Money Management

Your credit limit could rise by thousands of dollars if you swipe your cards the right way. Find out what happens to your limit when you spend. [[{“value”:”

Credit card issuers put new users on short leashes. My first credit card issuer, Discover®, lent me a measly $500 credit line for my first card — table stakes in the credit card universe. But your credit card limit rarely stays the same. It changes based on how you spend.

In 12 months, Discover extended my credit limit from $500 to $1,500 without any effort on my part. It was automatic. Your credit issuer will likely increase your credit line — assuming you use your card responsibly. Here’s what to expect based on how you spend.

Your credit issuer may boost your credit limit

If you pay your bills on time, your credit issuer may boost your credit limit automatically.

Issuers typically review your status every six to 12 months. If they like what they see, they may extend your line of credit. Over time, boosts add up. My oldest card limit grew from $500 to $9,000 over seven years of fairly consistent use.

If your income goes up, credit issuers may boost your credit limit. The more money you make, the more likely you are to pay off your card, or so the thinking goes. Issuers also consider your debts, how often you use your card, and credit limits on your other cards.

New credit card limits may start out higher

New credit limits may start higher. My first credit card start limit was $500, my second was $2,500, and my third was $7,300. That’s because I’ve established a long history of credit card use, one collected on my credit report. Issuers check these reports when determining limits.

The best way to spiff up a credit report is to pay bills on time and follow other credit score best practices, like using no more than 30% of your total credit limits at any time. The longer and stronger your credit history, the higher your limits.

Your credit issuer may shrink your credit limit

Your credit card issuer may shrink your credit limit if your income goes down, you make late payments, or you increase your credit utilization.

Generally speaking, you want to avoid making late payments. They hurt your credit score, which issuers use to determine your credit limit. It’s best to pay 100% of credit card bills monthly, though it’s better to make minimum payments than late payments.

A high credit utilization ratio (aka: how much credit you’re using) tells card issuers you may be a credit risk. Use no more than 30% of your total credit card limits to keep it low. If you have two credit cards with $5,000 limits each, use at most $3,000 between the two to keep your credit score healthy.

How to ask for a credit limit increase

You can also ask your card issuer for a credit limit increase. Before you do, make sure it’s been at least six to 12 months since opening your credit account or since you last requested a credit limit increase. Otherwise, you’ll probably be denied.

How to manually ask for a credit limit increase:

Call a credit card representative.Ask for a credit limit increase.Provide requested personal information like income, mortgage payments, and desired credit limit.

Some credit card issuers, like Discover, let you request limit increases online or through their app. Others, like Chase, prefer that you call. Have your details handy to save time. If denied, you can typically try again in six to 12 months.

You can increase your credit limit passively by reporting higher income, paying off debt, and paying off credit cards on time. Or you can actively request an increase. Calling a representative may be worthwhile if you think you deserve a higher credit limit.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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You don’t need to be rich to put your money to work. See why a CD is still worth opening even if you don’t have a lot to invest. [[{“value”:”

There’s this impression when it comes to finance that some products are only for people with a lot of money. I hear this about investment accounts a lot, and I’ve even heard it about certificates of deposit (CDs).

I’m here to tell you: Compound interest is for everyone, friends.

With $500 to deposit, you can definitely find a lot of great CDs with competitive rates. Sure, a few will have deposit minimums outside your range, but you still have plenty of options. Furthermore, any amount of money is a good amount to put to work — even if it’s “only” $500.

Even a small CD can generate income

One of the arguments I’ve heard from folks is that you won’t make very much money, so what’s the point? I’ll admit, I do see some of the thought behind this perspective.

If you get a competitive rate, here’s what a 6-month CD can return on a $500 investment:

If you know you can do without that $500 for a full year, here’s what a competitive 12-month CD would earn:

So, yeah, I get it. You may not get very excited about $14 or even about $28.

But guess what? You didn’t have to do jack for that money. It basically made itself. All you had to do was leave your $500 alone, and it paid you $14 to do nothing.

