The frenzied holiday shopping season has arrived. Amid all the buying and traveling to see family, it’s a good idea to keep your savvy consumer instincts intact. If you’re using credit cards for purchases, remember that credit card benefits and rewards can truly come in handy this time of year.
Whether it’s offering extended warranties on your purchases or giving you free access to cushy airport lounges when you’re traveling to see family, it’s time to brush up on the perks associated with those credit cards in your wallet.
Most major credit cards these days include price-matching policies. Not familiar with how these work?
If you make a purchase and later find the same item for a much cheaper price, the credit card refunds the difference. Discover cards are famous for this perk. The card will refund the difference up to $500 on eligible items if you find a lower price at any store within 90 days of purchase. The item in question however, must have been paid for with the Discover credit card.
“Also known by other monikers, such as price protection or price rewind, price matching is perhaps one of the most underutilized credit card benefits,” says Roman Shteyn, CEO and co-founder of RewardExpert. “Some credit card issuers will even conveniently monitor the price of your purchase for you if you register it, like with the Citi Price Rewind program.”
This is a benefit all consumers should be using, says Shteyn. If your credit card has this program and you don’t use it, you’re essentially throwing money away. Why not get the best price for the item you bought?
Many credit cards also offer purchase protection, also known as purchase assurance or damage protection.
This perk helps shoppers insure their goods against damage or theft, says Shteyn. And it can be useful because if your purchases ever get damaged or stolen, you’re usually on your own.
Shteyn explains, “This card benefit frequently goes unused by cardholders as they are unaware of their right to insurance through their card issuer.”
The coverage amount and the duration of time during which a claim can be submitted varies from card to card, typically ranging from 90 through 120 days after purchase. Some cards offer $1,000 coverage per claim while others may go as high as $10,000. You should check the terms and conditions for your credit cards to identify exactly how much coverage you may be eligible for.
Consumers are often encouraged by retailers to buy an extended warranty on high-ticket items like electronics and home appliances.
These warranties are usually pretty pricey. And why spend that money when many credit cards offer an automatic extended warranty at no extra cost?
American Express cards, for instance, are known for their extended warranty policy. If an item was purchased with your American Express card, then your card adds up to one extra year to the original US manufacturer’s warranty.
“Depending on the item being bought, it may not be worth purchasing a retailer’s warranty coverage since your credit card will most likely offer protection,” says Shteyn. “However, sometimes the retailer’s policy may offer a much longer coverage period than your credit card would.”
Accumulating Cash Back Rewards
While doing all of this holiday shopping, you might as well reap the rewards in the form of cold hard cash back.
Michael Foguth of Foguth Financial Group suggests using only credit cards that offer cash back while holiday shopping and eliminating the use of debit cards entirely, which offer no rewards.
“Find out which card gives you greatest cash back reward and use that,” he says. “Keep it simple . . . If you spend $10,000 on a card that offers 1% cash back, that’s $100. Some cards offer 1.5%. It’s free money for using your credit card.”
Airport Lounge Access
One last perk to keep in mind for the harried holiday season: some credit cards provide access to airport lounges.
It’s a feature that may come in handy as you travel back and forth to see family this season, and it can provide you a few peaceful, quiet moments away from the crowd and the hustle and bustle.
“When you need to fly during the holiday season, bring your credit card with you,” says Anna Wu, creator of the site FlightDealsHound. “A good variety of credit cards such as Chase Sapphire Reserve, American Express Platinum Card, and Citi Prestige Card, to name a few, offer complimentary Priority Pass lounge access, which means you (and guests for some card holders) can access those exclusive airport lounges that offer free drinks, free gourmet buffet, and fast Wi-Fi connections.”
Not all airport lounges are created equal, but still, this is an added bonus that’s definitely worth keeping in mind as you travel.
Not sure what perks your cards have? Get in touch with a credit card representative and find out. If you want to get a new credit card with travel perks before the holiday season is over, make sure you check your credit first. You can check your credit for free at Credit.com.
It’s irresistible, and painful, to play the what-if regret game with investments. What if you bought Apple or Amazon stock back in 1997? What if you bought a condo in that tough city neighborhood ten years ago? What it mom didn’t throw out that full set of 1969 Topps baseball cards? Millennials didn’t invent FOMO; investors have struggled with the fear of missing out forever.
Those missed opportunities pale in comparison to what’s going on with Bitcoin, however. Price of a single bitcoin just passed $1,000 in February. It had climbed 15-fold by December, less than one year later. Travel back another few months, or years, and the windfall for early virtual currency buyers is almost unfathomable. Writer Kashmir Hill captured it well; four years ago, she lived all-Bitcoin week for a story, and found a restaurant where she could use the digital currency to buy her friends a sushi dinner. The price: 10 bitcoins. By the end of November, the coins she spent on the sushi would have been worth about $100,000. And now?
“That sushi dinner could have paid for an ivy league degree,” she lamented on Twitter. Now, that’s a regret.
How could a sushi dinner turn into a six-figure windfall? How can you buy a dinner with virtual “money” in the first place? And what should you be doing when it seems like the whole world has gone crazy for digital currencies?
We’ll try to answer those questions for you here.
Before we get started, however, it’s important to remember that the fear of missing out has driven people to make many bad choices in investing, and in life, (you should have stayed at that party and met your future wife, dummy!) for a very long time. So if you are tempted to dip your toe in this brave new world, it’s critical that you understand what you think you are missing out on.
Tom is a virtual currency investor who agreed to speak on condition of anonymity. (Bitcoin hackers are very aggressive and scour the Internet for targets, finding them when people brag about their holdings; so if you invest in Bitcoin, keep it to yourself.)
Tom got in early, but he’s suffering from investment regret, too.
“That would be because I sold the bulk of it way back when it was $4000, because I very wrongly thought the bubble could not go much higher,” he said. “Crypto right now is like the wild west … It really is.”
What is Bitcoin? A brief history
To start at the ending, Bitcoin took a big step away from the Wild West this week when a traditional market tied to the virtual currency allowed U.S. investors to make Bitcoin bets the old-fashioned way: through brokerage accounts. On Dec. 10, the Chicago Board of Exchange began the buying and selling of futures contracts on Bitcoin’s value. Investors don’t buy actual coins through these contracts; instead, they are making bets with each other about the future value of Bitcoin. Still, the event marked a remarkable step for an idea that was born from the musings of Internet radicals and almost killed by child pedophiles.
The birth of cryptocurrencies
In the Internet’s early days, no one was really sure how people like Jeff Bezos would make money. To be specific, no one was sure how sites like Amazon would be able to collect money. Credit cards seemed like a risky way to transmit “cash” across the Web — anti-fraud systems were essentially unheard of — so there was a race to create a new kind of cash that could be sent digitally. “Currencies” with names like DigiCash, backed by MIT’s Nicholas Negroponte, and E-gold sprouted up to fill the void. Eventually, eGold would swell to 3.5 million users worldwide.
Virtual currencies offered the added digital-age benefit of making international transactions easier and far cheaper, as they can be used to circumvent transfer fees imposed by of traditional banking systems..
