Money Management

If you don’t want to pay an annual fee on a credit card anymore, you may be able to downgrade it. Learn how to do this and when it’s a good idea. [[{“value”:”

A credit card doesn’t need to be a lifetime commitment. And while you can close cards at any time, it’s often better to downgrade them. That’s when you change your current card to one with a smaller annual fee, or no annual fee at all.

I recently did this with two of my credit cards. By downgrading them, I’ll save $645 in annual fees going forward.

Opting out of fees may seem like an obvious decision, but I didn’t mind paying that much money. I saved much more than those cards cost me over the years. So, why’d I get rid of them? Here’s how I decide when to downgrade my cards. If you have any with annual fees, it could help you determine if they’re worth keeping.

These cards weren’t offering enough value anymore

The overall reason why I downgraded these cards is because I realized I was no longer getting enough value to justify their cost. There were a few factors that contributed.

I’ve added other cards with overlapping benefits

I’m a big fan of travel credit cards, so I’ve used quite a few. I like earning bonus points with welcome offers and getting to take advantage of more travel perks. The problem with this is when you end up with the same benefit across multiple cards.

For example, at one point, I had three cards with airport lounge access. I could get into the same lounges with any one of those cards, so having that benefit on three of them didn’t do me any good.

They didn’t have enough unique perks to justify keeping them

I don’t mind having the same benefit across multiple credit cards. You won’t find a card with features that are completely different from what every other card has. If a benefit is popular with consumers, like airport lounge access, multiple credit card companies will add it.

Here’s what I ask myself: Does this card have enough unique perks to outweigh the annual fee? If it does, then I’ll keep it. If not, I’ll downgrade it.

For example, one of my hotel credit cards includes an annual free night certificate and elite status with that hotel. Those are both valuable perks I don’t get anywhere else, so that card is a keeper. But if the only unique perk a card has is an extra 1 point per $1 in a bonus category, or a spending credit I rarely use, that’s not enough for me.

One of my cards had gotten more expensive and lost benefits

Credit card companies occasionally raise annual fees. They may also change or get rid of certain benefits. The worst is when they do both, charging you more and offering less.

That’s what happened with one of the cards I downgraded. The annual fee had gone up by $100, and it lost some of the benefits that I liked about it. This was actually a blessing in disguise, because it made my decision easy. By the time I heard about another benefit getting axed, I knew it was time to downgrade.

How to downgrade a credit card

It’s fast and easy to downgrade a credit card. Here’s how to do it:

Pick a new credit card for your downgrade. Check the card issuer’s lineup to see which card you want. Note that the card will need to be in the same product line as the old one.Contact your card issuer and request the downgrade. You typically need to do this by phone, although some card issuers may let you do it by live chat. Let the representative know that you’d like a product change from your current card to the new one you selected.

If you’re wondering which cards are in the same product line as your current card, it’s normally the cards in the same rewards program.

For example, if you have a United Airlines card, you can downgrade it to another United card. You couldn’t downgrade it to a World of Hyatt card, because United and Hyatt have different rewards programs. If you have a Chase Ultimate Rewards card, you can downgrade to another Ultimate Rewards card. When in doubt, contact your card issuer to ask what your options are.

Your card issuer may have a retention offer for you when you ask to downgrade. Retention offers are a special incentive to get a cardholder to keep their card. These vary, but common examples include bonus rewards or a statement credit. If you like the offer, you can accept it. If not, you can continue with the downgrade.

Downgrading a credit card is a good alternative to closing it. If you don’t think the card’s value justifies the annual fee anymore, then you can downgrade it to keep the account open at a lower (or no) cost.

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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.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 JPMorgan Chase. The Motley Fool recommends Hyatt Hotels. The Motley Fool has a disclosure policy.

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There are pros and cons to having a joint bank account. Read on to learn whether it might be right for you. [[{“value”:”

One of the first financial decisions you might face as a newly married or committed couple is whether to open a joint bank account or not. And it’s a decision that definitely warrants a good amount of thought.

Recent data from Empower finds that 30% of families say they have a joint bank account rather than separate accounts. If you’re not sure whether a joint bank account makes sense for you, here are some benefits and drawbacks to consider.

Pro No. 1: You might have an easier time managing joint expenses

You and your spouse or partner may have a host of expenses you share jointly, from smaller bills like cable to larger bills like the mortgage you recently signed. The upside of having a joint bank account is that you might have an easier time following your household budget and tracking and managing your expenses.