Sock drawers earn 0% APY

To put your options into perspective even more, answer this: How much money are you going to earn from that $500 if it’s just sitting in your sock drawer?

Spoiler: Sock drawers don’t earn interest.

Similarly, you don’t want to leave that money in your checking account. The national average interest rate for a checking account is just 0.08% (and that’s assuming your checking earns interest at all, which isn’t the norm).

Your savings account might not be a great place for the money, either. The national average for those is just 0.46%. Here’s what these numbers look like in terms of your return:

If you weren’t excited about $28 in a year, I bet you’d be really thrilled by that $0.40 you earn from your checking account!

Inflation eats all things

To be really honest, I’m actually being generous by saying your sock drawer’s APY is 0%. In reality, inflation is eating away at your money so much that the sock drawer’s APY is essentially negative.

In other words: Your $500 will actually be worth less than $500 after a year if you leave it in a sock drawer (or low-yield account). You need to at least keep up with the rate of inflation.

If you’re not sold on opening a CD, consider a high-yield savings account instead. Right now, you can find competitive rates comparable to our favorite CDs, plus you can withdraw your money — or deposit additional money — whenever you want.

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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.Brittney Myers 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.

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I used to love shopping at Target. Read on to see why I’ve changed my tune. [[{“value”:”

Target is one of those stores that’s long had a huge following for a reason. From the cute home decor to the delicious snacks, there are many delightful items you’ll find on the shelves at Target.

Target used to be a store I’d visit somewhat often. But these days, it’s rare that I walk into Target. Here’s why I’ve stopped shopping there — at least in person.

1. My local store is a hot mess

The experience of shopping at Target can vary substantially from one location to the next. In recent years, my local Target has gone from being a well-stocked store to one with shelves that are half-bare much of the time. Not only that, but the store is often a mess. So all told, it’s just not a pleasant experience.

If your local Target store has fallen victim to a similar fate, you may have more luck shopping on Target.com. While I’ve stopped going to Target in person, I do sometimes capitalize on the online deals. And generally speaking, the website’s inventory tends to be more extensive.

Also, give other stores in your area a chance if Target hasn’t been meeting your expectations.

Walmart sometimes gets a bad rap for mediocre quality, but I’ve recently gotten some pretty decent buys there. And you might save money on some of the items you’re looking for by purchasing them at a warehouse club store like Costco or Sam’s Club.

2. The store is too crowded

I happen to live in a bit of a Target dead zone in that there’s not a store super close by. Since the closest Target to my home serves a number of towns in my area, the store tends to be pretty crowded. And as someone who doesn’t enjoy navigating crowds, that makes for a bad experience.

In fact, I strategically try to do my in-person shopping at times when the stores I frequent tend to have fewer people. When I shop at Costco, I tend to get there right as the store is opening, which often does the trick. And I tend to shop for groceries at 9:30 a.m. after dropping my kids off at school, or I’ll shop at 9 p.m. because I find the store isn’t as busy at those times as it is in the afternoon or early evening.

If you’re someone who doesn’t enjoy crowds, then it’s important to visit stores strategically like I do, whether it’s at Target or someplace else. If you’re frazzled due to crowded aisles and long checkout lines, you may not be in a position to think through your purchases carefully. That could result in wasted money or forgetting items on your shopping list.

3. The temptation to make impulsive purchases is too strong

Even though the quality of my local Target has declined recently, it’s still Target, which means there’s still ample opportunity to go off-list and make extra purchases that aren’t good for my budget. Also, when I take my kids to Target to buy clothing, which is one of my biggest reasons for shopping there, they pretty much always want to check out other aisles that lead to me purchasing accessories, toys, or other items that weren’t planned.

So now, I basically avoid Target to avoid overspending. I buy my food mostly at a local supermarket and Costco, and when my kids need clothing, I take them to a store that only sells clothing. If I need Target-specific brands (which is rarely the case), I order them online and stay out of the store.

