Here’s how insurers keep tabs on you — and what you can do about it. ALPA PROD / Shutterstock.com
Home insurance rates are approaching record highs this year, with the average premium in the U.S. expected to exceed $2,500, experts say. That’s after increasing about 20% in the past two years and likely 6% more this year. And as we note in “10 States Seeing the Biggest Spikes in Homeowners Insurance Costs,” some places are seeing even faster growth. That leaves many people stuck between a…
Want to buy a new car in 2024? It’s OK if you don’t want to buy an EV. Here’s how to find a good deal and save money on gas (and car insurance). [[{“value”:”
Image source: Getty Images
Electric vehicles (EVs) have received a lot of media attention in the past few years. If you care deeply about fighting climate change, buying an EV might be on your to-do list. And silent, rapidly-accelerating EVs tend to get rave reviews as being fun to drive.
But EVs are not for everyone. Some people have big concerns about the high cost of EVs, the price of EV car insurance, and “range anxiety” about just how hard it can be to charge an EV at home or at public charging stations.
Let’s look at a few reasons why you might not be ready to buy an EV — and what car to buy instead.
EVs can help fight climate change, but they’re also (still) significantly more expensive than gas-powered cars. Research from Cox Automotive and Kelley Blue Book shows that as of April 2024, the average sale price of an electric vehicle was $55,242 vs. $44,989 for a gas-powered vehicle. That’s a difference of $10,253, making EVs 22.8% more expensive on average!
Yes, there are EV tax credits of up to $7,500 for new EVs, and up to $4,000 for used EVs. But you have to find the right vehicle and have qualifying income. Cost savings on gasoline and maintenance can eventually make up for the higher sale price of EVs, but it doesn’t happen overnight. EVs are not a must-have purchase for every driver. It’s understandable if you have sticker shock about EV prices.
Many people are curious about EVs, but don’t have a reliable way to charge EVs at home. If you have a long commute or regularly drive through rural areas, you might rightfully worry about running out of battery. Although a nationwide effort is underway to build more EV charging stations and other EV infrastructure, some people feel like they’re being pressured to buy cars that cause “range anxiety” in a way that no gas-powered car ever could.
After all, gas stations are available in every neighborhood and nearly every interstate highway exit. How soon will we be able to say the same for EV fast-charging stations?
Americans are feeling burned out on high inflation. Car insurance has been one of the highest-inflating monthly bills that most Americans have to pay — according to Bloomberg, in the past four years since January 2020, average car insurance premiums have increased by 43.7%.
Does buying an electric vehicle make your car insurance cheaper? Unfortunately, no! EVs tend to be more expensive than regular cars, because EV batteries and other parts are hard to fix or expensive to replace in case of a crash. That makes EV car insurance cost more — around 7%-11% more than auto insurance for gas-powered cars.
If you’re already worried about range anxiety and the cost of your monthly EV auto loan payment, being asked to pay an extra 11% for car insurance might be the last straw.
If you’re not ready for an EV, that’s OK. Buying a hybrid vehicle can help you get significantly better gas mileage than a typical car, but without the EV range anxiety. The Motley Fool’s Ascent’s research found that five popular models of hybrid cars can save an average of $611 per year on gas compared to standard gas-powered vehicles.
Some hybrid vehicles, called plug-in hybrid electric vehicles (PHEVs), give you the best of both worlds: the reassurance of old-fashioned gasoline, and the exhilaration of futuristic battery power. These PHEVs combine a gas-powered engine with an electric battery that you can charge by plugging it into a standard household outlet. I own a PHEV — a Toyota Prius Prime — and it’s my favorite car of all time. Cheap to fuel, cheap to insure, and fun to drive!
Some PHEVs can even qualify for EV tax credits. If you choose the right vehicle, your PHEV can get EV tax credits at the dealership for up to $4,000 (for many pre-owned makes and models) or $7,500 (for a limited selection of eligible new cars).
Don’t feel bad if you’re feeling horrified by the costs and uncertainties of buying an electric vehicle. If you don’t have an easy way to plug in an EV to charge at home, if you’re worried about EV range anxiety, or if you want to find cheaper car insurance, buying an EV in 2024 might not be realistic for you. Consider a hybrid vehicle or PHEV for your next car purchase — especially if that PHEV qualifies for EV tax credits.
