Money Management

Owning two savings or checking accounts could be worth the hassle. Find out the perks and drawbacks of multiple bank accounts. [[{“value”:”

Your partner wants to open a new bank account with a different bank, but you like your old one best. Should you close your old account? Keep it open? It’s questions like these that make banking nerds like us quake with excitement. In short, there are pros and cons to each option.

Keeping two bank accounts open gives you flexibility and security. But it also makes tracking your money more complicated. And if your banks charge fees, you could pay double. Read on for a more in-depth dive into the pros and cons of owning two bank accounts.

Pro: Flexibility

Keeping two accounts open allows you to use one when the other breaks down. Sometimes, banks have issues. They close your account for no reason you can tell. Next thing you know, you can’t access your money for weeks!

But having a backup account gives you flexibility.

If you open two checking accounts, you can boost your maximum ATM withdrawals. Banks set withdrawal limits independent of each other. Say one bank limits you to $100 daily, and the other limits you to $200 daily. You can drive to two ATMs to withdraw $300 total daily.

Finally, you can boost your earnings by transferring some money to the account with a better interest rate. The better your rate, the more you can earn.

Pro: Security

The FDIC insures bank accounts up to $250,000 per bank. Banks are insured separately. By spreading your deposits around multiple checking accounts, you can protect more of your savings. If your bank fails, the FDIC will return your savings up to the limit.

With two savings accounts at separate FDIC-insured banks, you can insure $500,000 worth of deposits. The more bank accounts you open at separate FDIC-insured banks, the more money the FDIC will protect. Owning two bank accounts is a smart way to keep your money safe.

Pro: Organization

You can open two savings accounts to keep money organized. You can designate one account as your emergency fund and the other as your vacation fund. It’s extra work, but it could be worth the effort if it brings you peace of mind.

Tip: Use a bank that offers bucketing to stay organized and keep your bank accounts to a minimum. Bucketing lets you split your money into designated categories without forcing you to open multiple accounts at separate banks.

Con: Hassle

Keeping two bank accounts open can be a hassle. It’s one thing to own a checking and a savings account — those pair together like peanut butter and jelly. They serve different needs. But two checking accounts? That’s where things can get complicated.

Take direct deposits. If you share finances with a partner, you both must decide whether to split deposits between multiple accounts or use one as the main account. Sending money between accounts could take days as deposits settle. In short, owning two bank accounts is a hassle.

Con: Fees

If one or more of your bank accounts charges maintenance fees, you’re paying more than you would with only one account. It’s the most straightforward con on this list. You can also avoid it by sticking to the best savings accounts — most won’t charge you maintenance fees.

Other fees matter, too. Some savings accounts impose account minimums, and these may charge you for leaving too little money in your account. Some checking accounts charge overdraft and insufficient funds fees for overdrawing your account.

The more bank accounts you own, the more fees you must track. Good news: the best checking accounts keep overdraft fees to a minimum or skip them entirely, so there’s that.

Should you own two bank accounts?

Yes, if you’re pairing a checking and savings account. Otherwise, it’s more complicated. If you want greater flexibility and security, opening two accounts of the same type can give you that. To avoid hassle and fees, consider sticking with one account per type.

If you open a second bank account and change your mind, beware of closing the account too soon. Bank accounts sometimes charge early account closure fees of $5 to $50 when you close an account within 90 days of opening it. Keep your account open for a bit longer to avoid paying fees.

You may benefit from owning two or more of the same type of bank accounts. It doesn’t hurt your credit score, and it’s a common practice. Weigh the pros and cons to decide whether owning two or more accounts is right for you.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

“}]] Read More 

CD rates are up right now. But that’s not the main reason why it pays to open a CD. Read on for all the details. [[{“value”:”

It’s not every day that you’re in a situation where you have money to spare after paying your bills — especially these days, given how expensive everyday living expenses have gotten. So when you do have extra funds you don’t need for expenses like rent and groceries, it’s natural to want to use that money to better yourself financially.

In that regard, now could be a great time to open a CD. With CD rates sitting at their highest level in years, you have a prime opportunity to earn a risk-free return on your cash. This assumes that you bank somewhere that’s FDIC insured.

