Money Management

Costco has some big downsides, including costlier memberships than its competitors. Here’s what you need to know before joining. [[{“value”:”

Costco has a huge following because the warehouse club provides high-quality items at discounted prices that let members keep more money in their bank accounts.

However, it’s not the right warehouse club for everyone. Before you sign up for a Costco membership, consider these three serious downsides.

1. It’s more expensive than Sam’s Club or BJ’s

The first big downside to Costco membership is the high cost of joining. The entry level Gold Star membership will cost you $60 a year, while the upgraded Executive Membership is $120.

By contrast, Sam’s Club charges $50 annually for its base Club membership and $110 for a Plus membership. And BJ’s is $55 annually for a Club Card membership and $110 for its upgraded Club+ Card membership.

Now, paying $5 or $10 extra to join a warehouse club may not seem like that big of a deal, but it can add up if you remain a member for years. Plus, if Sam’s Club or BJ’s offer similar pricing on the products you tend to buy most, and are located near to you too, there’s no real reason for you to pay the additional membership costs just to get your hands on a Costco membership card.

2. Online prices are higher than in-club prices

There’s another big downside to Costco that could be especially painful to some people who prefer to shop online from the comfort of home rather than going into the club. Costco.com charges higher prices than the deals you can get in the warehouse.

The exact difference varies depending on what you buy, but if you shop online regularly, paying even a $1 or $2 more for each item can eat up any savings that Costco membership would provide. Costco’s online prices are higher to account for shipping and handling costs.

Sam’s Club and BJ’s, by contrast, don’t charge higher prices for online purchases.

3. Perks of the upgraded membership aren’t that great

If you’re hoping for an upgraded membership, Costco may also disappoint.

It’s true that the Costco Executive membership provides you with 2% cash back on purchases, but you won’t get this reward until close to your annual renewal, while Sam’s Club’s Plus membership awards the 2% cash back monthly. And BJ’s 2% cash back rewards can be redeemed once you have a $10 balance.

Beyond the cash back, though, Costco’s added perks aren’t really impressive and include things you may not care about like extra discounts on auto insurance and water delivery. Sam’s Club, on the other hand, has better benefits like early shopping hours, early tire and battery service, and extra discounts on prescription drugs and eyeglasses. BJ’s offers its Club+ members an extra $0.05 off per gallon of gas.

Before you sign up for Costco, you need to consider all of these disadvantages. Now, you may decide that you still love what Costco offers and are still more than willing to put those membership fees on your credit card to join.

But, you don’t want to go in blind and end up disappointed that you made the wrong choice when other warehouse clubs offer some definite advantages over what Costco has on offer.

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.Christy Bieber 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.

“}]] Read More 

Millions of Americans start new businesses each year. Take a look at 10 tips to ensure your business gets off to a good start. [[{“value”:”

Early in the pandemic, it was clear that the world was about to change. One thing that shifted was the number of people who began going into business for themselves. In 2023 alone, a record-breaking 5,481,437 new businesses were formed. Each new business owner may feel as though they have about a million things to get done, but when it comes to setting up business finances, there are only 10 they need to concentrate on.

1. Have a financial plan

It’s nearly impossible to run a small business without a plan outlining how you plan to handle your finances. This includes everything from invoicing and taxes to purchasing and inventory.

Your business plan doesn’t have to be set in stone. Just make sure you have an idea — based on what you know now — of how you would like to handle your business’s finances. You can always refine your plan as you become more familiar with how it all works.

2. Come up with a budget

Just as you create a household budget, create a business budget you can stick with. Again, this plan is likely to change as you learn how much money your business takes in and pays out each month. But it’s still important to have a general idea of what to expect.

3. Prioritize tax payments

No budget is complete until tax payments have been factored in. Most businesses submit estimated tax payments quarterly, based on their earnings for that quarter. Failing to make quarterly payments can lead to penalties at tax time. To keep it simple, you can set up regular tax payments and budget for it as a standard operating expense.

4. Plan how you’re going to bill

Will customers need to pay as soon as they purchase a product or service, or will they have 30, 60, or 90 days to pay? Understanding your cash flow will help you develop a more accurate budget.

5. Track cash flow

Cash flow is what keeps your business afloat. Make sure you have enough money coming in to pay the bills going out. Proper cash flow is crucial to your business running smoothly.

6. Borrow carefully

If you don’t currently have enough money in a personal savings account to get your business off the ground, you may need to borrow money. While there’s nothing wrong with taking on debt to start a business, the less you borrow, the less stress you’ll have to pay it back.

7. Automate whenever possible

As a business owner, you can expect to be busy. Automating tasks can save you time that can be better spent elsewhere in your business. For example, accounting software can save you hours every month.

