Money Management

It’s never too late to become a homeowner. But see how becoming a homeowner for the first time in retirement may throw your finances for a loop. [[{“value”:”

Many people buy homes in their 20s, 30s, or 40s and then opt to stay put in retirement or downsize if they don’t need as much space. But what if you’ve never owned a home before and are reaching retirement age?

There’s no such thing as being too old to own a home. And even if you’re approaching retirement, it’s possible to get a mortgage as long as you meet a lender’s requirements in terms of factors like your income and credit score.

The upside of owning a home in retirement is the stability factor. As you age, it can become harder to pack up and move. With a rental, you perpetually run that risk, since your landlord isn’t obligated to continue renting to you beyond the length of your lease.

If you buy a home and keep up with your mortgage payments and property taxes, you’re guaranteed to be able to stay. The same holds true if you can buy a retirement home in cash.

But becoming a first-time homeowner in retirement could pose some challenges you should know about. And you may find that renting is a better match for you financially.

When your housing costs aren’t locked in

It’s common for people’s income to drop in retirement. Think about it — you’re going from earning a paycheck to living off of your savings and Social Security. There may be a pension in the mix, too.

But all told, many people have less monthly income available to them in retirement than during their working years. Given that, you may find that renting a home makes more sense financially because your monthly costs are fixed for the duration of your lease.

Let’s say you sign a two-year lease for a rental costing $2,000 per month. As a general rule, your housing costs should not exceed 30% of your income — both when you’re working and in retirement. So if you have a monthly retirement income of $6,700, paying $2,000 per month in rent works.

You may instead decide to buy a home that has you paying a $1,500 monthly mortgage and $500 a month in property taxes and homeowners insurance combined. That brings you to that same $2,000. But what if after a year, your property taxes and insurance costs rise to $600 a month, but your retirement income is still the same at $6,700? Suddenly, you’re at $2,100 a month, which is over the recommended 30% threshold.

Also, when you rent a home, you don’t have to spend a dime on repairs or maintenance. When you own a home, these are costs that need to somehow fit into your budget. They can also be hard to estimate. You may not want to take on unknown expenses at a time in your life when your income is falling.

Think through your choices before buying a home

Retirement could be the perfect time to venture into homeownership. If you’re not working, you may have the time to do required maintenance yourself, and you might even enjoy having home improvements to tackle as a way to keep busy.

But if you’ve always rented before, the unpredictable nature of homeownership could throw your retirement finances for a loop. So think about that carefully before deciding to buy. And if you do opt to buy, make sure you have a dedicated emergency fund for home-related expenses in case your repair costs are higher than expected.

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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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A credit card is an important financial tool. If you’ve never had one, find out why you should open a credit card right away. [[{“value”:”

Most Americans use credit cards, but not all of them do. Last year, a study by The Motley Fool Ascent found that 20% of Americans don’t have a credit card.

There are plenty of credit card horror stories out there. So if you’ve never had one, you may not be in any rush to change that. But the risks of credit cards are avoidable, and they have benefits you won’t get from any other payment method.

1. You can start building your credit

A credit card is practically a must-have for one important reason: It can build your credit score. Your credit score is a rating of how likely you are to repay money you borrow, so it’s a big factor in the interest rate you get when applying for a loan.

For example, if you ever want to buy a home, a high credit score could help you get approved for a mortgage and secure a low interest rate. Even if you don’t plan to buy a home, there are lots of unexpected ways your credit score can affect your life. Here are a few examples:

In most states, auto insurance companies can use your credit score when setting your rates. Drivers with poor credit pay more than twice as much as drivers with excellent credit on average, according to data from Quadrant.Many landlords and property management companies run a credit check on rental applicants. A lower credit score can make it harder to secure a place to live.Utilities companies often require a security deposit for new customers who don’t have good credit. You could end up paying a deposit for power, gas, water, and any other utility services you need.

If you never get a credit card, you’ll most likely have a limited credit history — or no credit history at all. That will almost certainly make life more difficult and more expensive.

Luckily, it’s not hard to build credit. If you get a credit card, use it regularly, and pay the bill on time, your credit score will improve. After a year or two of doing this and staying out of debt, you’ll probably be closing in on good credit.

2. It’s a safer way to pay for purchases

There are three common ways to pay for purchases: Cash, debit cards, and credit cards. Of the three, credit cards are the safest option.

Cash is the riskiest way to pay, because if it’s lost or stolen, it’s gone. With a credit card, you could just call your card issuer and request a replacement card, and you won’t lose any money. Cash is also inconvenient — the more you pay with cash, the more often you need to stop at an ATM to get more.

On the surface, debit cards and credit cards seem pretty similar. But there’s a key difference: Your debit card is connected to your bank account, and your credit card isn’t. If someone gets access to your debit card, it’s possible they could take money from your bank account. If someone else uses your credit card, you can just report the transactions as fraud to have them taken off your bill.