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!
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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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Interest rate cuts could happen this year. Read on to see if CDs will remain a good deal once that happens. [[{“value”:”
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I’m a big fan of free money, whether in the form of cash back from a credit card or a bonus from opening a checking account. So when CD rates started rising last year, I hopped on the bandwagon and opened a few to capitalize on them.
The neat thing about CDs is that you can basically earn a risk-free return on your cash. This assumes that you put your money into an FDIC-insured bank. But as long as you do that and keep your deposit below $250,000, you don’t risk losing any of your cash in the event of a bank failure.
For this reason, I have a number of 5% CDs laddered. And I may even try to open one more before the Fed starts cutting rates.
But to be clear, I won’t necessarily stop buying CDs once those rate cuts hit. I think CDs could remain a good buy well beyond 2024 if they align with your financial goals.
CD rates are high right now following a series of interest rate hikes from the Federal Reserve during 2022 and 2023. The purpose of those rate hikes was to slow inflation, which, for the love of $6 milk, really needed to happen.
Thankfully, living costs are now rising at a more moderate pace, and because of this, the Fed is likely to start cutting interest rates later this year. There’s pressure on the Fed to start lowering rates because those hikes have made borrowing expensive.
Once the Fed cuts rates, CD rates should follow suit. So while it may be possible to snag a 5% APY on a 12-month CD right now, after the Fed’s first rate cut hits, that may be tougher.
But all told, I don’t expect CD rates to fall drastically later this year or next. Remember, just as the Fed raised its benchmark interest rate gradually in 2022 and 2023, so too will it likely cut rates slowly over many months or even years.
In other words, it’s not like CD rates are expected to go from 5% this year to 3.5% early next year. It may be that come early 2025, you’re looking at 12-month CDs paying 4.25%. That’s still not a terrible deal.
Of course, it’s harder to predict what CD rates will look like in the long term. But CDs may very well have a place in your financial strategy in the coming years, even if rates are lower.
In a nutshell, CDs tend to make the most sense when you’re saving for a near-term goal, not a long-term one. For something like retirement, buying CDs could be a poor choice, because the stock market’s average annual return over the past 50 years is 10%, which beats CDs by a longshot — even when they’re at their best. So when you’re putting money away for a milestone that’s 30 or 40 years away, investing in stocks usually makes more sense.
CDs are also not an appropriate place to put your emergency fund, since there can be steep penalties for cashing out a CD before it comes due. Your emergency fund should be kept in a regular savings account so you have access to it at all times.
But let’s say it’s 2028 and 12-month CD rates are only at 2%. If that’s a good notch above what savings accounts are paying and you’re saving for a near-term goal that makes stocks a poor choice due to the risk involved, then you might as well get that 2%.
Right now, the idea of earning 2% on a 12-month CD is not appealing. I wouldn’t blame you for thinking that, since you can still get 5%.
But remember, you have to take CD rates in context year after year. If rates are down on a whole, CDs aren’t going to be paying as much. Whether they’ll be worth opening down the road will therefore depend on your goals and circumstances. But it’s pretty fair to say that CDs will still be worth it in the next year or so, even if they’re not paying nearly as generously as they are today.
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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It’s easy to get caught up in the moment and take out a credit card that no longer works for you. Here’s what to do before downgrading that card. [[{“value”:”
Image source: Getty Images
If you find yourself paying a high annual fee on a credit card you rarely use, you may wonder if it’s time to cancel the card. The answer is usually no, for reasons we’ll discuss in a moment. What you may want to do is give your credit card company a call to learn if you can downgrade to a less expensive card instead. Before picking up the phone, though, here are five things you should do.
Let’s say you have The Platinum Card® from American Express. Even though you’re paying $695 annually to carry the card (see rates and fees), doing so made sense for a few years due to the amount of time you spent traveling and the number of perks you took advantage of. However, you’ve changed jobs, no longer travel as often, and don’t have another trip planned for the foreseeable future. In short, you no longer believe you’re able to offset the annual fee by taking advantage of the perks offered by the card.
Featured offer: save money while you pay off debt with one of these top-rated balance transfer credit cards
Before you request a downgrade to another American Express card, take one last look at the perks the company offers to Amex Platinum Card holders. It’s possible there are new benefits available, or you’ve forgotten about perks that still save you money, like the free Walmart+ membership and the $240 digital entertainment credit (terms apply, enrollment may be required).