The philosophical origins of virtual currency predate these digital currencies, however, to a group of hackers with a libertarian vibe generally referred to as cypherpunks. They dreamed of creating a money system that was entirely beyond the reach of governments. They blamed much of the world’s ills — inflation, poverty, concentration of wealth — on the power governments can exert by controlling national currencies.
By combining the secrecy of cryptography with a currency, cypherpunks imagined a world of free, anonymous money flows that drained traditional governments of their source of power.
Early hits and misses
Early supporters like Rik Willard, founder of Agentic Group — a consortium of firms that advocates use of blockchain technologies — have always had lofty goals for cryptocurrencies.
“To me, Bitcoin is a globally distributed proof-of-concept for a new understanding and subsequent reconfiguration of intrinsic value creation,” he says. “Like any radical technology before it, digital value will begin to shape us in unimaginable ways, with the end goal, hopefully, of more financial inclusion and an end to enforced scarcity and unnecessary poverty.”
Creating new currencies is tricky work, however, largely because criminals often flock to platforms that seem to be beyond the reach of law enforcement and traditional institutions. E-Gold ultimately collapsed, and its founder jailed, after a 2007 indictment on money laundering charges.
“The E-Gold payment system has been a preferred means of payment for child pornography distributors, identity thieves, online scammers, and other criminals around the world to launder their illegal income anonymously,” the Department of Justice said.
The age of Bitcoin
But the dream of a currency not issued by governments wasn’t dead. About a year later, in August 2008, someone registered the domain name Bitcoin.org. Two months later, a paper attributed to “Satoshi Nakamoto” was posted to a cryptography mailing titled Bitcoin: A Peer-to-Peer Electronic Cash System, laying out the concepts for a new kind of virtual money. By January 2009, the first Bitcoin network came online.
What was different about Bitcoin?
When traditional currency is used for transactions, third parties are always involved. Cash changes hands, but a government provides that cash and promises it has a certain value. When money is electronically wired, banks add or subtract the money from balance sheets. More important, they supply “trust” that enables parties to believe they are getting what they deserve out of a transaction. Outside of old-fashioned bartering, there was no way to conduct business without invoking a third party institution to provide trust.
Bitcoin changes this model by allowing peer-to-peer transactions that don’t require outside blessing and verification. Instead, all transactions are published online, in a completely transparent format as a shared ledger, so they are verified — not by a bank or a government — but by the network itself. No trust required. Blocks of data are continually added to a chain providing an audit trail that confirms every transaction. Ever. That’s the blockchain.
The decentralized nature of the blockchain is key. Whenever there’s a discrepancy — say, someone tries to add inaccurate information — the many nodes on the network arm-wrestle over which data is correct and builds consensus. Then, the data is replicated across the network.
This decentralized-by-design feature means there isn’t one central authority which could be manipulated for fraud purposes, or by a government or corporation seeking control. It also means it’s virtually impossible to fake a blockchain transaction once it’s approved, or to remove one. This is sometimes called distributed “trustless” consensus. In anarchy, security.
The comeback cryptocurrency
Bitcoin’s timing was impeccable. The cryptocurrency’s radical libertarian (anarchist?) ideology found plenty of bedfellows in the early stages. The global financial crisis that began in 2008 stoked the flames of bank skepticism and helped create a population ready to consider dramatic alternatives. In 2011, Bitcoin immediately became popular with Occupy Wall Streeters, who used it to accept donations and run some operations.
But it was still a bumpy ride. While Bitcoin transactions are very public, the parties in the transaction can remain anonymous. They use a cryptographic key to access their money, hence the term cryptocurrency.
So Bitcoin predictably attracted the same crowd as eGold. In 2013, Bitcoin faced an existential threat when U.S. federal authorities cracked down on a criminal haunt called Silk Road, a popular site used to buy and sell illicit drugs. Bitcoin was the currency of choice for Silk Road criminals, and authorities seemed ready for another E-gold-like crackdown. The FBI seized 174,000 Bitcoins when it shut down Silk Road, leading many to fear that users would abandon the cryptocurrency.
While Bitcoin’s value fell briefly by about one-quarter after Silk Road’s closure, it quickly recovered (to $125…feel that pang of regret again?), and transactions kept flowing. Meanwhile, rather than marginalize Bitcoin, governments around the world slowly started to legitimize it.
Ironically, a decision in 2013 by the U.S. Treasury Department’s Financial Crimes Enforcement Network to require Bitcoin exchanges to register as money-service businesses — like payday lenders and other non-bank financial institutions — probably helped Bitcoin along. It was seen as tacit admission by the U.S. that it could not afford to drive Bitcoin overseas and cede the development of cryptocurrencies to places like Asia.
Since then, numerous factors have contributed to the meteoric rise in Bitcoin’s value. Chief among them: copycats, called alt coins.
There’s hundreds of cryptocurrencies now, all trying to cash in on the Bitcoin craze through their own Initial Coin Offerings. When these occur, buyers leap in, usually investing with Bitcoins. Later, they often convert the new coins into Bitcoins.
All that activity pushes up the demand for Bitcoins. Other reasons are critical, too. Many startups are encouraging investments in Bitcoin. The echo chamber of financial media keeps focus on fantastic returns early investors are getting, whipping up the FOMO, which in turn leads to more investment, which whips up the price.
And finally, perhaps the biggest reason: Everyone from taxi driver to baristas to grandparents are now talking about Bitcoin. Cryptocurrencies aren’t just for early adopters any more; now they have attracted what Wall Street calls “retail investors.”
That means there’s a lot of more money from a lot more people kicking the tires on a Bitcoin investment. More buyers and more money mean higher prices.
How to buy and sell Bitcoin
So, how do you get in on this?
There are two ways to obtain Bitcoins; you can buy them, or you can “make” them, through a process called mining.
New Bitcoins are created, it would seem, out of thin air as a “reward” when computers compete to do the nuts and bolts work of confirming blockchain transactions. Anyone can mine —investor Tom, mentioned above, mines for alt coins using a network in his garage — but as time goes by, the processing power required to mine continues to swell.
Enormous server farms around the world are now devoted to “winning” Bitcoins, using copious amounts of electricity as they do it.
So most people obtain coins by buying them, usually on a Bitcoin exchange, where traditional currency, like dollars, can be traded for cryptocurrency.
The largest bitcoin broker is called Coinbase, which says it now has 13 million accounts — more than stock brokerage Charles Schwab. Coinbase works like an exchange for beginners, but it’s really a front-end for an exchange called GDAX, or Global Digital Asset Exchange, formerly called Coinbase Exchange.
To buy Bitcoin from Coinbase or another broker or exchange, you’ll have to download software called a cryptocurrency wallet. The wallet will be used to store the cryptographic keys that are needed to unlock virtual currency value. Coinbase, like other brokers and exchanges, also supports some alt coins, like Ethereum and Litecoin.
People invest in alt coins because they are much cheaper, and theoretically offer a chance at greater investment returns, though they can also be more risky. Not all coins, or all exchanges, are supported by all wallets.
Selling coins simply requires reversing the process. Bitcoin holders use a broker or exchange to move transfer virtual currency back into traditional currency, like dollars. That money is then transferred back to a traditional bank account.
Can you buy Bitcoins with a credit card?