Pro No. 2: You can work together toward shared goals

Maybe you and your partner don’t own a home yet, but are saving for one. Or maybe you’re socking money away for another goal, like being able to renovate your kitchen or finish your basement. If you have your money in a joint account, that could make it easier to work toward financial goals like these.

Pro No. 3: There’s more transparency about your spending

When you and your spouse or partner have all of your money landing in a joint account, you can see exactly how much each of you is spending. You won’t have to wonder exactly what your partner spent on their weekend getaway with friends because you’ll see those debits right there in your account. Of course, that has the potential to backfire, too…

Con No. 1: You may be more likely to get into arguments over finances

When you share a joint bank account, you have the ability to review every single transaction in it. That could be a good thing, but also a bad one. If you and your partner don’t spend in similar ways, arguments could erupt due to one person taking withdrawals more often than the other. You might also start to constantly question one another’s leisure spending, which could make for a pretty miserable existence.

Con No. 2: There may be bitterness if your joint account isn’t being funded equally

It’s not a given that romantic partners will earn comparable wages. If there’s a big gap in income between you and your partner, it could lead to feelings of bitterness and resentment that one of you is contributing more to your shared account than the other — even if it’s not necessarily the lower earner’s fault that their wages aren’t as high.

Con No. 3: You might feel guilty dipping into cash reserves that aren’t just yours

When you share a bank account, you’re accountable for the money you pull out of it. Even if your partner has no problem with you withdrawing $40 for takeout lunch or $80 for a night out with your friends, you might feel guilty for tapping your joint cash reserves — especially if that money is coming out of a joint savings account, as opposed to a checking account.

Is a joint bank account right for you?

If you’re not sure whether opening a joint bank account is the best route to take, talk things through with your spouse or partner. Voice your concerns, but also discuss the benefits of having your finances combined in that manner.

One option you should consider is maintaining a joint bank account for shared expenses and goals, but also having some of your money in separate accounts. That way, you’re contributing jointly toward bills and financial objectives, but you’re retaining some cash that you have more freedom with. It could be a good solution if you’re worried that putting all of your money into a joint bank account will lead to conflict.

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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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Americans are spending a surprising amount of money on dining out. See what a new survey from Empower has to stay about America’s restaurant habits. [[{“value”:”

Lots of people say that they want to save money, but they don’t know how. What if the biggest way to find extra savings in your budget was staring you in the face from your dinner plate?

That’s right: According to a new survey from Empower, Americans are spending a huge amount of money on dining out. Getting takeout, going to restaurants, and otherwise spending on “meals away from home” can be convenient and delicious, but it comes at a cost. If you want to save more money in 2024, you might want to re-evaluate your meal planning.

Let’s look at a few details from Empower’s survey on how Americans are spending, and see how to improve your personal finances (while still eating well).

Americans dine out 1 out of 5 meals

According to a Dec. 2023 survey from Empower on Americans’ daily spending habits, restaurant meals have become a big source of America’s daily calories. Americans eat out for 1 out of every 5 meals (about 20% of the time). And the numbers are even higher for the younger generations:

Millennials dine out 21% of the timeGen Zers dine out 26% of the time

The biggest reasons why Americans get their meals from restaurants were listed as:

Convenience and speed (62%)Schedule accommodation (52%)To have as a treat (42%)

How to save money: Cook at home

Even though dining out has become a part of everyday life for many Americans, the survey also found that 29% of Americans are eating out less often to save money. If you are horrified by the rising price of feeding yourself and your family and you want to regain control of your monthly food budget, trying to cook more meals at home could be a good strategy.

Groceries and home cooking are almost always less expensive than dining out, especially if you can find good deals at the store and plan ahead to cook and freeze leftovers. Get a Sam’s Club or Costco membership to save on bulk groceries. Or use cash back apps to get extra discounts while grocery shopping.

The Empower survey found that Americans’ average food budget was about $145 per week. That’s about $7,540 per year, or $628 per month. That is quite a bit lower than the average monthly food budget (groceries plus food away from home) found in The Motley Fool Ascent’s research. As of 2022, Americans spent:

$475 per month on groceries$303 per month on food away from home

For a total of $778 per month or $9,336 per year spent on food. Those numbers might have gone up since 2022, due to high inflation on food prices.

The point is, no matter how much you’re spending on groceries and restaurants, making choices about which foods to buy and when/where/how to eat is one of the fundamental freedoms that everyone has in their personal finances. It can be hard to find time and energy to cook. But if your monthly budget is suffering, look at your food spending and try to re-prioritize.