You can report debit card fraud, too. But you may need to wait for your bank to complete its investigation to get your money back. With a credit card, you don’t have that problem.

3. You could earn rewards on your spending

What I love most about credit cards is the opportunity to earn rewards. Many credit cards earn cash back or travel rewards on purchases you make. For example, if you spend $1,000 on a card that earns 2% back, then you’d earn $20.

This is an easy way to save money. I’m a fan of travel credit cards, and I save thousands of dollars every year with them. Cash back cards can be just as valuable. It just depends on which you prefer.

Not all cards earn rewards, and this benefit is less common with starter credit cards. But there are some that earn cash back or points. And as your credit score improves, you’ll be able to qualify for better credit cards that earn more back.

Staying safe with credit cards

What you get out of credit cards depends on how you use them. If you follow good credit habits, you’ll be able to build credit, stay safe while making purchases, and earn rewards, all without going into debt.

But what are good credit habits? There are only a few things to remember: Use your credit card for your regular bills, and never spend more than you could afford to pay back with what you have in your bank account. Basically, treat it like a debit card. Pay your credit card bill in full every month on or before the due date. If you do that, you’ll stay out of debt, and you’ll never be charged interest.

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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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Want to open lots of bank accounts to earn multiple bank sign-up bonuses? This plan might sound profitable, but see how it can hurt you in other ways. [[{“value”:”

The best bank sign-up bonuses can give you hundreds of dollars for opening a new checking account or savings account. Some enterprising people might think, “Why not open lots of bank accounts all at once — or one after another — to chase sign-up bonuses?”

Here’s the problem: Opening too many bank accounts too quickly (also known as “bank account churning”) can hurt your reputation in important ways behind the scenes of the banking system.

In the same way that having a bad credit score can make it harder to get approved for new credit cards, getting a reputation as an “account churner” can make it harder for you to open new bank accounts in the future. A negative banking reputation is not worth it for a few hundred dollars.

Let’s look at why pursuing too many bank sign-up bonuses can be a bad idea — and what you could do instead.

How opening too many bank accounts can hurt your reputation

What if you could get a $200 bonus for opening a new savings account at one bank, and then move that money to a new checking account at a different bank for another $300 bonus? What if you could do this several times per year, as banks announce new bonuses, and make $1,000 or more?

Here’s why this is a bad idea: When you open a new bank account, it gets reported to ChexSystems, a bank account reporting agency. And applying for too many bank accounts too recently can show up as a negative item on your ChexSystems report.

How too many bank bonuses can hurt your ChexSystems report

ChexSystems is kind of like a credit bureau, but for bank accounts. You might not have heard of it before, but if you have a bank or credit union account, you probably have a ChexSystems report on file, just like you have credit reports. Your ChexSystems report does not usually have the same level of impact on your financial life as your credit score, but it matters.

If you rack up negative items on your ChexSystem report, you could be denied bank accounts in the future. Opening lots of bank accounts in rapid succession can be a red flag for banks. Another issue that can happen from bank sign-up bonuses is if you fail to manage your accounts properly. For example:

If the bank has to close your account involuntarilyYou have unpaid fees or negative balancesYou otherwise behave like a less-than-responsible bank customer

All of those negative items can go on your ChexSystem report — and can keep you from being able to open a bank account when you really need one. Do you really want to take that chance? Instead of churning bank accounts, why not just leave your savings in one of the best savings accounts for the long term and find a higher-paying side hustle to increase your earnings instead?

Bottom line

Chasing after multiple bank account bonuses is not illegal, and you might be able to collect multiple bank bonuses with no big issues. If you read the fine print, keep your promises, leave the correct minimum amount of money deposited, leave your account open long enough, and otherwise follow the bank’s rules, you might be fine.

But if something goes wrong with your bank account, it can cause big problems for you in the future. The hassle, stress, and inconvenience of having a bad ChexSystems report can far outweigh whatever small amount of money you might get from a one-time bank account bonus. Why take that risk just for a few hundred dollars? Having a good reputation as a bank customer can be worth more than that.

Right now, the best savings accounts and money market accounts are paying 5.00% APY or higher. Instead of chasing bonuses, let your cash stay put and grow with higher yields.

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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. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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Under the right circumstances, transferring a balance to a new credit card can help you pay it off. Read on for ways to tell this won’t work for you, though. [[{“value”:”

Paying interest on a credit card balance is expensive — the Federal Reserve Bank of St. Louis found that the average credit card APR on accounts charged interest in February 2024 was 22.63%. And since that interest compounds daily, carrying a credit card balance is more expensive the longer you do it.

If you want a break on that interest, you might consider applying for a balance transfer credit card. The best ones have long 0% intro APR periods — sometimes a year, 15 months, or longer.