In short, make sure you’re actually ready to give the card up before calling the company.
If you’re not quite sure where your credit score stands these days, it’s a good idea to find out before you request a downgrade. While you’ll probably be fine, if your score has dropped since you first applied for the credit card, it’s possible the company won’t approve a downgrade.
It’s the sort of information you want to know before calling.
Go to the credit card company’s website to learn more about its other credit cards. Each offers different benefits and carries a different annual fee (if there is a fee at all). Review the perks associated with each card and determine which one you’re likely to benefit from most. Once you’ve done a credit card comparison, you’re nearly ready to give the credit card company a call.
Even though you’re downgrading to a card with the same company, it’s possible you’ll lose all or part of your rewards points when the credit card is downgraded. That said, the same is not true for all credit card companies, so be sure to find out before deciding whether you need to spend the points you’ve accumulated.
If you use the credit card to pay any bills — including subscriptions and occasional expenses like insurance premiums — make sure to change the payment method right away. The last thing you want is a note from a creditor saying your form of payment didn’t work — and possibly a late fee.
Canceling a credit card rather than downgrading can lead to a lower credit score. Here are two reasons why.
Closing a credit card reduces the amount of credit you have available. For example, if you have three credit cards, each with a credit limit of $5,000, you have a total of $15,000 available. Now, say you use one of the cards to charge a $5,000 hot tub purchase. That means you’re using 33% of your available credit ($5,000 ÷ $15,000 = 0.33).
Look what happens if you cancel one of the cards and are left with $10,000 in available credit. If you were to buy the same hot tub, your credit utilization ratio would jump to 50% ($5,000 ÷ $10,000 = 0.50).
Creditors like to see that you have plenty of credit available, but manage to keep your credit ratio low. In short, the lower your credit ratio, the better.
Creditors like to see applicants with a history of managing credit well. The longer you’ve had credit cards, paid your bills on time, and didn’t max out your credit limit, the higher your credit score is likely to be. Canceling a card lowers the overall average age of your credit.
There’s nothing wrong with downgrading a card if it no longer benefits you. Before you do, though, make sure you’re ready for the change.
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.American Express is an advertising partner of The Ascent, a Motley Fool company. Dana George has positions in Walmart. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.
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Waiting to buy a home can pay off for numerous reasons. Read on to see why you may want to sit tight on a home purchase. [[{“value”:”
Image source: Getty Images
Although my husband happened to buy a house when he was 23 years old, most people I know didn’t become homeowners until their very late 20s or during their 30s. My friends Erin and Steve didn’t buy their first home until they were in their mid-40s — even though they got married in their late 20s. But waiting turned out to be the best decision they could’ve made.
Erin and Steve thought about buying a home shortly after they got married. But the timing wasn’t right.
Erin wound up with a surprise pregnancy within a year of tying the knot. Given her moderate income, losing most of her paycheck to daycare didn’t make financial sense. So she stopped working for a period to care for her daughter, as well as the son she had a couple of years later so her children would be close in age.
Erin and Steve could swing their basic expenses, including rent, on Steve’s income alone. But buying a house on one salary was a huge stretch. And thankfully, they recognized that.
Both Erin and Steve also still had left debt from college to tackle when they were first married. They didn’t want to take on a mortgage until they were debt-free.
They then thought about buying a home later on in their 30s. At that point, Erin was back at work and they had more money coming in. But they didn’t have a lot of savings, and they certainly didn’t have enough for a 20% down payment on a home in their preferred neighborhood.
It’s possible to buy a home with less than 20% down, but you’ll pay private mortgage insurance, or PMI, which is yet another ongoing expense to deal with. So all told, they wanted to wait until they could easily put 20% down on a home, plus have a nice cushion for all of the extras that would inevitably come with owning one, like property taxes, homeowners insurance, and maintenance.
It took Erin and Steve until their mid-40s to feel comfortable buying a home. But that was the smartest thing they could’ve done.
By waiting until they had more savings, they were able to easily cover a 20% down payment on a home to avoid PMI. And, they had a nice amount of money left over to cover repairs.