Yes. But only through a wallet application and an exchange.
To keep things simple, a new user who wanted to get started on cryptocurrency can download wallet software from Coinbase, link a traditional bank account (such as a checking account or a credit card) to the Coinbase account, and begin buying bitcoins almost immediately. There’s a fee associated with each transaction (at Coinbase, it’s 3.99% for credit or debit card transactions).
No one gets rich on Coinbase in a week or two. New investors can only buy tiny fractions of Bitcoins — credit and debit card depositors are limited to $150 during the first week, for example.
But note,Buyers can’t sell right away. They have to wait a week; that can be frustrating if the value of a coin investment rises quickly, as it has recently. Coinbase users can increase their buy/sell limits through a variety of steps, including identity verification and creating a history of transactions. The throttled on-boarding process helps prevent fraud.
Bitcoins can also be purchased and sold using ATMs that are scattered around the world. They aren’t very practical, however. Transaction fees are high, and there are only a few thousand machines. They’re more of a novelty.
Spending bitcoin is no picnic. Many journalists have imitated Hill’s “live life for a week on Bitcoin” project; they usually come away frustrated. Yes, Bitcoin acceptance has slowly increased.
BitPay.com claims 100,000 merchants worldwide accept it. Earlier this year, Starbucks announced support for Bitcoin through its mobile app and integration with a wallet called uPayYou. Plenty of familiar online services, like Overstock.com and Expedia, take Bitcoin, too.
There are plenty of pain points along the way, however. If you thought waiting for chip-enabled credit card transactions was annoying, wait until you get held up making a Bitcoin-based purchase. Bitcoin transactions must be confirmed and added to the Blockchain, which can take several minutes, or even hours.
Risk & Rewards
There’s an bigger challenge with larger transactions. Bitcoin is so volatile that it’s risky to use for large purchases.
“Shark Tank” star Kevin O’Leary recently told CNBC that when he recently tried to settle a $200,000 international Bitcoin transaction, the other party insisted he buy insurance to guarantee the value of the Bitcoins wouldn’t fall. The risk outweighed any savings that might have been earned by avoiding bank fees or currency conversion fees.
Bitcoin comes with an even greater risk, however: It comes with virtually no consumer protections. If Bitcoins are lost or stolen, they are gone forever.
Tom says he mined 100 Bitcoins fairly early on, but his hard drive crashed, so they are simply gone. Coin thieves are also hard at work hacking wallets, which don’t necessarily come with built-in security.
Writing in Medium, Cody Brown tells the painful story of looking on helplessly while a criminal took control of his cell phone, opened his wallet, and drained $8,000 worth of Bitcoins. Users are so concerned that some have taken to purchasing physical “hardware” wallets they can essentially hide at home.
Worst of all, exchanges themselves have proven to be unreliable. The Japan-based Mt. Gox exchange, once the world’s largest, closed in 2014 after $450 million worth of Bitcoin were lost or stolen. Dozens of smaller security incidents at exchanges are chronicled at the website Blockchain Graveyard.
To security expert Harri Hursti of Nordic Innovation Labs, this fragility is cryptocurrency’s Achilles’’ heel.
“The one key feature of conventional financial systems is that pretty much any erroneous transactions or illegal actions can be unwound and reversed,” he says. “In a blockchain economy, your monetary value can disappear in a cloud of bits with a typo — not to mention intentional crime.”
Is Bitcoin an investment or a currency — or both?
Because there’s still a lot of friction involved in spending Bitcoin — certainly more than many other methods, from debit cards to Apple Pay — Bitcoin is a poor currency at the moment. It’s most practical use as a currency is probably in third-world countries and places where the existing currency is already volatile and Bitcoin provides an immediate benefit.
Outside of these extreme environments, there’s plenty of debate about Bitcoin’s long-term potential as a currency. Brian Armstrong, founder of Coinbase, says that Bitcoin is largely an investment at the moment.
“Bitcoin is 80% people buying and selling as an investment and 20% usage. I think in five years those numbers could be inverted,” he wrote last year.
That split isn’t necessarily a bad thing. As an investment, Bitcoin also serves as a store of value, the same purpose traditional gold serves for people who think their government’s policies will lead to dramatic inflation. You could also think of Bitcoin as the digital-age version of hiding money in a mattress.
Should I invest in Bitcoin?
It goes without saying that consumers shouldn’t invest money in Bitcoin that they can’t afford to lose, or that they’ll need for something in the next couple of years. Whether or not you can stomach that risk is a question only you can answer for yourself.
As a high volatility investment, impacted by hundreds of factors that create a calculus beyond the capacity of individual investors to compute, it really isn’t much different from gambling.
A long list of investing titans, beginning with Warren Buffett, have warned consumers not to throw money at Bitcoin. Remember, fear of missing out can make you do dumb things.
One reason not to avoid investing in Bitcoin: Because you think it has no intrinsic value, it’s not worth anything in the real world, or any those similar arguments. All currencies have this problem. Why is a hundred dollar bill worth $100? Because Uncle Sam says so. If you recycled that piece of paper, you’d get a tiny fraction of that. So dollars have no intrinsic value, either. All currencies — including hard currency, like gold — are ultimately some form of group delusion.
It’s not the intrinsic value that matters; it’s the depth of the “delusion.” As long as people have faith a currency is valuable, it is.
Now, you might not trust the Bitcoin mania, or the exchanges, or your own hard drive, and those would all be sensible reasons to stay away — for now. But people like Willard believe virtual money, in some form, is inevitable.
“Whether Bitcoin, as a brand, lives or dies is ultimately inconsequential. The fact is that natively digital currencies are here to stay and a multiplicity of new digital value possibilities is inevitable,” says Willard.
There is wide consensus that the blockchain technology underlying Bitcoin is of real and lasting value. As with so many gold rushes before, the only group nearly guaranteed to make money are — not people digging for gold — but companies selling the shovels to the diggers. While the metaphor is inexact, that’s partly why Tom isn’t buying cryptocoins, but rather mining for them.
The way he looks at it, even if the coins he mines fall to zero value, he still hasn’t lost everything. He still has his servers in his garage.
“I can, as an example, build and sell gaming machines on top of them, and potentially recoup my entire investment if things went sideways,” he says.
In other words, if his cryptocurrency investment fails, there’s always video games.
As nearly half of the American population already knows, divorce is a difficult, emotional process to go through. This difficulty can be compounded depending on the number of years a couple has been together, the dollar amount of their acquired assets, and whether or not they have any children.
Divorce can also have an impact on your credit, though the proceedings themselves are not the reason for this. In other words, couples shouldn’t expect their credit scores to plummet the second they file for divorce. However, there are things that occur during divorce that can have a negative impact on credit. Here are 10 ways in which a divorce could affect your credit score:
Having to refinance your home
In order to move a property into one person’s name, it may be necessary to refinance your mortgage. As with any refinance situation, this will require a hard credit inquiry, and may also potentially add a great deal of new debt for one person.
The splitting of the debt was uneven
When assets are divided, one person may get to take more of the income, property, or assets, but also more of the debt. It all just depends on how the debt is divided.