If you move an existing balance to one, you might be able to pay off your debt without accruing more interest on it. But not so fast! Read these two signs that a balance transfer card isn’t right for you — and see what your other options are to get out of debt.

1. You can’t qualify for one

If you’ve been carrying a large credit card balance for a while, your credit score might be suffering as a result. So depending on the state of your score, you might not actually be able to qualify for a good balance transfer card with a long 0% intro APR. Or, you may not be given a large enough credit line to let you move all your existing debt over to it.

2. You don’t have a plan to pay off debt for good

You need a real plan to get out of debt and stay out of it. Ideally, you’d take the amount of your debt and divide it by the number of months you have with 0% APR if you use a balance transfer card.

If you’ve got $10,000 in debt and an interest-free period of 15 months to pay it off, you’d pay about $667 per month and have the balance paid off by the time your card’s go-to APR is charged. But if you haven’t decided how you’ll earn or free up that much money per month to send to the card, transferring the balance won’t do you any good.

Another potential problem is that transferring your balances will leave you with newly freed-up credit cards. If you turn around and spend on those cards again, you could end up even deeper in debt.

What are your other options?

If a balance transfer card isn’t right for you, one of these options might be a better move.

Debt consolidation loan

The interest rate on a debt consolidation loan is likely to be a lot lower than the rate you’re paying on a credit card, even if you don’t have a very good or exceptional credit score. And unlike a credit card APR, the loan rate will be fixed for the duration of your pay-off period.

If you get a $10,000 loan at a rate of 12%, and pay it back over five years, you’ll pay $222.44 every month, and by the time you’ve paid off your loan, you’ll have paid $3,346.67 in interest. To achieve that same payoff time while leaving the debt on a credit card charging you that average APR of 22.63%, you’d have to pay $280 per month — and would end up paying $6,787 in interest along the way.

Skip the consolidation and work more

For full disclosure, this is how I got out of debt in 2022. I decided that the best way out was through — and since I was fortunate enough to have time and flexibility, I decided to start working a side hustle. This worked out better for me than expected, since my side hustle was freelance writing and editing work, and I ended up coming to love it so much that I quit my W-2 job the following year and now I’m a full-time freelancer.

But a side hustle doesn’t have to be something you’re passionate about — it can just be a means to an end. If your end is getting debt paid off, you can funnel a lot of money toward it if you can work more hours at your main job or pick up a casual side gig, like driving for Uber or DoorDash. The money you earn won’t already be committed to your bills, so you can send all of it (less taxes, of course) to your debt.

Meeting with a debt counselor

If you’re really struggling with your finances, and watching your credit card balances mount thanks to high interest rates, all hope isn’t lost, even if you can’t make either of the above moves. It might be time to reach out to a nonprofit credit counselor.

You can find one via the National Foundation for Credit Counseling, and they can help you drill down on your financial situation. They’ll offer solutions to your budgeting and debt issues, and create an action plan for you to follow. Remember, it took a while to get into this situation, and it won’t be a snap to get out of it. But with the right support and tools, you can get a handle on your debt.

If you’ve got a high enough credit score and a plan to pay off what you owe, a balance transfer credit card can be a great way to achieve your goal. But if not, you’ve still got options. Make the best choice for you and your finances.

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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.The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool has a disclosure policy.

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If you’re a Costco member or plan to join, don’t miss out on membership perks. You may be ignoring some valuable benefits. Check out a few you should use. [[{“value”:”

Many shoppers invest in warehouse club memberships to get better deals on essentials like groceries, household goods, and clothes. If you’re a Costco member or are thinking of joining, you need to use the perks provided to maximize the value that you get. Read on to learn about five Costco membership benefits that could save you hundreds of dollars annually.

1. Shop through Costco Next for member-exclusive deals

Some members don’t realize that their membership perks include access to Costco Next, an online shopping portal with deals from popular retailers. The items you’ll find on Costco Next can’t be found in Costco stores, and right now they include clothing, appliances, pet products, lawn furniture, and much more.

2. Save money on moving truck rental fees

Are you planning a move soon? If you need to rent a moving truck, you can get a discount with Costco. Costco partners with Budget Truck Rental to offer discounts of 25% off retail truck rental rates. This membership benefit can save money and help ensure your upcoming move goes smoothly.

I reviewed truck rental prices in the Chicago area to determine how much you could save on this expense. Renting a 26-foot truck from Budget Truck Rental would normally cost $39.99 a day, with an additional $0.79 per mile charged. But with a Costco card, you’ll pay $29.09 daily plus an additional $0.57 per mile. That’s a savings of at least $10 per day on moving costs.

3. Find insurance discounts

Did you know that your Costco membership can unlock insurance discounts? Whether you’re looking for a new home or car insurance policy or you want to compare rates to see if it’s best to switch insurers, check to see if you can get a deal with your Costco card.