Bottom line

A new survey from Empower found that Americans are getting 20% of their meals from restaurants, takeout, and food delivery apps. It’s understandable that the convenience and deliciousness of restaurant-prepared meals might seem more appealing than a healthy balance in your bank account. Everyone’s pressed for time and trying their best. But if you’re serious about saving money, join the 29% of Americans who are dining out less. Spending more time in the kitchen can help you spend less on food.

Alert: our top-rated cash back card now has 0% intro APR until 2025

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

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Some credit cards come with annual fees. Before you sign up for one, be sure you can afford it and whether the perks will justify the cost. Learn more here. [[{“value”:”

There are many credit cards out there that are free. Others charge a lot to become a cardholder, though — sometimes hundreds of dollars a year. Cards that charge annual fees can actually sometimes be worth paying for, but that’s not the case in every situation.

To help you decide if you should opt for a card that comes at a cost, ask yourself these key questions.

1. Can I afford the fee?

The first and most important thing to think about is whether you can actually afford to pay the fee the card issuer charges. If you don’t have an extra $99 or $695 or whatever amount you’d be required to pay in your bank account, then that’s the end of the discussion. In this case, you should not sign up for the card. You don’t want to go into debt or compromise the rest of your financial situation just to get a fancy credit card.

2. Do the perks justify the fee?

The next big question is whether the value of the perks is greater than the cost to get the card. Say, for example, you’re considering applying for a card with a $595 annual fee. That sounds like a lot, but it comes with airline lounge access, $120 in credits for a ride-hailing service, and another $120 in credits for a popular food delivery service or rental cars from several major chains.

The amount you’d save due to the perks could potentially exceed the upfront fee — if you get all of those $120 credits and you regularly visit the airport lounge and eat food there, instead of buying it at the airport.

You’ll have to add up the value of the benefits that the card offers to make absolutely sure you end up getting more value out of the card than the amount you’re paying in order to get it.

3. Will I use the perks?

Next, you need to really consider whether you’re going to take advantage of the perks the card offers. For example, while you might want to travel and the idea of a card with airline lounge access might sound nice, it’s not going to be helpful to you if you have limited vacation time and kids in school and you don’t end up being able to get away as often as you’d like.

So, think about whether the card’s perks work with your current lifestyle you are leading right now, and not the lifestyle you wish to lead. It’s unlikely you’re going to change your whole way of living just because you get a new credit card.

4. Do I already have a card with similar offerings?

Finally, consider whether the perks you’re claiming justify the card’s annual fee are already offered by another card in your wallet. For example, you might assume that the travel insurance that one particular card provides makes paying the annual fee for that card worth it. But if you already have a card that offers similar travel insurance, then you don’t need to duplicate that benefit.

By asking yourself these questions, you can decide if a given card with an annual fee is worth paying for. If not, don’t worry — there are plenty of other great no annual fee credit cards out there that could be a better fit.

Alert: our top-rated cash back card now has 0% intro APR until 2025

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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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Raiding your retirement savings is a move you might regret. Read on for some alternatives. [[{“value”:”

The purpose of having retirement savings is to have money for — wait for it — retirement. But there may come a point when you’re tempted to tap your individual retirement account (IRA) or 401(k) ahead of retirement. That scenario might arise when you have a home repair to cover. Or maybe your car gives out on you and you unexpectedly need to replace it.

A December 2023 survey by Betterment at Work found that 30% of workers tapped their retirement accounts over the previous 12 months to pay for short-term expenses. But going that route could have serious consequences.

The problem with tapping your retirement savings when you’re not retired

The IRS offers some pretty sweet tax breaks for funding a traditional IRA or 401(k) plan. Not only does your money get to go in on a pre-tax basis, but you’re not taxed on investment gains year after year. Rather, those gains are tax-deferred until you take withdrawals.

But in exchange, the IRS wants the money in your IRA or 401(k) reserved for retirement. And if you take a withdrawal prior to age 59 1/2, you’ll usually be hit with a 10% penalty on the sum you remove. This means that a $5,000 withdrawal for a home repair will cause you to lose $500 right off the bat.

But that’s not the only issue. An even bigger problem is that tapping your retirement account early will leave you with less money once your retirement actually kicks off.

Let’s say your retirement account is invested heavily in stocks so you’re getting a 10% average annual return, which is in line with the stock market’s long-term average. If you take a $5,000 withdrawal at age 35, you might end up with $87,000 less by age 65 when you account for the fact that you didn’t enjoy that growth on your $5,000 for 30 years. That’s an even bigger problem than your $500 early withdrawal penalty.

