Money Management

Auto insurance can be a drain on your finances. Here’s what to do if you’re having a hard time keeping up with the cost. [[{“value”:”

The average yearly cost of a car insurance policy is $1,547, according to U.S. News & World Report. But the cost of auto insurance can hinge on several factors. These include where you live, the type of car you have, and your driving history.

It’s not unheard of for the cost of car insurance to rise over time. So if you’re at the point where you’re really struggling to keep up with your premiums, here’s what to do.

1. See if there’s a low mileage discount available to you

A lot of people are putting fewer miles on their cars these days now that remote work is so prevalent. If you largely do your job from home, it pays to let your insurer know how little you’re driving. You may be eligible for a low mileage discount that reduces the cost of your premiums.

What’s more, some auto insurers offer pay-per-mile programs where your costs hinge on the amount of miles you drive. With these policies, there’s always a base price to pay, so you’ll need to run the numbers to see if it makes sense to pay on a per-mile basis. To be clear, these programs differ from a low mileage discount, so it makes sense to ask about both.

2. Shop around for rates from different auto insurers

Maybe you’ve been driving for 10 years and have used the same auto insurance company since getting your license. Unfortunately, you may not be rewarded for your loyalty in the form of lower rates. It pays to shop around with different insurers if your costs keep rising, even if you’ve used the same company for many years.

Perhaps you’re also currently bundling your auto and homeowners insurance policies. Often, that does result in savings. But it’s also not a given. So if your rates keep rising, go out and get quotes to see if there’s a better deal to be had.

3. Decide whether it’s worth it to even have a car

If you’re struggling to keep up with your auto insurance and the cost of owning a car in general, then it may be time to ask yourself whether it pays to keep your vehicle or unload it. If you live deep in the heart of suburbia, it may not be feasible to go without a car. But if you’re in a smaller city with public transportation, or right outside of one with reasonable bus access, then it may be doable.

Let’s say it currently costs you $800 a month to own a car between your auto loan payments, insurance, gas, and maintenance costs. If you find that you really only use your car a couple of times a week, you may be able to get by with a combination of taking the bus and hailing rideshares. And while you might need your car to load up at the supermarket, you might save more by unloading your car and paying up for grocery delivery.

In fact, let’s say that in the absence of your car, you end up having to spend $40 a month on bus fare, $200 a month on rideshares, and $80 extra to have your supermarket haul delivered to your door. That’s an extra $320 in total, which is less than the $800 you were previously spending.

You shouldn’t expect auto insurance to be a negligible expense. But if your costs keep rising, seek out a low mileage discount if you don’t drive often and shop around with different insurers. And don’t assume that keeping your car is an absolute must, either.

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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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Opening a savings account before you go off to college can help build a lifelong habit. Keep reading to learn what to consider when you’re a beginning saver. [[{“value”:”

Finishing high school and knowing that college is in your future is so exciting. Your world is full of possibilities, and while you might not be financially independent from your family yet, your college years are a great time to start breaking away and becoming a full-fledged adult. Savvy grown-ups know that a high-yield savings account (also known as a HYSA) is one of the best financial assets you can have, because you’ve got a safe place to keep cash and it’ll even earn interest.

Right now, the average rate across all savings accounts is just 0.47%, according to the FDIC — but some HYSAs pay you 10 times that or more on your money! Here are a few ways to maximize your HYSA starting this year — and into the future.

1. Set goals for your money

Call me strange (you won’t be the first person to do so), but I enjoy putting money in my savings account because it gives me the chance to dream about what I’m going to do with it. My account helps feed this urge, too, because it came with the ability to set up multiple sub-savings accounts (depending on your bank, these might be called “buckets,” “pockets,” or something else). This means I can earn the same high APY (annual percentage yield) across all my saved cash, no matter what I’m saving it for.

To maximize your HYSA, I recommend finding an account that lets you do the same. Having separate parts of your savings account for different goals means it’s easy to check your progress toward them. And creating those goals can be a powerful impetus to save more money — there’s really nothing like watching those balances grow.

2. Earmark some for emergencies

Yes, I know I said above that having goals and plans for your savings is incredibly important if you’re hoping to save effectively. Well, one particular goal is important enough to deserve its own number on this list — an emergency fund. You might assume emergency savings are less crucial for you as a college student, since you’re not quite at the mercy of the world yet — in a real pinch, you likely have parents or other relatives to rely on for help with a surprise bill.

But the sooner you get in the habit of maintaining an emergency fund, the better off you’ll be in the future, when you’re ideally standing on your own two feet from a financial perspective. Living paycheck to paycheck stinks, and it’s expensive.