Costco partners with select insurance companies to provide members in most states discounted home, auto, life, and pet insurance coverage. According to Costco, its members reported saving an average of nearly $600 when switching their car insurance coverage to one of its partners, CONNECT, powered by American Family Insurance.

4. Add an additional driver for free on eligible car rental bookings

When making travel arrangements through Costco Travel, members can enjoy plentiful discounts. But that’s not all. For eligible car rental bookings, you can add an additional driver to your reservation for free.

When using your Costco membership perks to rent a car with Alamo or Enterprise, the additional driver fee is waived for rentals in the U.S., Canada, U.K., France, Germany, Ireland, and Spain. The fee is also waived for Avis and Budget for U.S. car rental bookings.

Additional driver fees cost about $13 to $15 per driver per day, so the savings can be substantial — especially if you’re planning a lengthy road trip.

5. Score a discount on gift cards from popular retailers

Before you buy gift cards for yourself or those you love, check to see if Costco sells gift cards from your favorite retailers. The warehouse club sells discounted gift cards for tons of popular brands and experiences, including restaurants, airlines, movie theaters, sporting events, and more.

You can save even more money by purchasing select gift cards during sales. Keep an eye out during the holidays for extra gift card savings opportunities.

Get the most from your Costco card

Take advantage of the valuable perks included with your Costco membership. The above benefits are only a sampling of the perks available to members. If you’re new to Costco, check out our ultimate Costco guide to stretch your money further.

Here’s one final tip: Consider using a credit card that earns rewards when paying for your next Costco haul. You can redeem your rewards for cash back or a statement credit to save even more money. Check out our list of the best credit cards for Costco shoppers.

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

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

Click here to read our expert recommendations for free!

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.Natasha Gabrielle 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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Some means of saving on auto insurance are more effective than others. Read on to learn why raising deductibles is worth considering. [[{“value”:”

Revisiting your insurance coverages at least once a year is a smart idea. You never know when another company might be able to offer you a better deal on the same policies you already have, which might include auto insurance, homeowners insurance, and beyond.

A big life change is another great reason to reconsider your insurance situation. As I write this, I am less than 24 hours away from closing on a mortgage and officially becoming a homeowner again, for the first time in a long time. In the course of researching homeowners insurance companies, I provided information to get a new car policy, too. I also decided to raise my deductible for my auto insurance in the process. Here’s why.

My financial situation has changed

I’ve owned a car in my own name since I was 21 years old and a senior in college — when I bought that car, I was also responsible for insuring it and could no longer piggyback off my parents’ auto insurance policy. Since I had college student (and then graduate student) finances, I had my deductible set relatively low, at $500. Your policy deductible is the amount of money you must cough up when you file a claim, and then your insurer picks up the rest of the tab for the repairs to your vehicle.

Unfortunately, my finances didn’t improve as dramatically as I hoped after I got out of school and started in my first career, so I just kept my deductible set at $500. That was a dollar figure I could reasonably hope to cover from my meager savings account balance. It wasn’t until recently that I could swing a higher deductible thanks to changing my money situation, so I’m boosting my deductible to $1,000.

It comes down to saving money — as many things do

Swapping your low policy deductible for a higher one is a very accessible means of lowering the cost of your policy. Sure, I could probably reduce my car insurance premiums by agreeing to download an app or put a monitoring device in my car so my insurance company can check up on my driving, but I have privacy concerns with telematics. I also have a proven record as a safe driver with no tickets or collisions in a very long time, and I’m already rewarded by my insurer with a lower rate as a result.

So right now, I’m focusing on saving money on insurance in two other ways:

Bundling my coverage: This move has perks beyond saving money, but the money savings can be significant. Bundling home and auto insurance can save the policyholder an average of $106 per month, according to State Farm. Plus, it can be convenient to have just one insurer to go to when you have a problem and need to file a claim.Raising my deductible: While I’ll have to cough up twice as much money in the event of filing a claim, raising that figure from $500 to $1,000 can offer savings on policy costs. According to Progressive, drivers who double their policy deductible from $500 to $1,000 could save 28% on their premiums. With a higher deductible, I’ll be taking on more of the risk than my auto insurer, and as a result, my monthly costs will be lower.

Should all drivers raise their car insurance deductibles?

Maybe — but it’s a good idea for drivers to consider their emergency fund and general financial situation. If needing to pay more to an insurer in the event of filing a claim won’t be a major hardship, it’s certainly worth considering. Drivers should also take the cash saved on premiums and stick it in a savings account, so it’s ready just in case.

But for drivers on shakier financial ground, like I was for many years, it might be better to pay a bit more for those premiums in exchange for the peace of mind that comes from knowing car repairs will be taken care of for a smaller amount of money. As in all things personal finance, the choice for this one is personal.

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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 recommends Progressive. The Motley Fool has a disclosure policy.

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