That was crucial, because they bought a home that needed some work. But they didn’t have to take out additional loans to pay for renovations and anything that needed to be fixed, like their mess of a driveway.
Also, by the time they bought their home, Erin had been back to work for a while and was earning a lot more than what she made when she first returned to a job. That gave her and Steve more confidence in their ability to cover their housing expenses without stress.
The sooner you buy a home, the sooner you can start to build equity in it. So you may be tempted to try to buy earlier in life than your 40s.
But you may end up earning a lot more money in your 40s than in your 20s or 30s, which could make it easier to keep up with your expenses. And the longer you hold off on buying a home, the more you can save for not just a down payment, but other homeownership costs.
Almost shockingly, 23% of homeowners say they spend over 30% of their income on expenses like home maintenance, improvements, taxes, insurance, and utilities, according to Real Estate Witch. That’s not even including mortgage payments.
Meanwhile, the general consensus is that you should limit your total housing costs to 30% of your income or less. So waiting until you have more money saved and your income is higher could help you avoid falling behind on homeownership expenses. Also, you don’t want to spend so much on a home that there’s no money left over for other things you enjoy, like taking vacations, going to the movies, and so forth.
Of course, the one drawback of buying a home in your 40s is that it may not be paid off before retirement if you buy with a 30-year mortgage. Erin and Steve got around that by signing a 15-year loan, so they’re on track to be mortgage-free before their careers end. And they’re able to afford higher monthly payments due to waiting until their incomes were higher to buy.
If you can comfortably afford to buy a home in your 20s or 30s, then by all means, go for it. But be honest with yourself, like Erin and Steve were at those stages of life. If you can’t manage to keep your housing costs to 30% of your income or less, it’s best to wait.
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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Medical bills can be a huge financial burden. Read on to avoid some common mistakes that could make yours more expensive than necessary. [[{“value”:”
Image source: The Motley Fool/Upsplash
Medical bills are often unavoidable, and they can also cause a huge financial strain.
Americans owe a whopping $220 billion in medical debt, according to the Kaiser Family Foundation. And all told, roughly 14 million people owe more than $1,000 in medical bills.
Since medical bills can be such a burden, you need to be careful when paying them. And that means avoiding these all-too-common mistakes.
Just because you hand over your health insurance card before a medical appointment does not automatically mean your insurance is getting billed for your visit. If you receive a bill that seems unusually large relative to your typical bills, perhaps your provider billed the wrong insurance or simply forgot to run the charges through your insurance altogether. So don’t just assume you owe the money and pay it.
The best way to know is to log into your account on your health insurance provider’s website and see if you can find a claim that matches the appointment or service you’re being billed for.
If there’s no such claim, contact your provider to see what insurance, if any, was billed. Then, confirm your insurance provider and ID number and ask that the claim be submitted.
Medical billers aren’t perfect. Unfortunately, sometimes, all it takes is a transposed or incorrect billing code number for an insurance company to reject a claim for services.
If you’ve received a bill that leaves you owing more money than expected, log into your account and review your claim or explanation of benefits to see why it was rejected. Or, call your insurer and ask. If it’s a billing code issue, your insurer will likely have you go back to your provider and ask it to resubmit the claim using the correct code.
Even with medical insurance, you may end up in a situation where you can’t afford your healthcare bills in full. This may happen if you haven’t yet met your deductible for the year and therefore have to cover the cost of a given appointment in full. For example, if you have a $1,500 deductible and you receive treatment costing $1,000, that entire $1,000 is on you.
You may be inclined to charge your medical bill on a credit card and pay it off over time. But that could end up costing you a lot of money in interest. If it takes you a year to pay off a $1,000 balance at an APR of 20%, you’re handing over an additional $112 to your credit card company.
A smarter move may be to talk to your provider about a payment plan. You may be eligible for a payment plan at 0% interest, or considerably less interest than what your credit card will charge you.
Also, credit cards let you get away with making just your minimum monthly payments. But that could cause a balance to linger for longer than it should, resulting in higher interest costs. With a payment plan through a provider, you may end up paying off your bill much sooner if you work those monthly payments into your budget.
It’s unfortunate that healthcare has the potential to be so expensive — even when you’re insured. Do your best to avoid these mistakes, so you don’t cost yourself money needlessly.
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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