As your business gets off the ground, take time to learn more about the kinds of automation services that you can use.

8. Be prepared to grow

Your business requires two things to thrive: determination and a willingness to invest. For example, rather than giving yourself a raise or allowing profits to build up, consider investing some of that money back into the operation to help it grow.

That may mean offering a greater number of goods and services or expanding your territory. It may also mean putting more employees on payroll or improving your business’s infrastructure.

9. Continue to keep track

No matter how many business operations you’ve automated or how much you trust the people you’ve put in charge of accounts and finances, set time aside to go over the books in depth at least once a week. Sit down with your favorite drink and dive into the numbers. Doing so is the best way to spot waste or discrepancies. After all, it’s your business, and you’re ultimately responsible for whatever happens.

10. Keep your eyes on the future

Even if you’re in the first few months of operation, consider what you want your business to look like several years down the road. Do you want the business to be larger and more diversified? Do you hope to operate from a new facility? Are you noticing any broader trends that may impact your business? Keeping one foot in the present and one in the future gives you a better chance of being ready for whatever comes your way.

Owning a business is not easy, but few things are more satisfying. The steps you take from day one can help determine your experiences as a business owner.

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.Dana George has no position in any of the stocks mentioned. The Motley Fool recommends Flow. The Motley Fool has a disclosure policy.

“}]] Read More 

Don’t rush into investing in CDs. Before you do, make sure you’re ready by considering these three questions. [[{“value”:”

There are a lot of great reasons to buy a CD, especially since rates are above 5.00% right now. But you don’t want to rush into opening one before you make absolutely sure that it’s right for you.

To do that, ask yourself these three questions before you consider adding a CD to your list of assets.

1. Can I afford to lock up my money for the CD term?

The first and most important question to ask yourself is whether you can make a commitment to keep your money invested for the required length of time.

When you buy a CD, you must agree to leave your money alone for the duration of the CD term. While there are some one-month CDs, it’s far more common to find terms ranging from three months to five years. So, you’re looking at locking your money up for a while — and potentially as long as half a decade.

If you cash in your CD early, you could face penalties that equal several months interest. This can really add up. In fact, if you cash in too soon, you could wind up walking away with less money than you put in — despite the fact that CDs are usually seen as a risk-free investment since they’re FDIC insured.

Take the time to think very carefully about whether any scenario could cause you to need the money you’re investing sooner than planned. If there’s a realistic possibility you’d have to break your CD before it matures, you’re probably better off putting the money in savings instead (especially as savings accounts are also offering really high yields right now).

2. Have I shopped around for CD rates?

The national average rate on a 6-month CD is 1.57% as of April 15, 2024. But the best 6-month CD rates on The Ascent’s list have APYs above 5.00%.

This huge discrepancy shows just how much variation there can be when it comes to the rate you’re offered on a CD. And since your goal is to earn the highest possible returns, it’s crucial that you shop around before you invest your money.

You should specifically look for high-yield CDs, many of which are offered by online banks. And you should compare factors including the APY, term length, penalties, and how often interest compounds (daily is best). If you don’t check out multiple options to find the best CD rates before you buy, you could leave a lot of money on the table.

3. Would this money be better off in a brokerage account?

Finally, the last big question is whether the money you are investing in a CD would actually be better off in a brokerage account. If you won’t need the funds for at least five years, the reality is that you are most likely going to end up better off if you invest it in the stock market instead of a CD.

You can buy shares of an S&P 500 index fund that comes with pretty low risks and that has very consistently produced 10% average annual returns over the last 50 years — and you don’t need any investing knowledge to do it. This is a better return than even the best CDs offer — with the caveat that past performance is no guarantee of future returns and that this strategy is best employed over the long term.

By making sure you answer these three questions, you can put your money in the best possible place, and maximize the chances of earning the best return on investment available to 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.The Motley Fool has a disclosure policy.

“}]] Read More 

Airline elite status is becoming easier to get each year. Here’s the best — and second best — way to make it happen. [[{“value”:”

Most airlines with rewards or miles programs also have elite status programs. Gaining elite status with an airline can unlock all sorts of valuable benefits, including:

Free checked bagsComplimentary upgradesPriority check-in and securityBonus miles on flightsEarly boardingAirport lounge access

But achieving that status is still one of the hardest tasks in the travel rewards world. This is mostly because frequent flyer status still requires quite a bit of flying — though that’s starting to change.

The best way to earn status is still to fly frequently

As a blanket statement, the very best way to guarantee you earn elite status is to directly book, pay for, and take a lot of flights with the same airline. Typically, this is easier for folks who fly for work, be it paid for by the company or for their own small business.

Each loyalty program will have its own points or miles system (or other “currency”) and a different target number you need to earn to reach each status tier. Generally, you’ll need to spend a certain amount of money with the airline and/or fly a certain number of miles.