Alternatives to consider

Clearly, raiding a retirement plan ahead of retirement could put you in a bad spot down the line. So before you do that, think about ways you might be able to borrow affordably for a sudden expense. If you have great credit, you may find that a personal loan or home equity loan gives you access to the money you need without an exorbitant interest rate.

Also, if you have a near-term need for money but don’t necessarily need the cash right away, it may be possible to hustle at a side gig to come up with the funds you require. For example, if you discover that your air conditioner needs a $700 repair but it’s April and you’re not really planning to start using it until June, you could try to earn an extra $100 a week to cover the cost.

All told, it’s not a great thing to tap your retirement savings. In addition to coming up with alternative ways to get your hands on money in a pinch, pledge to start building an emergency fund. That way, you’ll have cash reserves in the bank you can access when surprise expenses arise, and you won’t have to worry about early withdrawal penalties or lost investment gains.

Alert: our top-rated cash back card 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 lengthy 0% intro APR period, 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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Want to save money on an unpleasant “surprise” cost of car ownership? Here’s why you should think about buying tires at Costco. [[{“value”:”

Buying new car tires can be one of the most unpleasant “surprise” costs of car ownership. Whether you’ve suddenly suffered a flat tire or just need to replace old tires that are worn out, not everyone has set aside a special budget for new tires.

Want to save money on the cost of car ownership? Buy your tires at Costco. Costco Tire offers great prices, friendly service, free tire rotations, and low-cost inspections and road hazard repairs (if you run over a nail).

Let’s look at a few reasons why Costco can be a good place to buy tires, and how Costco Tire Center’s pricing and customer experience compares to other tire dealers.

How much do tires cost?

The cost of tires is based on the size and type of vehicle you drive. But according to tire pricing data from Discount Tire, here are a few general price ranges for all-season tires for a few different wheel sizes:

Keep in mind that it’s not always possible to just replace one or two tires in case you suffer a flat or get your tires damaged in a car crash. You’ll often have to buy all four tires at the same time. Four new medium tires for an SUV could cost $1,000. And the price of your tires might be even higher if you need specialty tires like snow tires, all-terrain tires, or performance tires.

Costco tire prices: Actual deals for my car

I drive a Toyota Prius Prime plug-in hybrid electric vehicle (PHEV), and my tires could need replacing sometime in the next few years. I checked the Costco website to see how much tires cost for my vehicle.

Here are a few of the lowest-cost tires that Costco recommended for my Toyota Prius Prime hybrid car (which has relatively small 15-inch wheels):

Costco’s recommended tires for my vehicle were a little on the pricey side compared to the average range identified by Discount Tire. Only one brand of tire was under $150. As with so many other aspects of car ownership costs, when shopping for tires, “your mileage may vary.”

How Costco tire prices compare to Discount Tire

Let’s look at another major national tire dealer, Discount Tire, to see how much it would cost to buy tires for my Toyota Prius Prime hybrid. I checked the pricing based on my nearest Discount Tire location in Clive, Iowa, and found the following low-cost deals on recommended tires:

Discount Tire is aptly named: the tires were surprisingly cheaper than Costco’s cheapest tires. Of course, it’s not a perfect comparison, because different brands have different prices, and my local Discount Tire didn’t offer all of the same brands as Costco. One tire that they both had in stock, the Michelin Defender T+H, was priced the same at Costco and Discount Tire.

Cheaper tires aren’t always “better” or “worse” tires, but sometimes with tires, you get what you pay for. Higher-priced brands and models of tires might offer a better warranty or longer-lasting tread life, or have better ratings for driving on wet roads.

Bottom line: Why buy tires at Costco

Costco is not the only place to get good deals on tires. Other tire retailers might also offer the same brands of tires for the same price, and with new tires costing upward of $600-$1,000, it’s worth shopping around. Check with local tire stores in your area to find tires that are recommended for your daily driving. Discount Tire has some helpful, easy-to-use tools on its website to find the best tires for your budget.

But if you’re a Costco member, buying tires at Costco is yet another way to get extra value from your membership. (Costco can even help you get deals on auto insurance.) When I buy tires at Costco, I’m confident that I’m getting a competitive price on a high-quality set of tires with a good reputation and a long warranty. And you can combine your Costco tire appointments with delicious (low-cost) meals at the Costco food court.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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

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