Money Management

Costco puts an upcharge on online orders. But so does Instacart. Here’s how it breaks down. [[{“value”:”

Sure, we all love spending an hour-plus hiking through the ever-changing aisles of Costco just to restock the pantry every month. But for those folks who aren’t such big fans of the endless Costco journey, there are two options: Purchase what you can online through Costco.com, or place an Instacart order and let someone else brave the aisles for you.

Both options are going to cost you more than going yourself. Not only are there markups, but you may pay a delivery fee either way. (And don’t forget to tip your Instacart shopper.)

Taking all that into consideration, which option is actually the best for your budget? As it turns out, it’s not that clear cut.

Instacart prices are an average of 8% cheaper

I took a look at 20 popular Kirkland Signature items on Costco.com and Instacart.com. I was logged into my Costco account, and my Costco account is linked to my Instacart account. I ignored any temporary sales and used only regular prices.

Overall, Instacart items averaged 8% cheaper than Costco.com items. In fact, Costco’s website was only cheaper for 3 out of the 20 items, meaning Instacart was cheaper 85% of the time.

If you purchased everything on the list, you’d save a total of $28.23 buying it though Instacart. Even including delivery and tip, you’d probably still come out ahead, or at last break even.

And Instacart will get it to your door same-day in many cases. Costco.com will take at least two days.

Savings get smaller as carts do

While the numbers above may be convincing, you have to consider the context. Personally, I’m not replacing every single bulk item at the same time once or twice a year. Instead, I tend to stock up in smaller waves, shopping once a month or so to get what we’re going to run out of soon.

On this smaller scale, the savings become less distinct. Take the example below, with a subset of seven items that may more accurately represent a typical purchase.

Here, you’re only paying $5.77 less through Instacart than Costco.com. Once you add in delivery fees and a tip, you’re likely paying a bit more for your Instacart order. But the point about timing stands: You’re getting your order the same day, instead of waiting days or longer.

Delivery costs vary

Some items on Costco.com have delivery costs built into the price. Other items — the “2-Day Delivery” items — require you to order at least $75 in qualifying items or you’ll be charged a $3 delivery fee. However, you don’t have to tip anyone.

Instacart, on the other hand, charges a delivery fee on all orders unless you have an Instacart+ membership. This can cost up to $99 a year, though there are a lot of ways to get it for less. Some credit cards offer it as a perk. Instacart also does lots of promos (at time of writing, I have an offer for $19 for my first year of membership).

Regardless of the delivery fee, though, you need to tip your Instacart shopper. They have to physically shop for and then deliver your order. They earned it.

In the end, shopping in person is always the best value. But if you’re getting Costco items delivered, you can choose whichever method best suits your needs and the cost difference will likely be negligible.

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.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Premium travel cards are often recommended for frequent travelers. Find out about the biggest downside of this type of card before you get one. [[{“value”:”

With a few exceptions, most travel credit cards have annual fees. The fee amount can vary quite a bit. There are lots of travel cards costing under $100. Some are in the $100-to-$300 range. And at the high end, you have the premium travel cards. The creme de la creme, so to speak.

Premium travel cards have the largest annual fees and the most benefits. I’ve been using them for a long time, and I’ve always considered them a good deal if you like to travel.

But to be honest, the features of many of these premium travel cards have been getting worse recently. If you’re thinking about getting one, there’s an increasingly common drawback to know about.

Spending credits of dubious value

Most premium travel credit cards have spending credits to balance out their annual fees. For example, a card may cost $400, but also include up to $300 in annual credits you can use in the card issuer’s travel portal. If you use the full $300, then the card is really only costing you $100 per year.

The problem is that these spending credits are often hard to use — and that’s by design. For a credit card company, it’s great to advertise that a card offers “$750 in annual value” based on all the spending credits it has. It’s even better if the typical cardholder isn’t getting the full $750 in annual value.

For example, one of my hotel credit cards recently raised its annual fee by $55. It also added $200 per year in spending credits for purchases at that hotel’s properties. That’s not a bad tradeoff, right? Except that $200 per year is actually a $50 credit every quarter. I now need to stay at this hotel at least once per quarter to maximize this benefit.