Another thing you should know is that today’s CD rates aren’t going to stick around forever. The reason they’re so strong is that the Fed spent much of 2022 and 2023 hiking up interest rates to battle inflation. But once the Fed moves forward with rate cuts, which is expected to happen at some point in 2024, CD rates are likely to fall in short order. So now’s really the sweet spot for opening a CD.

But don’t just throw money into a CD because rates are up. Rather, do it because that’s what makes sense given your financial goals.

Don’t just chase an impressive rate

With CD rates sitting at or above 5.00% for some products, it’s easy to see why the idea of opening a CD today holds a lot of appeal. But the best reason to open a CD right now isn’t to earn 5% on your money — it’s because a CD fits into your financial plans.

A 5% return sounds really neat — until you realize that over the past 50 years, the stock market’s average annual return has been 10%. And that 10% accounts for both strong years and periods of decline. And while investing in stocks does carry more risk than putting money into a CD, the reality is that when you’re looking at earning twice the return, that risk is easier to cope with.

But investing in stocks isn’t always the right move. And depending on your savings goal and timeline, a CD could make a lot more sense.

If you’re in your 30s or 40s and trying to build a retirement nest egg, then by all means, turn to the stock market. You may be looking at using your money in 20 to 30 years, which gives you plenty of time to ride out a stock market downturn.

But as a general rule, it’s not a good idea to invest money you may need in five years or less. So if that’s the sort of time frame you’re looking at for a particular goal, then a CD may be a better bet.

Imagine you’re saving to buy a home. You’re not sure if that’ll be possible in 2025, 2026, or 2027, but you’re hoping to become a homeowner at some point in the next three years. In that case, investing your down payment funds in stocks is a dangerous move, because if your portfolio loses value, it may not recover for years. But if you open a 12-month CD, you can earn a risk-free return on your money and then have those funds become available in a year’s time to put toward a home purchase.

Think things through before opening a CD

A lot of people you know may be rushing to open CDs right now. Hopefully, that’s the right decision for them. But that doesn’t make it the right decision for you.

You should open a CD if you’re saving for a near- or mid-term goal and want a risk-free return on your money for a limited period of time. Otherwise, consider stocks for long-term goals. And look at a regular savings account if you think you might need money in the very near future, such as for emergency expenses.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

“}]] Read More 

It’s easy to fall into certain credit card traps as a parent. Read on to learn about three you should avoid. [[{“value”:”

When you’re a parent and are dealing with the many expenses that come with raising kids, any free cash you can get your hands on is money you’re apt to appreciate. And so it pays to use cash back credit cards in the right situations. But one thing you don’t want to do is fall victim to these common cash back credit card mistakes that tend to plague parents.

1. Chasing sign-up bonuses

Kids require a lot of stuff. When they’re younger, they need cribs and car seats. When they get a bit older, there’s stuff like bikes and sports team uniforms to purchase. So if you’re going to be spending all that money, you might as well try to snag a credit card sign-up bonus, right?

Well, actually, there’s the potential to spend above your means when you chase a sign-up bonus. If you only need $800 worth of stuff for your kids but you push yourself to spend $1,200 to meet the requirement for a $300 sign-up bonus, you’re not really gaining $300 — if anything, you’re losing $100.

So be careful about going after sign-up bonuses on cash back cards. And don’t assume that you’ll automatically hit a given spending threshold just because you have kids who need stuff.

2. Charging child care expenses on a card for the cash back

Daycare can be a huge expense for parents of young children who aren’t old enough to attend school. In fact, Care.com puts the average weekly cost of daycare at $321 for infants and $293 for toddlers. Oof.

You may be inclined to charge your daycare costs on a cash back credit card to get the free money. But one thing you should know is that many child care centers impose a fee for using a credit card to pay tuition. And the fee you’re charged for using a credit card might exceed the amount of cash back you get.

Before you sign up for this particular payment method, read the fine print. There’s no point in paying for daycare by card for 2% cash back if you’re looking at a 3% surcharge.

3. Only making minimum payments on your credit cards

When you’re juggling different child-related expenses, it’s easy to see how you might get to a place where you can only swing making the minimum payments on your credit cards. But not paying your balance in full each month could cost you in the form of accrued interest.

And be careful with a 0% interest rate credit card, too. If you let a balance accumulate and can’t pay it off in time, you risk getting stuck with a lot of interest once your introductory period comes to an end.