You may love shopping at Target. But if your experience has shifted, you may want to take your business elsewhere. And if you find that you’re constantly making impulsive purchases at Target, you may want to shop for food at a store that only sells groceries, or take similar steps to avoid the temptation to add to your credit card bill.

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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.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Tired of making money for your bank? See how to make money for yourself with a 5.00% APY (or higher) savings account, money market account, or CD. [[{“value”:”

After years of near-zero interest rates on bank savings accounts, Americans are getting more savvy with their cash. Instead of leaving money in an account that pays almost interest, more people are moving money to certificates of deposit (CDs) — recent reporting from Bloomberg shows that the amount of money held in U.S. commercial bank “large CDs” (CDs of $100,000 or more) increased by $615 billion during 2023, reaching a total of $2.26 trillion.

According to FDIC data, the national average savings account is paying only 0.46% interest as of April 15, 2024. And some major banks are still offering savings accounts that only pay 0.01% APY. This is not good enough! You don’t have to settle for zero interest anymore, especially since the Federal Reserve has thus far left interest rates at 5%. You have better choices for where to put your savings — and actually earn yield. And CDs aren’t the only game in town.

Let’s look at a few places where you could put your money instead of a no-yield (or low-yield) bank account.

1. The best savings accounts (up to 5.36% APY)

You don’t have to settle for a bank savings account that pays 1%, 0.46%, or (even worse!) 0.01% APY. The best savings accounts are offering up to 5.36% APY (as of May 3, 2024). For example, if you have $10,000 in a savings account, after one year you’d earn $500 of interest — and your money (up to $250,000) is FDIC-insured, and you can withdraw your cash at any time.

Some people might believe that opening a CD is the best or “only” way to earn higher yield on your savings. This isn’t true. I’m not a big fan of CDs because they force you to lock up your cash for a certain amount of time, and they charge early withdrawal penalties if you need your money sooner than expected. Some of the best savings accounts give you the same yield (or better) than the best CDs, and you have more flexibility for how to access and use your money.

2. The best money market accounts (up to 5.30% APY)

According to Bloomberg, America’s savers also moved $1 trillion of cash into money market accounts during 2023. The best money market accounts are paying up to 5.30% APY (as of May 3, 2024).

Opening a money market account can be a great move for your savings. These accounts function in most of the same ways as a high-yield savings account — you can get your cash out at any time, and your money is FDIC-insured. But money market accounts give you a higher yield than a typical bank account because your cash is invested in low-risk, short-term “money market” securities like government bonds and corporate paper.

Some money market accounts also offer check-writing capabilities or debit card access. This can give you more flexibility for how to use your money. But don’t try to replace your everyday checking account with a money market account; you likely won’t be able to pay bills as efficiently. That’s because money market accounts (like savings accounts) typically have limits on the number of withdrawals you can make per month.

3. The best CDs (up to 5.15% APY)

As of May 3, 2024, some of the best CD rates are offering APYs of up to 5.15%. The exact APY you can get with a CD is based on the bank or credit union’s latest offers, the term of time that you commit your money, and sometimes the amount of cash that you put in.

For example, jumbo CDs (of $100,000 or more) can sometimes earn a higher APY than smaller amounts of deposits. Longer CD terms (like three or five years) might also help you lock in a higher APY if you can commit your cash for that long. Banks and credit unions also sometimes have special offers on CDs for a limited time only, where you can lock in a higher APY than is typically available with those institutions.

Unlike savings accounts and money market accounts, CD rates are fixed — you promise to give the bank your deposits for a certain timeframe, and the bank promises to give you a guaranteed rate of yield. In case the Federal Reserve cuts interest rates in 2024, right now could be a good time to lock in a high APY on a longer-term CD. But no one knows if or when the Fed will actually cut interest rates — so if you want to keep your options open, a savings account or money market account could be a better choice.

Bottom line

Stop letting your money languish in a near-zero-interest bank account. Instead of making money for your bank, let your money make money for you. The best savings accounts, money market accounts, and CDs can give you higher yield on your cash with the safety of FDIC insurance.

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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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