Going from two incomes to one
If possible, it’s helpful to examine finances before a divorce and determine new budgets for both parties, so as to avoid falling behind on any bills or payments. Many divorced individuals report that losing another person’s income made the single greatest impact on them financially. Setting up a new budget early on can help avoid this issue.
Not disclosing all debt during the proceedings
At some point during the divorce process, both parties are required to disclose their financial accounts. However, as former spouses sometimes learn, not everyone is truthful about these assets. Running a credit report is the best way to ensure you’re aware of every account bearing your name.
One party doesn’t pay his or her agreed-upon share
Most courts are willing to work with couples to help them discuss and agree on a payment plan for shared assets, such as a home or any jointly-owned property.
One party still has access to the other party’s accounts
In the event that divorcing spouses do not split their joint accounts, both parties will still be responsible for any additional charges. It’s best to split any joint accounts as soon as possible.
Credit limits are decreased
Many creditors regularly check up on their clients to see if there has been a salary change, and most credit card agreements state that limits can be decreased at the creditor’s discretion. If one spouse was making more money than the other, and the accounts are separated, a credit card company can choose to lower the limits for one or both spouses. This can, in turn, affect credit scores, as well as catapult credit card holders to their maximum limits very quickly.
The divorce turns ugly
While no one enjoys going through divorce, the best solution is to try and remain civil to one another, lowering the risk of spouses doing financial harm to one another out of spite.
There is confusion over the divorce decree
People can often be confused about their financial responsibility as stated in the divorce decree. If you are unsure of where you stand or what you must pay, consult your attorney, family court facilitator, or mediator.
Spouses don’t work together
Sometimes, electric bills can be overlooked or go unpaid. Keeping the divorce process as amicable as possible helps parties communicate with one another over their shared financial responsibility after the households have been completely separated. Working together ensures everyone’s credit remains in good standing.
[UPDATE: Some offers mentioned below have expired and/or are no longer available on our site. You can view the current offers from our partners in our credit card marketplace. DISCLOSURE: Cards from our partners are mentioned below.]
Wine is a drink for all occasions, perfect for relaxing at home or hitting the town with friends and family. And while a great vintage is good on its own, some credit cards can sweeten the deal by rewarding your wine purchases.
Here are five credit cards for wine lovers.
Rewards: Two points per dollar spent on travel and dining; one point per dollar spent on other purchases.
Sign-Up Bonus:50,000 bonus points if you spend $4,000 in the first three months.
Annual Fee:$0 the first year, then $95.
Annual Percentage Rate (APR): Variable 16.99% to 23.99% APR on purchases and balance transfers.
Why We Picked It:If you like getting wine with dinner, this card can earn you travel rewards.
For Wine:With two points on the dollar for dining purchases, you’ll rack up rewards every time you order wine at restaurants. Points can be redeemed for many things, but the best value is reserved for travel redemptions.
Drawbacks:After the first year, there’s a $95 annual fee.
Rewards: 3% cash back on dining purchases; 2% cash back on groceries; 1% cash back on other purchases.
Sign-Up Bonus:$150 bonus cash if you spend $500 in the first three months.
APR:0% APR for nine months on purchases and balance transfers, then variable 15.49% to 24.49% APR.
Why We Picked It:This card rewards wine purchases at multiple merchant types.
For Wine:With special cash back rates at restaurants and grocery stores, you get rewarded whether you’re ordering a glass with dinner or picking up a bottle at the supermarket.
Drawbacks: If you don’t dine out much, this card isn’t for you.
Rewards: 4% cash back on up to $7,000 in eligible gas purchases per year; 3% cash back at restaurants and on eligible travel purchases; 2% cash back at Costco and Costco.com; 1% cash back on other purchases.
Sign-Up Bonus: None
Annual Fee: $0 with a paid Costco membership.
APR: 0% APR for seven months on purchases, then variable 16.24% APR; variable 16.24% APR on balance transfers.
Why We Picked It: You can save big on wine at Costco.
For Wine:You can get great deals on a wide selection of wines at Costco—and beyond the initial savings, you’ll earn 2% cash back on your Costco purchases, putting even more money back in your wallet. Plus, you get 3% cash back at restaurants.
Drawbacks: If you aren’t a Costco member, you can’t get this card.
Rewards: 3% cash back on up to $6,000 in annual US supermarket purchases; 2% cash back at US gas stations and select department stores; 1% cash back on other purchases.
Sign-Up Bonus:$150 statement credit if you spend $1,000 in the first three months.
APR:0% APR for 15 months on purchases and balance transfers, then variable 13.99% to 24.99% APR.
Why We Picked It: If you get your wine at the supermarket, this card offers great value.
For Wine: This card earns 3% cash back at supermarkets, which is perfect if you like to pick up a bottle or two with your groceries.
Drawbacks: If you don’t spend a lot at supermarkets, keep looking.
Rewards: Three points per dollar spent on travel; two points per dollar spent on dining and entertainment; one point per dollar spent on other purchases.
Sign-Up Bonus: None.
Annual Fee: $0 the first year, then $95.
APR:Variable 15.49% to 24.49% APR on purchases and balance transfers.
Why We Picked It: Your bar and restaurant wine orders earn double points.
For Wine: Dining and entertainment purchases earn two points on the dollar, helping you collect rewards as you order wine at bars and restaurants. Points can be redeemed for gift cards, travel, and more.
Drawbacks: There is no sign-up bonus.
How to Pick a Card for Wine
The best card for wine depends on where you tend to buy it. If you order wine at bars and restaurants, a card with dining and entertainment rewards is probably your best bet. If you pick up wine at supermarkets or wholesale clubs, look for a card that rewards those purchases.
Rewards tend to come in three types: points, miles, or cash back. Make sure to pick a card that offers rewards you’ll actually use.
Many credit card companies offer access to exclusive events and ticket packages. Check out any events offered by credit cards you’re considering; there might just be an upcoming wine festival or vineyard tour that’s right up your alley.
What Credit Is Required to Get a Card for Wine?
The best travel and cash back credit cards usually require good to excellent credit. But even if your credit isn’t stellar, there might be an option for you. If you aren’t sure where your credit stands, you should check before you apply. You can check your credit score free at Credit.com.
At publishing time, the Chase Sapphire Preferred Card, the Capital One Savor Cash Rewards Credit Card, the Costco Anywhere Visa Card by Citi, and the Blue Cash Everyday Card from American Express are offered through Credit.com product pages, and Credit.com is compensated if our users apply for and ultimately sign up for any of these cards. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved, or otherwise endorsed by the issuer(s).
Note: It’s important to remember that interest rates, fees, and terms for credit cards, loans, and other financial products frequently change. As a result, rates, fees, and terms for credit cards, loans, and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees, and terms with credit card issuers, banks, or other financial institutions directly.
With all eyes on the GOP’s sweeping plans for tax reform, it’s easy to lose sight of other policy changes that could have an impact on your wallet.
In 2018, there are at least three key policy changes to keep tabs on — adjustments to Social Security benefits, 401(k) contribution limit changes, and the preservation of one of the year’s most controversial financial rules.
Here’s what you need to know:
More Social Security benefits
For Social Security beneficiaries, there is a lot to be excited about in 2018.
