Money Management

Deciding whether to rent or buy a home is not always so simple. Learn how your goals and situation should influence your choice. [[{“value”:”

We’ve all been taught that a big part of the “American Dream” is to own a home, and for many people, it makes a lot of sense. Homeownership builds equity, creates stability, and allows you to build your credit by having and paying off a home loan.

But note that I said that it is right for “many people,” not “all people.” There are certainly times when owning your own home may not be the best choice. Depending on your financial situation, lifestyle, and goals, renting can often be the better option.

So let’s explore both sides and see why the answer to this age-old debate is, surprisingly, “it depends.”

When buying is the better choice

Buying a home can be a powerful way to build wealth and create stability over time. Here’s when it makes a lot of sense.

You want stability

If you plan on staying put for a considerable length of time, say, for at least several years, then buying a home can be smart. As long as you are living in the same place, the stability and independence of homeownership is usually a solid decision.

You want an investment

On the same note, if you plan on staying in a residence for several years, buying a home can also be a smart investment. Over time, homes generally appreciate in value (with minor bumps along the way), and that builds equity.

Instead of paying rent to a landlord, you are paying down a mortgage, and over the years, you will not only own more of the home, but the home will very likely go up in value.

You want fixed monthly payments

As any young person who has rented an apartment or house knows, rent increases are a fact of life. But with a fixed-rate mortgage, your monthly housing payment remains consistent over time, even 30 years. That stability is comforting.

Need a place to save your monthly payments where they can grow with interest? Click here for a list of our best high-yield savings accounts.

You want to make changes to a home

Homeowners have the freedom to renovate or make changes to their home as they see fit and do not need the permission of someone else to do so. My best pal is an artist and he owns a house he painted purple; not my taste, but hey, I have no say, and neither does a landlord nor anyone else. His home is his purple castle.

So, if owning a property where you can fully express your personal tastes is important to you, buying is the better option.

When renting makes more sense

While buying a home clearly has its benefits (especially if you like purple!), renting can offer its own advantages in certain situations.

You need flexibility

If your lifestyle is such that you need to think more in terms of flexibility and the short term, then renting is definitely a better choice. For example, if you are a student, or your work demands frequent relocation, or you’re caring for an ill parent, then renting offers the flexibility and ability to relocate without much notice or hassle.

You want to enjoy lower costs

When you buy a home, you typically need a substantial down payment, as much as 20% of the purchase price, along with closing costs, which can total thousands of dollars. Plus, if you buy at a time when mortgage rates are up, you could find yourself facing very expensive ongoing monthly payments.

Renting, on the other hand, usually requires only a security deposit and the first and maybe last month’s rent, making it much more affordable for people who do not have large amounts of cash.

You want maintenance-free living

One of the biggest perks of renting is that maintenance and repairs are typically the responsibility of the landlord. But if you’re the homeowner, unexpected expenses like a broken water heater or roof repairs can be quite expensive.

The surprising conclusion: It depends

While the decision to rent or buy may seem obvious, the surprising reality is that there is no one-size-fits-all answer. For some, the flexibility and affordability of renting suits their lifestyle better, while for others, homeownership provides long-term stability and wealth-building potential.

The key then is to assess your personal situation, financial goals, and long-term plans, and choose accordingly.

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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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Booking travel deals is one attractive Costco benefit. But here’s why you may not want to go that route. [[{“value”:”

The benefits of joining Costco go far beyond savings on groceries and gas. Costco members can save money on everything from home installation services to tires to appliances. You can also take advantage of Costco’s travel service.

The nice thing about using Costco Travel is that you could potentially pay less for popular destinations and theme parks than by booking those trips on your own. Costco’s vacation packages come with perks you may not get elsewhere, like free resort credits you can use on dining or spa services.

Or, you may be eligible for a Costco Shop Card, the store’s version of a gift card, as a thank you for booking a trip. That’s the same as free money for anyone who shops at the store regularly. Plus, Costco vacations are eligible for cash back if you have an Executive membership.

If you pay using the right credit card, you can pocket even more rewards. Click here for a list of credit cards that can give you more cash back on your Costco shopping.

But while there are advantages to booking a vacation through Costco, there are some pitfalls to know about, too. Here are a few reasons not to use Costco for your next trip.

1. You may not find a package for your preferred destination

Costco’s travel packages cover a range of popular destinations, from Disney World to Hawaii to the Caribbean. But if you like to go off the beaten path, you may not have much luck with Costco.