Not only might only making minimum payments result in you having to pay credit card interest, but it could also cause damage to your credit score, making it harder to borrow money affordably in the future. Having a large credit card balance relative to your total credit card limit can drag your score down. So if anything, what you may want to do is redeem your cash back and use it to chip away at your balance any month it starts to rise.

It’s not uncommon for parents to find themselves overworked and overwhelmed. After all, you’re juggling a career, a household, and a gaggle of little humans you’ve pledged to care for indefinitely. But don’t make your life harder by falling victim to these cash back credit card mistakes.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

“}]] Read More 

Michigan drivers have outrageous car insurance rates. Check out a few ways to score premiums more than 70% below the state average. [[{“value”:”

No other state touches Michigan’s average auto insurance rates, which last year reached a painful $5,766 annually. With premiums this high, it’s not surprising that close to 20% of Michigan drivers risk fines and jail time just to save themselves a huge expense.

But believe it or not, there are some Michigan drivers that pay less than $1,700 per year for coverage. Here’s how.

Check these three boxes to get Michigan car insurance for less than $160 a month

Our data shows that Michigan drivers who do the following three things have an average car insurance premium of $136.92 per month.

1. Maintain a clean driving record

Those with clean records receive lower rates because they’re perceived to be safer drivers. Those with histories of accidents, speeding tickets, or DUIs pay significantly more. The table below breaks down the difference in average monthly premiums for Michigan drivers based on their driving record.

Drivers with multiple negative marks on their driving records could face even higher rate increases. But this isn’t forever. Over time, accidents and tickets have smaller effects on premiums until they eventually stop affecting rates at all.

2. Have excellent credit

Credit might seem unrelated to safe driving, but insurers argue that there’s a link between someone taking risks with borrowed money and taking risks behind the wheel. In Michigan, the rewards for maintaining an excellent credit score are pretty substantial. Here’s a look at the difference in average monthly premiums for drivers with excellent and poor credit.

Some car insurance companies penalize drivers for poor credit more than others, which is why it’s important for drivers to get quotes from multiple companies before deciding which to work with. But those hoping to secure a lower premium may want to think about building a good credit history as well.

This takes time because your credit score is designed to provide a long-term look at how you’ve handled borrowed money in the past. But it’s worth the investment; a higher credit score also opens the door to better credit cards and lower interest rates on loans.

3. Have a bachelor’s degree

Higher education levels are also associated with less risky driving behavior. As with credit history, this is likely an overgeneralization. There are plenty of bad drivers with PhDs and a lot of great drivers with only a high school diploma. Nevertheless, those with at least a bachelor’s degree can save big on Michigan car insurance.

This probably isn’t reason enough for someone to go out and obtain a bachelor’s degree if it isn’t part of their career plan. But those who choose to pursue higher education should definitely notify their auto insurer once they get their degree to take advantage of these savings.

Putting it all together

Drivers can benefit from more than one of the factors above. In fact, stacking them together results in the biggest savings. The table below outlines how various combinations of the above factors affect the average Michigan car insurance premium, for better or for worse.

It’s natural for drivers facing high premiums due to the factors listed above to feel discouraged. But remember that every company weighs risk differently. Finding rates under $140 per month might not be possible for everyone, but there are companies willing to cut drivers more slack for having poor credit or a few dings on their driving record. Getting quotes from at least three to five companies before buying a policy gives drivers the best chance of finding a rate they can easily fit into their budget.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

“}]] Read More 

You can grow a lot of wealth over time even if you don’t make a ton of money. Read on to see how. [[{“value”:”

As of 2023, there were 5.3 million people in the U.S. who had enough wealth to be considered millionaires. But it’s rash to assume that most of those people attained millionaire status through high earnings year after year. In fact, you should know that it’s possible to eventually become a millionaire even if you’re a fairly low earner.

If you adopt these essential habits, you may be shocked — in a good way — by how much wealth you’re able to accumulate over time.

1. Not spending your entire paycheck

It’s easier to not spend your paycheck in its entirety when you’re earning $80,000 a year compared to $40,000. But if you make a point to reserve even a small portion of each paycheck for the future, you can eventually build up your savings.