The cost-of living-adjustment, which determines the amount of money people receive from the system, is rising by 2 percent, the largest increase in five years. This means a growth in benefits for the more than 61 million recipients currently who currently utilize Social Security in America.
Additionally, the maximum payout—which is the amount you can receive once you’re eligible for 100 percent of your benefits—is also increasing, with the figure growing from $2,687 per month to $2,788 per month.
Greater 401(k) contributions
Saving for retirement will also be a little easier in the coming years, as the Internal Revenue Service announced that the annual limit for 401(k) contributors will increase by $500 in 2018.
Previously, anyone participating in a 401(k) or 403(b) plan, the majority of 457 plans, or the Thrift Savings Plan could set aside $18,000 per year, but the number will grow to $18,500. To see how much this change might affect your retirement funds, you can use this calculator to track how your 401(k) funds will grow over time.
Mandatory arbitration contracts
Earlier this year, the Consumer Financial Protection Bureau (CFPB) issued a regulation banning mandatory arbitration clauses, the often-controversial sections of consumer contracts that effectively prevent customers from filing class-action suits against a company they are doing business with, such as a bank.
However, this law, which was set to come into effect in 2018, has been overturned by Congress, meaning the rule will remain in effect.
Martin Lynch, the compliance manager and director of education for Cambridge Credit Counseling Corp. in Agawam, Mass., says the repeal of the CFPB’s rule is a major defeat for consumers because forced arbitration is often used to scare customers out of taking action against the corporate world.
“That’s not fair, almost by definition,” says Lynch, who is also a member of the board of directors for the Financial Counseling Association of America. “It’s why the concept of consumer protection exists in the first place.”
Still to be determined: The GOP tax bill
It seemed as though 2017 might be yet another slow year for tax legislation. Then earlier this month Republican lawmakers moved to pass what is could be the biggest American tax overhaul since the 1980s.
While the U.S. House of Representatives and Senate still have to agree on a singular version of the new bill, which likely include close to $1.5 trillion in total tax cuts — $900 billion of which will be for businesses alone — they’re rushing to meet President Donald Trump’s Christmas deadline.
“If any or all of the proposed changes get enacted, we will have a lot to be concerned with,” says Cindy Hockenberry, director of tax research and government relations for the National Association of Tax Professionals.
So how will the Republican tax bill—in its current form—most affect consumers? Next year, not very much. The plan’s changes, which technically go into effect on Jan. 1, 2018, will be mostly marginal until 2019 because Americans will mostly be able to file their taxes in April under the current rules.
Being aware of these changes can help you plan in advance because filing taxes in the coming years might be extremely different, depending on your income bracket and your usual deductions. While the bill—officially named the Tax Cuts and Jobs Act—is not yet finalized, here are the parts of the bill’s current form that consumers are likely to feel the most:
- Your income tax bracket could change: The House version of new law would reduce the number of standard tax brackets from seven to four, meaning many Americans would pay a new percentage of their income in 2019. You can check out this chart of the proposed percentages to see how your taxes might change.
- Your state and local tax deductions will probably go away: The Senate plan would eliminate the State and Local Tax (SALT) deduction. This means that if you typically itemize your taxes—instead of just taking the standard deduction— you will be unable to write off taxes paid to state and local governments on your federal filing.
- You will no longer be able to deduct a personal exemption: Currently, you can take a $4,050 “personal exemption” from your return that doesn’t count toward your taxable income. Under both the House and Senate bills, this option would disappear, however the standard deduction you can take each year would almost double—increasing from $6,350 to $12,200 under the House bill.
Hockenberry, who is based in Appleton, Wis., says the most important part of the plan is its proposed elimination of the personal exemption and a number of itemized deductions. Some Americans might have to pay more each year, she added, because the increase in the standard deduction might not be enough to make up for these changes, causing some consumers’ taxable income to grow.
The post 4 Big Legal Changes That Will Hit Your Wallet in 2018 appeared first on MagnifyMoney.
By Brittney Laryea & Shen Lu
The end of the calendar year is generally an important time to pay attention to your workplace benefits accounts. You may already have gotten an email from the head of your workplace’s HR department about making your elections for the coming year and maybe even made them already. While you’re at it, take a look at the balances in your flexible spending accounts and transportation benefits accounts — they may need your attention.
Workplace benefit accounts like your health flexible spending account (FSA) and transportation benefits accounts help you save money on the important line items in your budget like your healthcare bills and getting yourself to and from work. Since the accounts are funded with pre-tax dollars, you could help your dollars go up to 40% further on common expenses — like getting a checkup or a bus pass — that help you keep and maintain your job. However, if you don’t quite know how to best use these accounts, you could actually end up losing the money you have socked away in your benefits accounts.
Read on or click ahead to learn the ins and outs of using these benefits accounts and what you can do, if anything, to save your money when you’re in danger of losing it.
Flexible spending accounts
What is a flexible spending account?
A flexible spending account (FSA) is an employer sponsored reimbursement plan. It allows you to set aside pre-tax money and spend it on eligible medical expenses.
For 2018, you can contribute up to $2,650 to your health FSAs, up from the 2017’s limit of $2,600.
In an ideal world, you’ll avoid losing income by using up all your funds for eligible medical expenses by deadline. But the reality is that it’s tricky to budget for medical expenses for the next year (generally you can only adjust your contribution from each paycheck during open enrollment or during a qualifying life event, such as marriage or birth of a child). Many find themselves with excessive balance in their medical FSA at the end of the year.
It’s actually not that flexible given its “use it or lose it” rule — you have to use all the funds by the deadline, otherwise you lose the money. Several plan advisers confirmed to MagnifyMoney that many people underutilize their medical benefits. FSAStore.com, a one-stop-shop website stocked with FSA-eligible products, reported that each year, hundreds of millions of dollars was forfeited back to employers simply because consumers do not deplete the funds in their accounts.
So how can you make the best use of your medical FSA and avoid wasting money? We have done research and asked experts for you.
How can I use my health FSA funds?
First off, the medical FSA reimburses you for you or your dependent’s expenses that are not paid by your health insurance.
The eligible expenses include copayments, coinsurance and deductibles, prescription costs, vision and dental expenses and many over-the-counter (OTC) items — prescribed or unprescribed. But note that you cannot pay your monthly insurance premiums with the FSA.
If you have money left over in your FSA, you may want to consider getting new prescription glasses, prescription sunglasses and contact lenses. Those are some of the most common big-ticket items you can purchase with your FSA.
You can also stock up on things like first aid kits, contact solution, bandages and sunscreen that you may use year-round.
Your FSA plan provider will have a list of eligible over-the-counter items you can purchase at the pharmacy with your FSA, such as this one. Many of the pharmacy sites have sections of their sites that list all the FSA eligible items.
Another possible way to use the money would be scheduling check-ups with all your physicians. Your annual physicals and other preventative care are covered by your health plan, but if you need special medical treatment, you can use the remaining funds for copays, coinsurance or prescriptions.
Many FSA providers recommend you visit FSAStore.com.
How much should I contribute to my health FSA?