Say you want to hike in the woods of Arkansas, or spend time in a remote beach town in New England. You may not be able to find a flight and hotel room through Costco — it all depends on your timing and specific destination.

And you may not find an actual vacation package — meaning, a complete itinerary you simply click on and add to your cart. An independent travel agent, on the other hand, may be able to help you put together a package based on the destination you want to visit that includes different outings and activities.

2. You might struggle to find a budget trip

You might spend less money booking a vacation through Costco than doing so on your own. But that doesn’t mean Costco vacations are cheap.

A week in Aruba for two adults in early December, including hotel and airfare from the New York City area, could cost you close to $4,000. If you’re on a budget, you may find that you’re largely priced out of Costco’s offerings.

3. You may have to commit to an itinerary far in advance

Since Costco works with its partner hotels to offer good deals, it can sometimes only offer a limited number of slots for a given package on a given date. You may find that if you wait too long to book a trip, it will be sold out on Costco Travel.

If you’re a natural planner and prefer to book your trips way in advance, this may not be a problem. But if you’re a fan of spontaneous last-minute travel or need flexibility due to a demanding job or having kids and needing to see what their school calendar looks like, then you may run into some issues.

It’s worth checking out the deals offered by Costco Travel and seeing if any are right for you. But you should also be aware of these pitfalls, so you can look at other options for planning your next vacation.

Top credit card to use at Costco (and everywhere else!)

We love versatile credit cards that offer huge rewards everywhere, including Costco! This card is a standout among America’s favorite credit cards because it offers perhaps the easiest $200 cash bonus you could ever earn and an unlimited 2% cash rewards on purchases, even when you shop at Costco.

Add on the competitive 0% interest period and it’s no wonder we awarded this card Best No Annual Fee Credit Card.

Click here to read our full review for free and apply before the $200 welcome bonus offer ends!

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.Maurie Backman 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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Getting a new credit card before the holidays could pay off. Here’s what you need to know. [[{“value”:”

The downside of opening a new credit card is that if you don’t manage your balance carefully, you could end up paying a lot of money in interest. That’s what credit card companies want you to do, which is why having too many credit cards can be dangerous.

But if you do a good job of paying off balances and keeping your debt to a minimum, then there’s a big benefit to opening a new credit card. Not only might you set yourself up for benefits like cash back or rewards points, but many credit cards offer generous welcome bonuses that put extra cash, points, or miles in your pocket.

In fact, October is a great time to apply for a new credit card with a sign-up bonus for one key reason.

Earning credit card sign-up bonuses

Credit card sign-up bonuses typically work like this. You get three months (sometimes more or less, but this is a common time frame) to meet a specific spending requirement on your new card. If you do, you get a certain amount of points, miles, or cash back as a reward.

For example, you may find a card that gives you $250 for spending $3,000 within three months of opening your account. And if you like the idea of getting a bonus like this, check out this list of the best credit card sign-up bonuses for October.

However, it’s not always a given you’ll be able to spend enough on your new credit card to meet the issuer’s requirement for a sign-up bonus. And if you specifically spend extra just to claim the bonus, you’re not exactly benefitting.

It’s one thing if you’d normally charge $1,000 worth of expenses on a credit card each month. In that case, spending $3,000 in three months is doable, and the $250 bonus is truly a bonus. But if you normally only spend $750 a month on a credit card ($2,250 over three months) and you force yourself to spend an extra $750 to make it to $3,000, you’re not gaining $250 so much as losing $500.

Timing your credit card application

That’s why October can be a great time to chase a sign-up bonus. In the coming weeks, you’re likely to spend a fair amount of money on holiday purchases, whether it’s airline tickets to go back home or gifts for your friends and coworkers. If that’s money you were already planning to spend, then you’re not forcing yourself to spend extra just to claim a sign-up bonus.

Let’s circle back to our example. Perhaps you need to spend $3,000 in three months to get a $250 bonus and you’d normally only spend a total of $2,250 during that time. But if you also typically spend $750 on the holidays, then you’re in a prime position to hit that $3,000 requirement without resorting to forced or needless spending.

An opportunity you should seize

It’s a huge bummer to apply for a new credit card with a generous sign-up bonus only to not reach the spending minimum and miss out on the extra rewards. But if you expect to spend a lot of money on the holidays, then now’s a great time to add a new credit card to your wallet.