I’ve seen this happen with many of the most expensive travel cards. The card issuer raises the annual fee, and it adds spending credits to soften the blow. Only the spending credits are doled out in quarterly or even monthly increments, so you need to stay on top of them to use them. Or they’re so specific that most cardholders won’t be able to use them.

Pick a travel card that fits your needs

None of this means that getting an expensive travel card is a bad idea. Even after accounting for the annual fees, these cards can help you save money on travel, if you can use their benefits.

That last part is important. Don’t put too much faith in the advertised value of a card. Consider how likely it is that you’ll actually use a card’s benefits. If a card has a $200 airline fee credit, but you’re pretty good at avoiding airline fees already, then you shouldn’t look at that as $200 in value. It’s more likely that you won’t use it, or that you’ll need to force yourself to use it. In either case, you’re not truly saving $200.

Look for a travel card that fits your lifestyle and spending habits. When I’m deciding whether to get a travel card, I’ll go down its list of features and ask myself, “Will I use this?” If I find enough features that I expect to get my money’s worth from the annual fee, then I’ll apply for the card. If I need to think hard about how I’d use its intricate web of spending credits, then I rule it out.

The right travel card will be one with benefits that are easy to use. For example, an airline credit card for an airline you fly with several times per year. Or a travel card with spending credits in places where you already spend money regularly. The goal is to find a card that saves you money on travel and improves your travel experience — not one that makes your life more difficult.

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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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Today’s best 6-month CDs have incredible rates. Before you start counting your plunder, make sure you avoid this common math mistake. [[{“value”:”

If you’re looking at today’s certificates of deposit (CDs) by rate alone, you might notice a trend. Nearly all CDs with the highest rates have short terms, like six months. In fact, if you’re looking at the best 6-month CDs, you’ll see that most pay above 5%, with some even closer to 5.30%. In comparison, 2-year CDs are barely breaking above 4.5%.

That detail might lead you to open a 6-month CD. After all, six months isn’t a lot of time to lock your money up. Plus, if you can earn 5.25% on your money for six months, you could generate a hefty sum by the time your CD matures.

True, the best 6-month CDs have mind-boggling rates. But be careful that you understand how your CD generates interest and what “APY” means. If not, you might be confused at how slowly your CD is earning interest.

Misunderstanding your CD’s APY can lead to unrealistic expectations

Banks list bank accounts (CDs, savings, checking, and money market accounts) by their annual percentage yields (APYs). In a nutshell, the APY is how much interest a bank account will generate within a year. Since CDs earn compound interest, the APY also factors in the interest you’re earning on interest you’ve already earned.

An easy way to understand how CD interest works is to look at a 12-month CD. A 12-month CD with a 5% APY would generate $500 in interest on a $10,000 deposit. This assumes that the account holder doesn’t withdraw interest periodically or liquidate the account before its maturity.

Now, if you’re in a hurry, you might see the 5% APY on a 6-month CD and assume you would calculate it like a 12-month CD. Not so. Because this is an annual percentage yield, you have to calculate your CD’s earnings month by month to arrive at its total returns. Personally, I use CD calculators to do this, since the compound interest makes it cumbersome to work it out on paper. Using a calculator, then, we would see that a 6-month CD with a 5% APY would generate about $247 in interest on a $10,000 deposit.

Your CD may earn even less interest than you think

Another factor to keep in mind is taxes. Like with other savings accounts, you have to pay federal taxes on CD interest that totals $10 or more. What’s more, you have to report CD interest for the tax year in which it was earned, even if the CD has multiple years. So if you had a 5-year CD, you would report the interest generated by the CD for each year until it matures. This is true even if you don’t withdraw the interest.

If you live in a state with income taxes, you have to pay state taxes on your CD interest, too. This could make CDs slightly less lucrative than a Treasury bill with the same rate, as you don’t have to pay state taxes on T-bills.

The only way around the tax liability with a CD is to hold one in a retirement account, like an individual retirement account (IRA). IRAs have the power of tax deferral, meaning you won’t pay taxes on your interest immediately. That said, if you have your IRA at an online broker, you might be limited to brokered CDs, which aren’t the same as bank CDs. Brokered CDs don’t earn compound interest, but they can be sold on a secondary market like bonds.