There are usually bonuses for booking higher fare classes. For example, international business class flights will usually get you to a higher status tier faster than short basic economy jaunts.

Second best way: Airline credit cards

Folks who love travel rewards cards will be glad to see that it’s getting easier to earn airline status without traveling like it’s your job. Many cobranded airline cards are starting to include ways to boost your elite status journey.

Earning American Airlines elite status without flying

The currency you need to earn American Airlines (AA) elite status is called Loyalty Points. AAdvantage Gold status — the lowest elite status tier — requires 40,000 Loyalty Points.

Most American Airlines cobranded credit cards earn 1 Loyalty Point per $1 spent on purchases. So, spending $40,000 on your eligible AA rewards card would get you Gold status. But there’s no cap on how many Loyalty Points you can earn with your cards. So you could potentially spend $200,000 and reach the top AAdvantage Executive Platinum status which requires 200,000 Loyalty Points.

This may be particularly interesting for business owners, because you can get AAdvantage cobranded small business credit cards. If you can put a lot of business expenses on your card, you could earn elite status even if you don’t need to travel a lot for your business.

Earning United elite status without flying

There are two paths to earning elite United Premier status:

Obtain both PQF (Premier qualifying flights) and PQP (Premier qualifying points), or;Obtain a higher number of PQP

In layman’s terms, PQF refers to the flight segments, or how many miles you spend in the air on United flights. PQP is basically just how much money you give United to purchase flights, upgrades, and seat assignments.

Multiple United cobranded credit cards can earn PQP based on your credit card spend. Specifically, eligible cards earn 25 PQP per $500 in card purchases. At this rate, you would need to spend $100,000 to earn the 5,000 PQP you need for the bottom-tier United Premier Silver status.

One thing to keep in mind is that United credit cards have caps on how many PQP you can earn. The more expensive the card, the higher the cap. United’s top-tier cobranded card is capped at 10,000 PQP per year.

Earning Delta elite status without flying

Early in 2024, Delta changed the requirements for Medallion status to a single spend-based currency: Medallion Qualification Dollars (MQD). This means you can now spend your way to Delta Medallion status with your Delta cobranded cards.

First, eligible cardholders can get an MQD Headstart in the form of $2,500 MQDs each year just for being a cardholder. (Note this only applies to the expensive top-tier personal and business cards.)

Plus, most Delta cobranded cardholders will also have a way to earn an MQD Boost through card spend. Depending on your card, you may earn $1 MQD per $20 spent, or $1 MQD per $10 spent on your card. (The latter applies to, you guessed it, the cards with the most expensive annual fees.)

Reaching Medallion Silver status requires $5,000 MQDs. So, assuming you have an eligible card, you could potentially get the $2,500 Headstart then spend $25,000 on your card to reach Silver status.

Consider the opportunity cost

Before you run out and start putting all of your spend on your airline cards, take a minute to consider the cost. (No, I’m not talking about the annual fees — though those are definitely worth consideration; some of these cards cost more than $500 a year!)

I’m talking about the opportunity cost. What are you missing out on if you move your spend to your airline cards instead of using other credit cards?

Although a few airline cards have useful bonus categories, you’re still likely to lose out on a ton of rewards you could earn if you were maximizing those instead. For example, even if your airline card offers you double miles on restaurant purchases, a restaurant rewards card that earns 4X transferable points per dollar is going to blow that airline card out of the water in value.

If you fly enough that airline status would be truly valuable, consider a strategy that involves both flying and spending. This will help you earn status in a more organic way (and without wasting so much rewards potential).

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 

CDs can help your money grow, but you need to choose the right term length. This is how to figure out the right fit. [[{“value”:”

Getting that first $1,000 in investable savings is a good milestone. But now what? Where’s the best place to put that money so it continues to grow for you?

With interest rates so great right now, a CD could be an excellent way to build your savings. Folks who are just getting into CDs will likely want to start with a short-term CD, such as a 6-month or 12-month CD.

Both have similar rates right now, so which one is right for you? Here’s how to decide.

How long can you live without the money?

The money you put into your CD will need to stay there until the CD matures. That takes six months for a 6-month CD and a year for a 12-month CD. If you take the money out before the CD matures, you’ll get hit with a big fee, referred to as an early withdrawal penalty, that could be equal to half of your interest earnings.

To avoid losing your earnings to penalties, really consider if you might need that money before a year is up. If the answer is “yes” — or even just “maybe” — go with the 6-month CD.

If you won’t need the money for a year, the 12-month CD is a good pick. It can sit and grow without you needing to do anything for a full year. It will also keep the same interest rate for the full duration, so if rates go down (which may or may not happen, the Fed is about as clear as mud) your CD won’t be impacted until after it matures.