Last year, the National Retail Federation said that holiday shoppers were expected to spend $875 on average. If you think your spending will be similar during the upcoming holiday season, then it might be worth getting a new credit card at a time when you’re more likely to snag the bonus that comes with it.

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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. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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A big deadline is coming up at the midpoint of the month for tax-filers. Read on to see if it applies to you. [[{“value”:”

It’s not exactly a secret that tax returns are due every year on April 15. But sometimes, a situation arises where you need more time to file your return.

Perhaps you waited a bit too long to find an accountant and couldn’t get one by mid-April to complete your return. Or maybe you had a personal situation you were distracted by.

The good news is that the IRS allows filers who can’t submit their taxes on time in April to request an extension. An extension buys you six extra months to complete your return. And you don’t even have to make up a sob story about a sick turtle to get the IRS to give you that leeway. Extensions are granted automatically as long as they’re requested by the April tax-filing deadline.

If you got an extension this year, though, you should know that your 2023 return is due on Oct. 15. And since that deadline is right around the corner, it pays to get moving to avoid potentially costly penalties.

Don’t be late on your tax return again

It’s one thing to not be ready with your tax return by mid-April. But at this point, you don’t want to file your taxes beyond Oct. 15 for one big reason — it could cost you a lot of money.

If you don’t owe the IRS any money for 2023, but rather, are due a refund, then technically, the agency won’t care if you submit your taxes after Oct. 15. That’s because the IRS gets to hang onto your refund for longer — so why should it have a problem with that?

Of course, in that scenario, you’re penalizing yourself by delaying your tax refund. But if you’re not desperate to get that money back, then conceivably, missing the Oct. 15 extension deadline isn’t a big deal.

However, if it turns out you owe the IRS money from 2023, missing the Oct. 15 deadline could mean getting hit with a failure-to-file penalty equaling 5% of your unpaid tax bill for each month or partial month you’re late, up to 25% of your unpaid taxes. If you owe $2,000 to the IRS and don’t file your 2023 taxes until Oct. 30, it’ll cost you $100 right off the bat.

You should also know that while a tax extension gives you more time to submit a return and avoid the failure-to-file penalty, it doesn’t give you extra time to pay your actual tax bill. So if you owe the IRS $2,000 from 2023, guess what? You’ve been racking up interest and penalties on that sum since mid-April. The sooner you pay it, the sooner you can stop the bleeding.

What if you can’t pay your tax bill in full?

If you know you owe the IRS money from 2023 and don’t have the funds in your savings account to pay up, don’t just ignore your tax return. At the very least, file it by Oct. 15 and simultaneously reach out to the IRS to get onto a payment plan. This allows you to pay off your tax bill over time.

Remember, the IRS doesn’t take kindly to unpaid taxes. If it discovers you owe money and don’t make good on it, the agency can garnish some of your wages. But if you keep up with your installment plan payments, that won’t happen — you’ll be considered current even if you still have a large balance that won’t be paid in full for a while.

The good news about filing a tax return in October is that it tends to be a less busy time for tax professionals than April. You may be able to quickly find an accountant to help you.

And if not, you may be able to file your own return. Check out this list of the best tax software to find a program that makes your filing a cinch.

If your tax situation isn’t complicated, filing your own return may be more doable than expected. However, if you own a small business, then it generally pays to hire a professional, since your return could get complicated due to different requirements and deductions you may be taking.

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Click here to read our full review for free and apply in just 2 minutes.

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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Interest rates are falling for borrowers. Read on to find out where credit card rates could be by the time 2025 rolls around. [[{“value”:”

Credit card interest rates are variable, which means they fluctuate depending on economic conditions and, most importantly, interest rate decisions made by the Federal Reserve.

When inflation skyrocketed, the Federal Reserve hiked its benchmark interest rate 11 times to get it under control.

Unfortunately, that sent credit card annual percentage rates (APRs) soaring from about 17.9% in 2022 to their current level of 22.76%.

But with the Fed recently slashing its rate by half a percentage point and more cuts likely on the way, what does that mean for credit card interest rates in 2025? Let’s take a look.

Where credit card interest rates could be in 2025

The good news is that the Fed’s recent rate cut decision directly affects credit card rates. That’s because credit card APRs are determined based on what’s called the prime rate, which is affected by the federal funds rate set by the Federal Reserve.

In short, when the Fed raises the federal funds rate, the prime rate goes up, and credit card APRs increase. When it cuts rates, credit card interest rates eventually come down. Based on this, we can make some loose assumptions.