If you don’t have the funds available to cover an unplanned expense (like a car repair or a trip to urgent care that your insurance doesn’t pay for in full), you may not have options besides taking on high-interest debt. What’s worse than a $1,000 bill from the auto mechanic? Knowing you’ll be paying 20% interest (or higher) on it when you have to charge it to a credit card.

3. Make it automatic

A high-yield savings account won’t do you much good if you’re not putting money into it. This is why it’s great that you can automate savings contributions. Set a monthly savings goal for yourself (or make it for as often as you want — perhaps when you get paid from your on-campus job?), and set up automatic transfers from your checking account to your savings.

This’ll be easier and faster if the two accounts are at the same bank, but even if they’re not, it’s still worth doing. This way, some of your money will always land in savings, without you needing to actively move it there. A higher savings account balance (and more interest earnings) will be your reward for making this simple move.

Another good option, if it’s available to you, is to sign up for automatic “round-ups” or “keep the change” programs with your bank. If you opt in, the money you spend from your checking account will be rounded up to the nearest dollar and the difference goes to your savings. For example, if you put a pizza bill for $18.22 on your debit card, $19 will be taken out and $0.78 will land in your savings account. It’s a pretty great way to ensure a small amount of money is always being funneled to savings.

If you’re headed off to college in the fall, you’ve likely got a million things on your mind. Who will your roommate be (and will they help you keep the room clean)? What classes will you take? Maximizing your high-yield savings account is perhaps at the bottom of your list. But if you’ve got these moves on your radar and can put some into practice, you can ensure you start adult life on the right financial foot. And trust me when I say that’s worth it.

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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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There are lots of myths and misconceptions about flying business class. Learn about the most common ones so you don’t fall for them. [[{“value”:”

For many travelers, the business-class cabin has an air of mystery to it. It’s curtained off, and when you’re flying economy, you only get the occasional glimpse of it. It’s supposed to be luxurious, but what’s it really like?

People often share stories and rumors about flying business class. The problem is that much of what gets shared is completely inaccurate. While this is sometimes harmless, it can cause issues if you’d like to book business class and want to learn more about it first. Since I’ve flown this way quite a bit, I’m going to dispel the biggest lies I’ve seen about it.

1. The business-class lounge and cabin are good places to make connections

I once read that when you fly business class, the airport lounge and cabin are perfect for networking. Just start chatting with the person sitting next to you, and you could have your next “valuable business contact.”

Maybe I’m just not hustling enough, but I’ve never felt the urge to start chatting with my fellow passengers. In many business-class cabins, part of the appeal is the privacy. You get your own enclosed seat area where you can watch a movie, read, or sleep in peace — without another passenger pitching their app to you.

While airport lounges are better for socializing, it’s still not exactly a big cocktail party. People are there to relax, and they usually stick to chatting with their own group.

2. You should dress the part

This dubious tip gets shared often. It’s business class, so apparently, you should dress to impress with an outfit that is at least business casual.

The business-class cabin is not a nightclub. There’s no special dress code, nor is there a doorman who won’t let you enter because you’re in leisurewear. It’s up to you. On long flights where I want to sleep, I usually wear joggers and a t-shirt. Comfort is my priority, not impressing people I’m never going to see again.

Some people suggest dressing well for your flight, and then changing to more comfortable clothes after you board. But an airplane bathroom usually isn’t the best place for an outfit swap. Even in business class, the bathrooms aren’t that spacious.

By the way, another related rumor is that you’re more likely to get upgraded if you’re well-dressed. Maybe in 1985, but that’s not how upgrades work now. Airlines sell upgrades first before giving them away. And when they give them away, they have an upgrade list based on everyone’s frequent flyer status. Having elite status matters a whole lot more than what you’re wearing.

3. You need to be rich to fly business class

At first glance, business-class prices may give you sticker shock. Normal business-class airfare to much of the world costs upward of $4,000, according to travel deals site Going. If you’re not a big earner, that’s a lot to spend on a plane ticket.

But you don’t need to pay those kinds of prices. I’ve been flying business class for years, and I’ve never paid anywhere near that much for a ticket. Instead of paying full price, I almost always pay in miles that I’ve earned using travel credit cards.

It’s also possible to find lower cash prices if you’re flexible and you shop around for deals. And there are flight deal subscriptions that will do the deal shopping for you. Going is one of them. For a yearly subscription fee, it will send you business-class flight deals out of your home airport.

4. It always has lie-flat seats

A lot of people associate business class with lie-flat seating, where you can turn your seat into a bed. While this is a common feature, not every business-class cabin offers it.

On shorter flights, business class normally has large recliner-style seats, like what you see in first class on domestic flights. Long-haul flights normally have lie-flat seats, but not always. Some airlines only offer recliner-style seats in business class, even on long flights.