CD accounts roll over automatically

Even if you decide to go with a 6-month CD, you may not have to actually do anything after the six months are up. That’s because CDs will roll over automatically when they mature.

You can choose to withdraw the money during the rollover grace period if you need it for something. But if you just leave it alone, it will automatically be put into a new 6-month CD at the current rate.

CDs vs. high-yield savings

You may realize that you don’t want to tie up your $1,000 for even six months. In that case, you don’t want a CD. You want to look for a high-yield savings account instead. The best savings accounts available right now offer rates comparable to that of a good CD, so you won’t lose out on much, if any, earning potential.

Now choose the best rate

Once you know how long your CD term should be, you can shop around for a good rate. How much money your CD earns will depend on its interest rate, expressed as the APY (annual percentage yield).

Right now, the national average rate for a 6-month CD is 1.57% and the average rate for a 12-month CD is 1.81%. These are not good rates. Here’s what that looks like in real money on a 6-month CD with a $1,000 deposit:

In contrast, here’s what your earnings could look like if you get a top CD with a competitive rate:

The numbers in the bottom chart are clearly way better than the top chart. Thankfully, you can find a lot of great CDs with rates around the 5.00% range. These rates often come from online-only banks. You may also get good rates from a local credit union.

In the end, it doesn’t really matter whether you go with a 6-month or 12-month CD. Rates are very similar, and 6-month CDs can roll over with no involvement from you. Pick whatever length of CD suits your needs (or forget it and stick with a high-yield savings account — that works, too!).

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 

Paying your credit cards on time can help you avoid repercussions. Find out what happens when you’re late on a credit card and how to avoid it. [[{“value”:”

Credit cards are jam-packed with perks, like cash back rebates and free shopping protections. But they also have their fair share of risks, such as high purchase APRs and late fees. Most credit card users can avoid these risks by paying their balance in full and on time each month, but what happens if you can’t make a credit card payment on time? Is it ever OK to be late?

Generally speaking, it’s prudent to always stay current on your credit card payments, as being late could set up some thorny problems down the road. That said, you don’t have to panic yet, especially if this is your first late payment. Let’s take a look at what happens when you’re late on a credit card payment and how you might remedy the situation.

Late fees will apply (but could be waived)

Most credit card companies charge a late fee for each payment that isn’t made on time. These fees are often between $30 to $41, which can add up if you’re late on the same payment more than once. That said, the Consumer Financial Protection Bureau is currently in the process of capping late fees at $8 for big credit card companies, which could save consumers more than $10 billion each year.

If this is your first late payment on your credit card, you might be able to get the fee waived. Even if you’ve been late on your credit card in the past, you might be able to get it waived if you can show a consistent history of paying on time, say 12 months of on-time payments. Either way, you’ll have to contact your credit card issuer to see if it will waive the fee. Make your payment, call the number on the back of your card, state your case, and then see if it will excuse you for this late payment.

Late payments don’t immediately impact your credit score

Contrary to what many people believe, your credit score doesn’t immediately reflect a late payment. In fact, as long as you make the payment within 30 days after its due date, the late payment won’t show up at all.

In general, credit card companies don’t report late payments to credit bureaus unless the cardholder is more than 30 days late. Some credit card companies may even wait longer than 30 days, though one month is the standard.

If you can’t make the payment before it’s reported late to credit bureaus, your credit score could drop by 100 or so points. What’s more, the longer you take to make the late payment, the more damage your credit score could sustain.

Credit card interest will kick in

Credit card companies give you a grace period before you have to start paying interest, usually 21 days. If you’re late on a credit card payment, however, this grace period ends, and you’ll start to pay interest on your unpaid balance.

Given how high interest rates are right now, your credit card’s APR will work like a high-performing stock investment in reverse. Instead of gaining money daily by compound interest, you’ll owe slightly more each day the balance remains unpaid. Any interest you owe for the day is added to the previous day’s unpaid balance, only to be charged the same APR the following day. As you might guess, this can easily snowball into substantial debt.

To be fair, this APR applies to unpaid balances even if you make the minimum payment before the due date. But if you’re charged a late fee plus ongoing interest, the sting to your finances is even more acute. One solution might be to get an intro 0% APR credit card. You could transfer the balance from a high APR card to a zero-interest one. This could help you save on interest, though you’ll want to pay off the balance before the zero-interest period ends to avoid the same problem in the future.

All things considered it’s always prudent to pay your credit cards on time and, if you can, in full. While your credit score won’t be affected immediately, you’ll pay a fee and start accruing interest. At the very least, consider setting up an automatic payment for the minimum amount that’s due. That way, you can avoid paying late fees and remain in good standing with your credit card company.

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

“}]] Read More