Many economists predict the Fed will lower interest rates by another half percentage point (in addition to the recent half-percentage-point cut in September) by the end of the year and make a series of small cuts equaling 1 percentage point through 2025.

This means the average credit card interest rate could slide to about 21.7% by the end of this year and fall to about 20.7% by the end of 2025.

This is just my prediction, of course, and it’s worth mentioning that any shift in economic conditions could change what the Fed does moving forward.

Why credit card rates are hard to nail down

Since credit card rates are variable, there isn’t a specific percentage that we can know for sure they’ll be set to.

It’s also important to note that your credit history and your credit score determine your specific credit card APR.

Credit cards with lower rates and great perks often require higher credit scores. Click here to learn more about the best credit cards on our radar.

It’s worth reaching a credit score of 750 or higher if you’re trying to get the best rates on credit cards and other loans. That’s an above-average credit score, which tells lenders you’ll likely be a low-risk borrower.

Don’t wait for rates to fall

To improve your credit score, focus on making loan payments on time and using very little of your available credit. A credit utilization rate under 30% is good, and under 10% is even better. It’s also a good idea to keep old accounts open so you have a long credit history to show lenders.

Paying off your high-interest credit card debt is one of the best ways to improve your financial situation and credit score. For example, if you owe $1,000 on a credit card that has a 22.7% APR, it will take you one year to pay it off if your monthly payments are $94. But if you increase your payments to $150 per month, it’ll take just seven months.

You might also want to consider a balance transfer card, some of which have a 0% intro APR for a period of 15 months or longer. Check out the best balance transfer cards here.

While the Federal Reserve will likely continue cutting interest rates, you shouldn’t wait for this to happen. You can improve your financial situation now by working on your credit score and throwing any extra income you have toward your credit card balance.

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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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You might save money on a mortgage this fall. But read on to see why waiting to buy a home could benefit you even more. [[{“value”:”

In 2020 and 2021, home buyers and refinancers alike enjoyed record-low mortgage rates. But mortgage rates started climbing in 2022, and they’ve been pretty high ever since.

Over the past few weeks, though, buyers have gotten some relief. In September, rates fell to as low as 6.09% before creeping back up slightly to 6.12% as of Oct. 3. Considering mortgage rates peaked at 7.76% in November 2023, that’s a world of a difference.

You may want to buy a home this fall, given that mortgage rates have dropped. And if you shop around with different lenders, you might even snag a below-average interest rate on your loan. Check out this list of the best mortgage lenders for big savings.

But you should also know that waiting a bit longer to buy a home could be a better move financially. Here’s why.

Mortgage rates are likely to continue falling

On Sept. 18, the Federal Reserve made its first long-anticipated interest rate cut of the year. The very next day, the average 30-year mortgage rate fell to 6.09%.

Now, it’s worth noting that mortgage rates don’t always rise and fall with the Fed’s benchmark interest rate. But generally speaking, when the Fed lowers the federal funds rate, borrowing tends to get less expensive across the board. And that includes mortgages.

Meanwhile, the Fed’s September interest rate cut is likely to be the first of several. The Fed raised interest rates 11 times between 2022 and 2023 to slow the pace of inflation. The Fed now needs to reverse those hikes, given that inflation has cooled nicely.

In the coming months, we should expect the Fed to continue lowering its benchmark interest rate. And there’s a good chance that mortgage rates will follow suit.

If you sit tight through early or mid-2025 before trying to buy a home, mortgages may become even cheaper to sign. And that could make homeownership more affordable for you.

Set yourself up to snag a great mortgage rate

Tempting as it may be to buy a home this fall, waiting until winter or spring could lead to even more savings. Plus, spring tends to be a popular time for sellers to list their homes, so you may have more inventory to choose from if you sit tight for another six months or so.

But in the interim, take steps to increase your chances of getting approved for a mortgage and locking in a great rate. Having a higher credit score could help, so spend the next few months paying bills on time and reviewing your credit report for errors.

Also, if possible, work on reducing your existing credit card balances. That could not only help your credit score improve, but also reduce your debt-to-income ratio, which is another factor that mortgage lenders consider when deciding whether to approve you and what rate to offer.

Of course, if you find the perfect home next week and it falls into your price range, you may not want to pass up that opportunity. The point, however, is that mortgage rates are likely to keep falling from where they are today. If you can hold off on a home purchase beyond the fall, it could mean snagging a better deal overall.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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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