All things considered, 6-month CDs are still paying out at incredible rates these days. Just make sure you understand how much money your CD is actually generating. No one wants to get to the end of their CD term and think, “Wait, where’s my money?” In the meantime, you can check out some CD rates on our best CDs list and see if another term would suit your goals better.

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

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Most travel credit cards give you lots of ways to use your rewards, but they aren’t all a good deal. Here are the ones you should avoid. [[{“value”:”

It’s exciting to start using travel credit cards. Most of these cards have big welcome bonuses, so it probably won’t take long before you have a large number of points or miles amassed. When you’re ready to redeem those rewards, you’ll have more options to do so than you would with a cash back card.

Here’s the tricky part: They aren’t all good options. Some of the ways you can use your rewards offer far less value than others. If you choose wrong, you won’t get nearly as much from your points. Before you do anything with your travel rewards, you should know about which redemption options to avoid.

1. Paying with points when shopping online

Some travel cards give you the option of using your rewards at checkout with online merchants. For example, you may be able to connect your rewards to Amazon and pay with points there. PayPal is another common option — you may have the option of paying with points at stores that offer PayPal checkout.

This might seem convenient, but it’s a bad deal. Points are typically worth much less this way. For example, with Chase Ultimate Rewards points, you can get $0.0125 to $0.015 per point when you use them for travel bookings, depending on which Chase card you have. At that value, 100,000 points would be worth $1,250 to $1,500.

You can also pay with Chase points at checkout, but you only get a value of $0.008 per point. Those same 100,000 points would be worth $800, so you’d lose $450 to $700 in value.

2. Getting cash back

Most travel cards let you turn your points into cash back as a statement credit on your credit card. Once again, you’re usually giving up value when you do this. For example, with American Express Membership Rewards points, you only get $0.006 per point on cash back redemptions.

If you want to earn cash back by using a credit card, then it’s not a good idea to open a travel card. Check out cash back credit cards instead.

3. Buying merchandise or gift cards

Your travel card’s rewards program may include a shopping portal where you can use your points to buy merchandise, such as Apple products. And most rewards programs give you the option of buying gift cards with your points.

The problem is, you guessed it, value — or lack thereof. This is another type of redemption where you don’t get much for your points. The normal rate is $0.006 to $0.01 per point, depending on the card you have.

4. Transfers to a travel partner before knowing what you want to book

Many of the most popular travel credit cards let you transfer points to airline and hotel partners. For example, Chase points are transferable to over a dozen partners, including United Airlines and Hyatt Hotels.

Transfers are one of the best ways to use travel points. It’s often possible to get $0.02 to $0.03 per point or more this way. I almost exclusively transfer my travel points.

But transfers are irreversible, so you should only transfer your points when you know exactly how you’ll use them. Don’t transfer 50,000 points to United because you think you’ll fly with that airline at some point in the future. Do it if you’ve already found airfare you want to book with United, and it costs 50,000 miles.

5. Hoarding them

Alright, this isn’t exactly a way to redeem travel rewards. It’s the opposite. But it’s worth mentioning, because it’s another common mistake.

Some people are great at earning travel points, but not so great at using them. They either don’t end up traveling all that often, or they want to save those points in hopes of eventually using them for some amazing deal.

Travel rewards don’t do you any good when they’re sitting around unused. It’s not like money in a high-yield savings account earning interest. They’re just points, and they only have value when you use them for travel.

The most important rule: Use your travel rewards for traveling

If there’s one thing to remember, it’s that you’ll get the most out of travel rewards when you use them for travel redemptions. That usually means either using them to book travel through the card issuer’s travel portal or transferring them to travel partners. You can safely ignore non-travel options, such as paying with points at checkout or getting cash back. They won’t get you nearly as much bang for your buck — or in this case, your points.

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.American Express is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, JPMorgan Chase, and PayPal. The Motley Fool recommends Hyatt Hotels and recommends the following options: short June 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.

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