One thing it might help to do is play around with different budgeting apps until you find one you’re comfortable using. From there, you can use that app to help prioritize your expenses and free up a small amount of money to save.

2. Automating savings contributions

Many people contribute to a savings account at the end of the month, after they’ve paid all of their bills. A smarter bet may be to send money into your savings, or into another account, at the start of the month, before you’ve started to spend your wages.

Once you have a budget going, you can get a sense of how much money you’re not spending each month. You can then set up an automatic transfer in that amount, so the money lands in your savings at the start of the month — before you’re able to spend it.

3. Investing

Investing money for the future is something you should really only do once you have a complete emergency fund. But if you’re willing to invest in stocks, you can potentially turn a series of small contributions to a brokerage account or IRA into a large sum over time.

Let’s say you begin investing $100 a month at age 22. Over the past 50 years, the stock market’s average annual return, accounting for both good years and bad, has been 10%. If your investment portfolio delivers that same return, you’ll end up with a little more than $1 million by age 69.

And don’t worry if you don’t know a ton about investing. The aforementioned 10% stock market return is based on the performance of the S&P 500 index. You can buy S&P 500 index funds or ETFs (exchange-traded funds) for your portfolio if you’re not sure which individual stocks to buy.

Let’s get one thing straight. Becoming a millionaire isn’t necessarily easy on a lower salary. Heck, it’s not that easy on a high income, either.

The point, however, is that it’s a possibility, and one you shouldn’t write off. And if you make a point to not spend all of your earnings, automate your savings, and invest, you may end up with a lot more money to your name than you ever could have imagined.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

“}]] Read More 

This writer refuses to sink a penny more into her home for renovation purposes. Read on to find out why. [[{“value”:”

Recently, a friend of mine reached out to ask for the name of the company we used to finish our basement five or so years ago. We got into the topic of home improvements, and she asked whether I had any projects on the horizon.

My answer? An emphatic no.

Since I’ve already done several home improvement projects, I don’t have any high-priority ones on my list. Are there smaller things about my home I might want to change? Sure. But I’ve already made the big improvements. So I don’t feel the need to dip into my savings account and spend on home improvements that won’t really add much to my quality of life.

But that’s not the only reason I’m no longer planning to make home improvements. I also don’t think it will be necessary for the purpose of selling my home, and I don’t want to make my property taxes an even bigger financial burden.

My home is likely to sell as-is

Investing in home improvements is a great way to make your home more marketable. In some cases, it could be worth it to sink $40,000 into a kitchen remodel if that spells the difference between getting a decent price for your home and getting seriously lowballed.

But a big reason I’m not doing more home improvements is that property values have soared where I live. These days, homes are easily selling for 30% more than they were a few years ago — without improvements. So the way I see it, why should I spend money to increase my home’s resale value when I can already sell it for a lot more than what I paid?

RELATED: Today’s Mortgage Rates

And it’s not just my area where home values have taken off. During the first quarter of 2014, the median U.S. home sold for $275,200. During the first quarter of the current year, the median property sold for $420,800. So chances are, I’m not the only homeowner who doesn’t need to pay for improvements to get a higher sale price.

I don’t want my property tax bill to increase

I live in a state where property taxes are expensive to begin with — some of the highest in the country, in fact. My town also has one of the higher tax rates in my county. Because of this, many people in my town pay more in property taxes than for their actual mortgage. Making matters worse is that homes are assessed in my town once every year. This means that your property tax bill has the potential to increase every single year.

Often, making notable home improvements will result in a property tax increase. You won’t necessarily see this happen if you replace the blinds in your dining room with nicer ones. But an obvious improvement, like renovating your kitchen, will have an impact.

Because I already pay such a fortune for property taxes each year, I don’t want to do anything to cause that bill to increase, so I won’t make major improvements to my home.

Think carefully before improving your home

If you’re planning to make home improvements, you clearly know to budget for the cost of the work itself. But think about the hidden cost — a higher property tax bill — before moving forward with renovations.

Ultimately, if there’s an improvement to be made to your home that could enhance your quality of life, then it could be worth the cost and property tax hike. But that’s not my situation. I’m fairly happy with my home, so while I’m willing to pay for repairs, I’m not planning to do anything to make my home nicer for the foreseeable future.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

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.

“}]] Read More