You can find out what an airline offers in business class on its website. Airlines also usually let you know what type of seating you’ll get as you book your ticket. Another resource I like using for this is SeatGuru. You can plug in the airline and flight number for the flight you’re interested in, and SeatGuru will show you the seating configuration and the types of seats offered.

Business class is an amazing way to travel. If you’re interested in it, I’d recommend looking into credit cards that earn travel rewards so you can use points and book it at a lower cost. Make sure to check what type of seating you’ll get before you buy your ticket, and definitely don’t believe everything you hear about what to wear or making connections with your fellow passengers.

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

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Are you considering opening a business bank account for your freelance services? Affordable banking options exist. Here’s what to look for and what to avoid. [[{“value”:”

As a freelancer, you’re a busy business owner. One way to set your business up for success in the early days is by getting your business finances in order. Using business banking products is an excellent way to keep your personal finances and business financial matters separate for better organization.

You may wonder how to choose affordable business banking solutions for your freelance services. I’ll share a few tips to guide you in this important decision.

Research all fees (and read the fine print)

Before opening a business bank account, ensure you understand all the fees. A bank account may be advertised as free, but hidden fees could exist. For example, you may be required to maintain a minimum account balance to be eligible for no monthly maintenance fees.

Other fees to consider are out-of-network ATM fees if the bank isn’t local to you. Some banks offer to reimburse out-of-network ATM fees up to a specific monthly limit. Every fee charged adds up and impacts your finances. Before opening an account, carefully research fees and read the fine print. Otherwise, you may be in for an expensive surprise.

Review deposit and transaction limits

Here’s another warning about potential fees. Some business bank accounts have cash deposit limits or transaction limits. You may be charged fees if you make additional deposits beyond the limit or have too many transactions within a set period. But not all bank accounts have limits like this. Compare offerings so you can choose the best bank and bank account for your needs.

Review other financial products and services

Before settling on a specific bank or bank account for your business, you should review the other banking products the bank offers. Do they offer competitive financing on loans? What kind of business credit cards do they have? Even if you’re only looking for a checking account or savings account, there may come a time when you need other financial products and services.

Consider community banks and credit unions

If a larger bank has a business checking account or savings account that meets your needs, fabulous. But don’t assume that’s the only option. If you seek affordable business banking solutions, you may want to consider products offered by community banks and credit unions. You may benefit from lower fees and better customer service with these institutions.

Compare interest rates for savings products

With a bank account that earns interest, you can earn money while your cash sits in the bank. Any extra money earned is a win for your small business. If you plan to open a savings account, review interest rates. A savings account with a higher rate could benefit your account balance. It’s also wise to monitor rates after opening a savings account because banks can adjust rates.

Business banking solutions can benefit your freelance business

It may seem like your personal checking account is more than enough for your freelancing business. But, combining your personal finances and business finances can get confusing.

Plus, it can make collecting essential accounting and tax information more difficult, which could cause added stress. That’s why having separate business bank accounts is best. For additional tips related to business and freelance finances, check out our small business resources.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

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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Rewards credit cards can help you earn points or miles. Keep reading for an error that could see you end up with a mound of debt. [[{“value”:”

Rewards credit cards earn points, miles, or cash rewards on your everyday purchases. They can be a simple way to put money back into your budget, especially when your card rewards you for purchases you’re already spending money on, like groceries or gas.

But rewards credit cards have a dark side. Though they can be instrumental in saving you money, they come with high annual percentage rates (APRs) that could trap you in a spiral of debt. The average credit card interest rate for rewards cards is 24.57%, according to LendingTree. If you had the average credit card debt ($6,501, according to The Motley Fool Ascent), you would pay about $1,135 in interest if you were making $500 monthly payments over 15 months.

But herein lies the single worst mistake you can make with rewards credit cards. While paying $500 on this debt would mean paying it off in less than 1.5 years, credit card companies may not require you to make a payment this high. In fact, if you’re not careful, you could fall into a common trap — paying the minimum on your credit card.

Paying the minimum keeps you in debt for longer

A credit card minimum payment is the smallest amount you’re obligated to pay each billing cycle to remain in good standing on the account. Paying the minimum means you can avoid late penalties, as well as protect your credit from delinquency. It’s also the slowest way to pay your credit card bill and could result in paying a hefty amount in interest.

For example, let’s say you had a balance of $6,501 on a rewards credit card with an APR of 24% and a minimum payment that’s 2.5% of the balance. If you only paid the minimum amount, it would take you 557 months to pay off your balance — that’s more than 46 years. You would also pay over $24,000 in credit card interest during that time, or more than three times what you originally charged.

