Money Management

Don’t say goodbye to bank branch locations yet. 

It’s been awhile since I last had reason to set foot in a physical bank, and it wasn’t even on my own behalf. I managed a small nonprofit organization from 2020 into 2021 and made weekly bank trips to deposit donations and membership fees in the form of cash and checks. Since the bank I dealt with was extremely local, there was no way to deposit checks digitally (a feature many larger banks have made available through their mobile apps). Cash, of course, is a physical medium and so must be either taken into a bank for deposit or brought to a bank drive-through lane (or in some cases, deposited via ATM).

My own banking is exclusively online these days. In 2022, I opened bank accounts with an online-only bank that doesn’t even have branch locations. I’ve been with a large national bank for almost two decades, but I haven’t visited one of its branches in several years. I receive direct deposit paychecks into my checking account there, and otherwise make use of money transfer services to move money around. In my life, and perhaps in yours, physical bank branches are kind of, well…obsolete.

It’s not so surprising, as online-only banks have some pretty great features. They can offer higher interest rates on cash in savings accounts, as they don’t have to spend money maintaining physical branches. And they come with robust web presences, including user-friendly mobile apps that make money management easy, and dare I say, fun?

Based on the rise of online banking, you might be wondering if your neighborhood bank branch will close its doors soon. After all, according to Forbes, the number of bank branches has declined in the last decade, from 85,000 in 2012 to 72,000 in 2022. But the answer is no, not yet. And here’s why.

Technology isn’t yet adequate to replace the human experience

Put plainly, there’s still a lot that physical banks provide that online banks can’t yet replicate. First and foremost, if you want to speak to a helpful human, chances are, you’ll have a better chance of it if you visit a physical bank. While online banks offer means of contact, such as phone numbers and online chat features, including those “managed” by a chatbot, many people prefer the ease of strolling into a bank to speak to a person.

As technology evolves, online banks could edge out physical ones in this area, however. According to Forbes, banks are improving their chatbot services, and it’s this technology that will eventually kill physical banks. A chatbot is a software application designed to carry on a “conversation” with a bank client, answering questions, providing service options, and in some cases, eliminating the need for a real human interaction, be it virtual or otherwise. Right now, this technology isn’t quite sufficient to replace physical banks, but the future is fast approaching.

Physical banks offer useful services

In addition to giving you the chance to speak with a real live human (for now), physical banks also offer other valuable services for consumers. These include access to safe deposit boxes and notary services. It’s not possible to replicate either of these features over the internet. If you have something valuable to store, a physical bank is the perfect place for it, and notaries are vital as official witnesses to the signing of important documents.

The future likely looks different

While we still have physical banks for now, it seems likely that as chatbot technology and digital money management services improve, physical banks will slowly fade away. The rise of remote work has also served to change the banking landscape, with many bank employees (such as phone and digital chat customer service representatives) now working from home, rather than at a physical bank location.

It’s an interesting time to be observing the world of personal finance, and the only guarantee at this point is that banking will continue to change. Even just in the time I’ve been a bank account holder, I’ve seen huge changes. The first time I watched someone deposit a paper check by taking a photo of it with their smartphone, it blew my mind. When it comes to the future of banking and the divide between online and physical banks, stay tuned so you don’t miss a move.

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Don’t shop at Sam’s or Costco without reading Ramsey’s warning. 

Joining Costco or Sam’s Club may seem like a great idea if you’re trying to keep your credit card bills down by spending less on groceries. These warehouse clubs offer discounted bulk buys as well as house-brand products that can be a great value.

But, while you may want to join one of these members-only clubs if you can reduce your spending by switching to shopping there, it’s important not to make mistakes that end up costing you.

Finance expert Dave Ramsey warns of one common error that many people run into at these types of stores.

Don’t make this mistake that Dave Ramsey warns about

Ramsey is generally a fan of wholesale clubs, even indicating that he and his wife are members of Costco and Sam’s Club. However, he believes there’s a potential pitfall to shopping at them — and it’s one many members run into.

“The biggest problem most folks run into with wholesale clubs is overbuying,” Ramsey warned. “Lots of people think overbuying isn’t a big deal, especially if it’s something that only happens by mistake once in a while. But the truth is it’s really dangerous.”

Ramsey believes overbuying can be a big mistake because you could end up wasting money on items you don’t end up using. He gave the example of purchasing a really large jar of mustard that you don’t use before it goes bad, but this could happen with a huge array of different products.

In fact, you could end up spending too much at warehouse clubs not only by buying too much of an item and seeing it go bad, but also by impulse buying and purchasing things you don’t need because you’re enticed by store displays, samples, and a promised bargain.

How can you avoid falling into the overbuying trap?

Ramsey is absolutely right that overbuying is a huge risk of warehouse club membership. Many people overspend because they feel like they need to justify their membership, while others do so because they don’t have a realistic idea of how much of a particular product they’ll actually end up using.

The good news is, you can avoid this common problem so you get the benefits of warehouse club membership without the downfalls. There are a few ways to do that:

Track your family’s consumption habits before shopping. Pay attention to how much of a particular item you use over time. If you go through one regular-sized ketchup every few months, for example, buying an industrial-sized bottle probably isn’t the best choice.Shop with a list. You’ll be less prone to purchase random items because they come across as a bargain if you have a plan for what you’ll purchase before you go into the store.Split bulk purchases with friends or family: Some of the best bargains come from buying large quantities of items. So, see if you can team up with loved ones to split the cost and each take home the amount you need.

By following these tips, you’re less likely to end up making the mistake Ramsey warns about. This will ensure your warehouse club membership ends up helping you financially rather than harming you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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It’s a strategy that could make sense under the right circumstances.  