Becky Seefeldt, director of marketing at Benefit Resource, a benefits programs provider, said the average 2017 contribution was $1,250, based on the company’s 300,000 participants. That’s roughly half of the maximum amount one could contribute for the year. For those who over-contribute to their FSAs, by the end of the year, Seefeldt said, they usually have less than $100 left in their account.
Experts suggest you contribute conservatively because there is a chance that the unspent money might be forfeited. But everyone has a different situation; it’s hard to give a single guideline that fits all.
You really need to do the math when budgeting your contribution for the next plan year during open enrollment.
Nicole Wruck, a national health practice leader at Alight Solutions, told MagnifyMoney that most of the company’s clients over-contribute every year. She suggests consumers keep track of their health care expenses they had over the last year and plan accordingly for the coming year.
You will need to do the math based on the factors below:
- What did you spend on prescription drugs?
- What did you spend at the doctor, or the dentist, or the eye doctor?
- Do you have any upcoming things planned in the next year that might make you experience some additional costs? For example, are you or your dependent expecting a baby? Will you need new glasses?
To help yourself run the numbers, you will want to study your health care plans. Know your deductibles — the amount you pay for health care services before your health insurance begins to kick in — as well as your copays and coinsurance. Learn what your out-of-pocket maximum is — the most you have to pay for health care services in a plan year. After you hit your out-of-pocket max, your insurance company covers your healthcare costs for the rest of the year.
Visiting your doctors can also help. Sometimes your year-end doctor visits can help you estimate your next year’s out-of-pocket medical expense. For instance, if your dentist tells you that you will need orthodontic treatment in the near future, then consider maxing out your FSA for the next plan year to cover the big dentist bills your insurance company won’t pay.
What happens to leftover funds at the end of the plan year?
Traditionally, you would have to use up all your remaining funds by Dec. 31. But there are two options employers can adopt to make the rules more lenient now.
The roll-over option. It allows up to $500 in your FSA per year to roll over into the next plan year, so participants don’t have to rush to use the remaining funds. Seefeldt said about 40 percent of employers now adopt the roll-over option.
An extended grace period. This gives participants an additional two and half months — through March 15 — to use up the money from the previous year. At the end of the grace period, all unspent funds will be forfeited to the employer.
Depending on how your company decides to do with the FSAs, you may have a little bit more leeway to use your funds by the year end. Check with your human resource department and your FSA plan provider to find out which option is available to you.
What happens if I leave the company before I use all my FSA funds?
If your eligible expenses incurred before you left the company, you may be able to request reimbursement through your company’s claim submission deadline.
If you leave the company in the middle of the year but you have used more funds in your flexible spending account than contributed. You may not be required to pay back your company.
You have access to the total amount you have allocated for the year after your first medical FSA deposit, regardless of the balance in your flexible spending account. You are reimbursed based on your company’s pay schedule as you submit claims.
For example, if you elected to put $2,000 into your FSA throughout the year, and you have a $2,000 dental expense in May, your FSA would reimburse you for the whole $2,000, even though you’ve only contributed about $833 by then.
If you jump ship in August, you may not have to pay back the rest of your contribution. Your company will cover it: It agrees to take the potential financial risk when it signs up for the FSA program. Don’t feel too guilty just yet — your company may be able to offset the financial loss with the unspent funds forfeited from other employees.
Now, if you have money left unused in your FSA, first, try to use it as much as you can before you part ways. But If you can’t use it up by your last day, you may have a chance to extend your FSA benefits if you choose to enroll in COBRA.
COBRA allows former employees, retirees, spouses and dependents to get temporary continuation of health benefits at group rates. FSA is one of the COBRA-eligible benefits.
Generally, you have until the end of plan year to use up money left in your FSA through your prior employer, but it’s most common for someone to take their FSA COBRA for one or two months and use the funds quickly, Seefeldt said. Under COBRA, you can continue to make your health plan contributions (but pay an additional 2 percent administrative fee) before the new plan kicks in, according to the Society for Human Resource Management.
Say you leave your company in August but there is $400 left in your FSA, and you plan to continue your health insurance coverage through your previous employer for two months before your new insurance plan kicks in, you can keep submitting expenses up to $400 in that period of time but pay an administrative fee that’s 2 percent of your monthly premium. But you are not required to purchase the health coverage in order to use your FSA balance.
Again, money in your FSA cannot be used to pay your premiums. But you can use it to cover eligible medical costs.
If you’re not eligible to continue your FSA through COBRA, try to use up the money before your job ends so that you won’t leave it on the table.
Transportation benefit accounts
What are commuter benefits?
Transportation benefit accounts, also known as commuter benefits accounts, let employees use pre-tax dollars to pay for the costs of commuting. The accounts are meant to act as an incentive for employees to use eco-friendly transportation options like carpools, mass transit or bikes on their commute to the workplace.
Commuter benefits help many workers save on their transportation costs. But, it’s possible just as many workers aren’t completely sure how their transit benefit account works, or how to make the most of it.
How can I use my commuter benefits?
If you drive to a park-and-ride, catch mass transit or ride a bike to get to work, you may be able to use pre-tax dollars contributed to a commuter benefits account to cover some or all of the cost of your commute. However, if you ride solo to work or don’t use a bike or mass transit options available to you, you won’t be able to use commuter benefits to, let’s say, pay for the gas your personal vehicle burns during your bumper-to-bumper commute each morning.
However, you may be able to take advantage of parking benefits, which we’ll explain below.
You can use the money in a transportation benefits account to pay for any of the following eligible expenses:
- A ride in a “commuter highway vehicle” to or from home and work.
- This is another way of saying carpooling. Riding to work in a commuter highway vehicle counts if the vehicle can seat at least 6 passengers, according to the IRS. You might not have to go through the hassle of organizing a carpool with your coworkers or neighbors to use your transportation funds this way. Some commuter benefits programs allow you to carpool using rideshare apps like Lyft or Uber, too. All you’d need to do is use your commuter benefits card to pay for UberPOOL or Lyft Line rides and join the carpool when it arrives to pick you up.
- A transit pass.
- A transit pass is any pass, token or other tool that permits you to ride mass transit — like a train, ferry or bus — to work.
- Qualified parking.
- If you need to pay to park on or near your workplace, or you have to pay for parking in order to catch a ride on public transit for work or you pay for parking for any other work-related reason, you can use your transportation benefits to cover the charge.
- Qualified bicycle commuting reimbursement.
- You can use up to $20 per month in transportation benefits to purchase a bicycle, make improvements or repairs to the bike, and pay for bike storage as long as you use the bicycle for regular travel between home and your workplace. Be warned: If you use your transportation benefit to be reimbursed for commuting via bicycle at some point during the month, per IRS rule, you won’t be able to use the transportation funds for any of the three aforementioned eligible expenses in that particular month.
How much should I contribute to my transit benefit?
How much you contribute to your commuter benefits account will depend on how much you spend on transportation to and from work each month. Look at your monthly commuting expenses. Do the math to figure out what you would need to contribute from each paycheck to cover the cost of your commute to work. To avoid over-contributing to your transportation benefits account, be sure to to pull out a calculator.
Step 1: Estimate how much you spend on transportation expenses — monthly parking pass, bus pass, etc. — each pay period.