But what about a lower credit card balance? What if you owed $1,000 instead of $6,501? And what if your minimum was 1% of your balance, not 2.5%? In this case, your total interest payment would still be greater than the original charge. Paying the minimum on a $1,000 debt with a 24% APR would take you 125 months to pay off the balance, incurring $1,332 of interest within that time.

How to start paying more than the minimum

Paying the minimum on your rewards credit card can wreak havoc on your personal finance goals, and you don’t deserve that. And while it can be tough to tackle a mountain of credit card debt, there is help if you need it.

One potential way to reduce your credit card debt is to take advantage of a 0% APR credit card offer. These credit cards will typically let you transfer a balance from a high-interest credit card to one with an introductory period of no interest. You can then use the money you’re saving on interest to pay down your balance faster. Once the period of 0% interest ends, however, the card’s go-to APR will apply to your balance. You’ll also pay a balance transfer fee, which could be 3%-5% of the amount you’re transferring.

In the meantime, stick to using cash or a debit card as you work to pay down your debt. Adding more to your balance will only increase how much interest you’ll pay in the long run, making it more difficult to pay it off. Keep yourself on a budget and save those rewards credit cards for a later time, when you can enjoy their perks without the costly consequences.

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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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If you don’t have enough saved for travel, you may be considering a vacation loan. Find out why this isn’t a good idea and how it can cost you. [[{“value”:”

The cost of travel is one of the most common reasons people don’t do it as much as they’d like. Over one-quarter (28%) of travelers said that a lack of money was the reason they couldn’t travel as much as they wanted last year, according to a report by Going.

Enter the vacation loan. As the name suggests, it’s a loan you use to take a vacation. People typically get personal loans for this, because they can be used for almost anything.

I understand the desire to avoid missing out on travel opportunities. But a vacation loan isn’t the solution, for several reasons.

1. Financial stress could weigh on your vacation

Some people think they’ll be able to put financial worries out of sight, out of mind while on vacation. Maybe you can, but it’s more likely that those issues will continue being a source of stress.

You could find yourself constantly wondering: Can I afford this activity, a meal at this restaurant, that souvenir? What am I going to do when I get home? It’s hard to fully enjoy your vacation when you know you can’t afford it.

2. There are probably alternatives that don’t involve going into debt

If you’re looking at it like you either get a vacation loan or don’t travel, it’s easy to make the case for a loan. But you almost certainly have more options than that.

What about taking a cheaper vacation this time around? You could pick a place closer to home, maybe even take a road trip instead of flying. Or, you could see where the best deals are with an “everywhere” flight search, a helpful trick that 1 in 2 travelers use to find cheap destinations.

Another option is to postpone your vacation and spend some time saving so you can pay for it in full. Set up a high-yield savings account as your travel fund and deposit money there every month. If you save $300 per month, then after five months, you’ll have $1,500.

3. The loan will last a lot longer than the vacation

Before you get a loan, it’s always worth considering the future implications. You’ll be committing to a monthly payment for as long as your loan lasts. The shortest personal loans are typically six months, and depending on how much you borrow, you may need to go with a 12-month loan.

Those loan payments could slow down other money goals, such as building your savings or contributing to your retirement accounts. And a vacation loan isn’t like an auto loan or a mortgage, where you’re making payments on something with long-term benefits. Vacations generally last from several days to a week or two. You may not be nearly as happy that you have a vacation loan four months later when that trip is no longer at the forefront of your mind.

4. It’s a want, not a need

This is a cliche, but it’s true. A vacation every now and then is important, but it’s not a necessity. It’s a luxury.

When you start borrowing money for things you want, it can quickly become a habit, and habits are hard to break. You’re probably not going to want just one vacation. You’ll enjoy it, pay off your vacation loan over the next six to 12 months, and be in the same position as before. You’ll want to travel again, but you won’t have the money for it, because it was tied up making loan payments.

5. Interest rates are high right now

Vacation loans are much more expensive than they used to be. The average rate on a 24-month loan is 12.49%, according to the Federal Reserve. That’s the highest it has been since 2007.

Now, it wouldn’t be a great idea to get a vacation loan even if rates were low. The argument that a vacation is a want, and not a need would still apply. But the current rates mean you’ll pay more overall, and they’ll make it especially costly if you borrow a large loan.

A better way to pay for a vacation

Even though it can be easy to borrow money, it’s not a decision to take lightly. With vacation loans, the cons far outweigh the pros. Here’s what you can do instead:

Make vacations one of your savings goals. Set up a travel savings fund and transfer money to it every month.Estimate how much a vacation will cost before you go so you can ensure you have enough. Make sure to factor in all your expected expenses, including things like meals and activities.Consider opening a travel card. There are lots of travel credit cards that earn rewards you can redeem to cover your travel costs.

It takes a little longer than applying for a vacation loan. But travel is much more enjoyable when you can do it without going into debt.

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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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