It’s more than fair to say that 2022 has been a tough year for stock market investors. Whether you have money in an IRA account, brokerage account, or both, there’s a good chance your balance is lower right now than it was at the start of the year. In fact, your portfolio might be down year to date even with you having made contributions throughout 2022.

Normally, a good strategy for investing in stocks is to purchase shares of quality businesses and hold them for many years. But if you have some stocks in your portfolio that are up, you may want to sell them at a profit this month if the circumstances call for it.

Why December could be a good time to sell stocks

When you buy or sell stocks in a regular brokerage account, it has the potential to impact your tax bill for the year. When you sell stocks at a price that’s lower than what you paid for them, you’re looking at capital losses. Those can be used to lower your taxes.

On the other hand, when you sell stocks at a price that’s higher than what you paid for them initially, you face capital gains taxes. Those can increase your tax liability.

It’s for this reason that investors have to be careful when selling stocks at a profit. But you may want to sell stocks at a profit this month if these two things apply to you:

You have losses in your brokerage account to offset your gains.You have the potential to profit on a stock right now whose future is iffy.

The first item may be fairly easy to check off given the state of the stock market. It’s the second one you’ll need to think about.

You don’t want to take any old stock in your portfolio that’s up right now and sell it, because if you do, you might lose out on future profits. For example, say you bought shares of a given stock for $100 apiece and they’re now trading for $125. That means you can enjoy a $25 profit per share. But if you hold those shares for another 10 years, they might be worth $250.

That’s why if you’re going to sell stocks at a profit this month, you should limit yourself to those you have reason to believe may have peaked and/or are likely to lose value going forward. So let’s say shares you bought for $100 are now worth $125 but are likely to drop back down toward the $100 mark in 2023 and continue to fall. In that case, selling now could make sense, because chances are, you have losses in your brokerage account you can use to offset your gain.

It’s all about being strategic

Your goal as an investor is to make money. But sometimes, taking the money and running could mean owing the IRS a bundle of cash. If you’re looking at a short-term opportunity to profit on the sale of a stock, then now’s a good time to dump an underperforming stock and use that loss to offset your gain.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Drivers should browse their insurance carrier dashboard to see if they qualify for discounts. 

Get out your holy water and start sprinkling. Yes, the rumors are true: Rates are rising. Car insurance is just one of those things that are getting more expensive. And car insurance rates in 2023 will probably be even more costly.

Sadly, a little prayer probably won’t chase away the specter of higher premiums. That’s why clever drivers are checking out how to squeeze the most from their auto policy.

Most folks know the power of bundles. Drivers get discounts for bundling multiple insurance lines or cars under the same line. But there’s more to saving on car insurance.

Here are three little-known tips to save on car insurance as rates rise.

1. Switch to usage-based insurance

Some insurance carriers, like Metromile, offer cheaper insurance to low-mileage drivers. Drivers fix a device to their car, which Metromile uses to track distance driven. Casual drivers may prefer this option to insurance carriers that don’t take miles driven into consideration.

To a lesser degree, some carriers offer small discounts for low-mileage drivers. Drivers can check with their insurance to see whether they qualify for usage-based programs like Allstate’s Drivewise, Progressive’s Snapshot, or State Farm’s Drive Safe & Save.

Author’s Note: Metromile insurance is currently unavailable to many California drivers.

2. Drop unnecessary coverage

Consider dropping collision and comprehensive coverage if your car is old. If your vehicle is worth less, it may not make sense to pay for coverage that would only reimburse you for a small portion of the cost of repairs or replacement.

When I insured my cheap 1999 Ford, I didn’t bother applying for replacement insurance. It was cheaper to sell the wrecked car for spare parts. I ended up doing just that, to my delight.

3. Request special discounts

Drivers can typically manage discounts via online dashboards provided by insurance carriers. In some cases, drivers self-report on whether they qualify. Drivers without this tool should call the insurance company directly to ask which discounts they are eligible for.

Student discount

Geico offered me a discount for maintaining a 3.0 GPA average in high school and college. Many carriers offer similar deals. Drivers may have to be 25 years old or younger to qualify.

California drivers who qualify for the “Good Student” discount can see their insurance costs slashed by 20%.

Defensive driver discount

Some carriers offer discounts to drivers who complete an online defensive drivers course. California drivers who complete the course can save up to 5% on their insurance costs.

Drivers may have to be 50 years or older to qualify.

Anti-theft discount

Right now, I qualify for the anti-theft discount for having an anti-theft device active within my vehicle. The value is small — about $5 in savings per quarter — but I didn’t have to do anything special to qualify.

Does your car have an alarm system installed? If so, your vehicle may qualify for the discount.

New car discount

New car owners should double-check if they qualify for a new car discount. After swapping a 1999 Ford F-150 for a 2021 Toyota Corolla, I saved over $140 per year with my new car discount.

This discount is worth checking out if your car is less than three years old.

Other special discounts

The best discounts get snagged by drivers with clean records. Drivers should avoid striking out with the DMV by practicing safe driving. Discounts are enormous for drivers with both a clean DMV record and zero insurance claims.

Shop around

Sometimes, drivers need more discounts than their current insurer offers. If you want to switch insurers completely, shop around. Make sure your next insurer meets your needs.

The best car insurance companies offer comprehensive coverage at reasonable prices. Low-budget shoppers may prefer to stick with the best cheap car insurance. And drivers haunted by a poor driving record may want to consider the best high-risk car insurance for warding off demons like reckless driving, prior accidents, etcetera.

Drivers have options. A little research on car insurance companies — and research into little-known ways to save on car insurance — can save drivers hundreds in yearly premiums.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.

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