Estimating your commuter benefits should be easier than, say, trying to guess how many doctor’s visits or prescriptions you’ll need to cover in the coming year. “With a commuter benefit you are making an estimate,” says Joseph Priselac, Jr., CEO P&A Group, a Buffalo, N.Y.-based employee benefits administration company. “As long as you have a job and you know you’re going to keep going to it, you know how much you will spend.”
Step 2: Elect to contribute that amount for the year. The amount you elect will be divided by the total number of remaining pay periods for the year. The benefit will be deducted from each paycheck and placed in your transportation account for your use when you need it. If you change your annual contribution, the remaining number of deductions will be adjusted accordingly to reflect the change. If, for example, you elect $1,200 for the year and are paid monthly, $100 pre-tax will be deducted from your paycheck to your transportation account.
Beware of contribution limits
Commuter benefits: In 2017, the maximum monthly pre-tax contribution limit for commuter benefits is $255, or $3,060 in a year. Moving forward, the IRS may decide to change that limit. The federal agency reviews and sets the limit annually. If you bike to work, you max out at $20 per month.
Parking benefits: An additional $255 per month. If you’ve got to ride mass transit to get to work and pay for parking, Priselac says that limit is technically doubled, since you can max out $255 for parking and another $255 for mass transit passes each month.
Unless you are certain sure you will use up the maximum in transportation spending for the year, don’t simply contribute the maximum amount you can to your transportation benefits account.
What if I want to reduce my contribution?
If, for whatever reason, you decide you don’t need to contribute as much or you want to contribute more to your transit benefit fund during the year, that’s not a problem.
Unlike an FSA, for which your contribution election can’t be changed during the year, “you can change your election anytime you want,” says Priselac.
To clarify, you can change your commuter benefits election as often as your company allows. For some, that may be once per pay period, for others, it may be once per quarter. It’s one of the few benefits you can change mid-year. Consult with your employer’s human resources department to find out how often you are able to change your election.
“If you’re not sure how much you will be spending, start by contributing a small amount,” says Caspar Yen, Senior Director of Product Management at Zenefits, a human resources software company. “There’s no need to over contribute to play it safe.”
That said, if you feel you’ve contributed too much to your commuter benefits account to use up within the period, you can stop the deductions and use up the balance you’ve accumulated until it runs out, then restart your contributions. Just be sure to keep an eye on your transportation benefits balance so you know when to restart your contributions.
What happens to leftover funds at the end of the year?
Transit benefits rollover each year so long as you are still with the company and the company still offers the benefit. That means you don’t have to rush to use leftover funds at the end of the year.
This is in contrast to a flexible spending account, which has a ‘use it or lose it’ rule, which we covered above.
In a sense, there is no ‘plan year’ for transportation benefits, although your company may ask that you confirm you’d like to stay enrolled in the program each year when you elect your annual benefit contributions. Transportation benefits accounts roll over each pay period and should roll over into the coming period at the end of the year. That means there’s no danger of losing any of the money you’ve contributed so far, as long as you remain employed with that particular employer.
What if I quit my job or get laid off?
“As long as you are still working there and you have work related transit expenses the money stays,” says Priselac.
But if you quit your job or are laid off you could lose some or all of the money remaining in your transportation benefits account. If you’ve been over-contributing, any money you don’t use up will be lost to you, and returned to your employer.
The good news is that some benefit programs will give employees a grace period to submit reimbursements requests for any transportation expenses incurred during their employment — even if they quit.
If you know you may no longer be with the company or the company is planning to terminate its program, there’s one thing you can do to save your money.
“Before leaving a company, employees can make a large eligible purchase,” says Yen.
In the Bay Area, for example, an employee can purchase a clipper card with up to $300 in credits. If the transit method you take offers individual tickets, you could purchase a large number. Or, if you are able to load your transit pass with cash, you could place a large amount on your pass.
For example, those in the New York City metro area might load a large amount of money onto their MetroCard and use it up until it’s depleted.
Whenever you’re making a decision about benefits, it helps to talk to your HR department or the benefit provider, just to be sure you understand the rules. Mistakes you make when choosing benefits can end up costing you a lot of money, so ask questions and avoid leaving your decisions to the last minute of open enrollment.
The post How to Maximize Your FSA and Transit Benefit Before You Lose It appeared first on MagnifyMoney.
Would you like to spend less money up-front, drive away from the dealership in a brand-new car, and spend less time and money on vehicle maintenance?
Consider leasing your next car.
What Does Leasing a Car Mean?
Leasing a car is a lot like renting one—but for a much longer period of time. When you buy a car, you own it after you’ve made all your monthly payments. When you lease a car, you make monthly payments, drive it for a set amount of time (usually about three years), and then give it back to the dealer when that time is up.
Then you get to decide what you want to do next with no strings attached—do you want to lease again or buy a car this time?
While leasing isn’t the perfect solution for everyone, it is absolutely worth considering. Here are seven reasons leasing a car might be the better option for you.
1. You Get to Drive Newer Cars
If you’re the kind of person who likes driving a new car, leasing your vehicle may be a better option than buying one. Cars depreciate quickly, so if you buy a new car, you’ll probably owe more than it’s worth not long after you make the initial purchase.
If you lease instead of buy, you can keep driving new cars indefinitely—just trade in your old lease for a new one every few years. That means you’ll have access to the latest features, like better navigation, back-up cameras, or music players. You could even lease an expensive car for an affordable monthly payment.
2. You Probably Pay Less Up-Front
Traditional car loans usually come with somewhat hefty down payments. But if you lease instead, you’ll likely have a lower down payment than you would with a normal loan. In fact, some dealers may not require a down payment at all.
This means you pay much less up-front so you can put that extra money toward home repairs, a vacation, or paying down existing debt.
3. You Get to Drive a Safer, More Reliable Car
When you lease, you’ll probably drive a newer car, which can be safer and more reliable. The newest cars have the most recent safety features and are compliant with current safety regulations that older cars might not meet.
Plus, since a newer car has less wear and tear, it’s less likely to break down and leave you stranded in an unsafe situation on the side of a fast highway or miles away from civilization.
4. You’ll Likely Spend Less on Repairs and Maintenance
Usually, a newer car needs fewer repairs, but when issues do come up, repairs will often cost less if you lease your vehicle. Most of the time, the vehicle you’re leasing will still be covered by the manufacturer’s warranty, so you won’t have to foot the bill for expensive repairs. There’s a good chance that basic maintenance, like oil changes, will also be covered in your lease agreement or car warranty.
5. Your Monthly Payments Might Be Lower
When you lease a vehicle, you pay for the vehicle’s depreciation during the lease. When you buy, you’re paying taxes, fees, special finance charges, and the full price of the vehicle.
This means that monthly lease payments are usually lower than loan payments.
6. You Don’t Have to Worry about Selling Your Car
Selling a used car can be a hassle. With leasing, you skip it entirely. Instead, you drop the car off with the dealer when the lease is up. Then you’re free to lease a car again or purchase a new one without worrying about trade-in value or an ownership transfer.
7. You May Pay Less Sales Tax
If you buy a car, you pay taxes all at once for the full value of the vehicle. When you lease, you pay taxes on your monthly payment and spread that cost out over time, so there’s a good chance you’ll pay less sales tax.
Things to Remember about Leasing a Car
There are lots of great perks about leasing instead of buying, but it isn’t the perfect solution for every person. If you decide to lease a car, there are a few things you should remember.
- You Still Need to Get through a Credit Check
Leasing isn’t the same as a normal car loan, but it is still a form of financing, so a dealer will check your credit to make sure you’re eligible for a lease. In fact, you might need a higher credit score to lease than you would need to buy.
If you have a low credit score, you may pay a higher interest rate or be denied financing altogether. It is always wise to keep an eye on your credit report throughout the year to look for errors or other problems. For the best rates, make sure your credit is in good shape before you apply for financing.
- You May Have to Stick to a Mileage Limit
Leases come with mileage limitations. In most cases, that limitation will be somewhere between 10,000 and 12,000 miles per year. If you go over that limit, you pay extra fees for every extra mile—which can be costly.
Before you sign up for a lease, think carefully about how much you drive each year. Your daily commute is probably the biggest thing to consider, but all those little trips to the grocery store can also add up. If you drive more than 10,000 miles in a year, you may want to pay for extra miles or buy a car instead.
- You Get Charged for Extra Wear and Tear
Leases require you to keep the vehicle in good condition. If you turn it in with stains, scratches, dents, or dings, you’ll have to pay extra charges. Should you lease a car, take extra good care of it.
- You Could Be Penalized for Terminating the Lease Early
Car leases work a lot like other lease agreements. If you terminate your lease early, you may be subject to significant penalties and fees—just like you would be if you broke an apartment lease early.
- You Can’t Modify the Vehicle
Lease agreements have strict rules, and if you violate the agreement, you’ll be fined. Modifications will likely violate the warranty or lease terms—even if they’re modifications that you consider upgrades, such as shiny new rims or a more powerful sound system.
Should You Lease or Buy a Car?
Leasing is an excellent option if you’re comfortable with the limitations that are spelled out in the lease agreement. If you’re still on the fence, ask yourself the following questions to determine whether a lease is best for you:
- How much do you drive each year? If you love going on epic road trips, leasing may not be the best option, but if you just need a car to get to and from work and around town, a lease would work well.
- How much do you want to spend up-front? If you don’t have a large down payment saved up, you could get into a new car faster by leasing instead of buying.
- Is driving a new car important to you? If you’re okay driving the same car for the next 10 to 15 years, you should probably just buy one. However, if you want to consistently drive newer vehicles, leasing is one of the easiest ways to do that.
- Does vehicle maintenance frustrate you? Because leased cars are newer, they usually have fewer maintenance issues. And when those issues do come up, they’re often covered under the manufacturer’s warranty. If you don’t want to think too often about maintenance, leasing might be a good call.
- Do you have good credit? Sometimes, you need better credit to lease a car than to buy one. If you’re still working on repairing your credit, you may have to purchase a car instead of leasing one.
- Do you care more about short-term or long-term savings? Leasing is a great way to save on up-front costs. It also usually results in smaller monthly payments, which makes leasing a perfect option if you want to save money right now. However, in the long run, leasing may cost more than buying since you don’t own any property at the end of your lease.
When deciding whether leasing or buying a car is better for you, carefully consider all the various factors. It’s important to take your own needs and preferences into account to determine which is the most reasonable solution. Use the tips above and research local leasing options to ensure you pick the best one.
The post Leasing a Car: 7 Reasons Why You Should Consider It appeared first on Credit.com.
“All the thoughts and dreams of people throughout history, and all you need’s this little card to borrow ’em for free!”
Other children of the ’90s might recognize this lyric from the classic tune “Library Card,” rapped by the cast of the cartoon show Arthur. It’s a silly song, but it’s a solid reminder that libraries can be amazing sources of entertainment and education. And unlike a credit or debit card, swiping a library card doesn’t cost a thing.
But exactly how much can you save by choosing your library card over a credit or debit card?
I recently overhauled my budget, and in the process, I decided to put my local library to the test. The exercise saved me nearly $700 per year in dodged subscription costs—money I now use to make $57 of extra student loan payments per month. Here’s how it worked.
Cutting Back on Entertainment Subscriptions
I’m decent at setting and following a budget. But there I was, facing another month where my family netted $0.
Specifically, I was bugged by how many frivolous entertainment subscriptions we had. I subscribed to a video streaming service here; my husband signed up for a premium account there. Although each account seemed affordable or even cheap, they added up.
Upon review, I realized that in the past year or two, we’ve paid for a number of entertainment subscriptions:
- $12 per month for Hulu Plus
- $9 per month for Netflix
- $15 per month for Audible
- $11 per month for online newspapers and magazines
- $10 per month for Spotify Premium
We’d mindlessly signed on for $57 per month in subscription fees that added up to $684 per year.
Don’t get me wrong, I think entertainment subscriptions can be a savings-savvy alternative to pricier options like paying for cable or seeing movies in theaters. The problem wasn’t the subscriptions themselves—it was the mindless spending they reflected.
Finding Free Entertainment at My Local Library
I thought I could find better uses for that cash if I canceled those services. But I didn’t love the idea of quitting cold turkey.
My Audible subscription caught my eye first. It cost me $15 per month. But I already used the OverDrive app, available through my local library, to request, check out, and listen to audiobooks for free. So I killed my Audible subscription and gained an extra $15 per month right there.
I wondered if I could replicate those results for other subscriptions. I dove into my library’s digital catalog and quickly found out.
My library partners with RBdigital (formerly Zinio) to offer a range of digital magazines. I used the service to replace a subscription to ESPN The Magazine ($2.50 per month) and found lots of other reading material worth browsing.
The New York Times digital pass that’s part of my library membership grants me access to New York Times apps and unlimited articles at NYTimes.com. That meant I could cut $8 per month from my budget and still support an outlet I love.
PressReader is another decent replacement for subscriptions to periodicals, and I can access it for free through my library.
TV and movies
I took the plunge and ended up canceling my $9-per-month Netflix membership of more than eight years. Now, my family accesses documentaries and movies through Kanopy and OverDrive, thanks to our library accounts.
For my 4-year-old daughter, Nickelodeon shows on Hoopla are all the rage, so I was able to cancel my subscription for Hulu Plus and save $12 per month.
My library card granted me access to music streaming and downloads through Hoopla and Freegal. Bye-bye, $8 Spotify Premium fee.
In all, I found $57 worth of monthly fees to cut from our budget. My family easily saves $684 per year while enjoying much of the same entertainment and content we’ve always loved.
5 Tips for Getting the Most Out of Your Library Card
Like most budgeting decisions, trading in your subscriptions doesn’t come without sacrifice. I’ve learned a few tricks along the way to make the most of my library card.
- Don’t Forget Analog Entertainment
My main goal in cutting costs was replacing my entertainment subscriptions. However, I can’t always find a decent digital replacement. In many cases, I request a physical copy of the book, movie, TV show, or music album and pick it up during my next library visit.
- Get Comfortable with a Little Delay and Inconvenience
A huge benefit of paid subscriptions is instant, convenient access to any content you want on a particular platform.
With library services, there might be a limit on how much content you can check out or access at a time. You might get put on a waiting list for a book or movie as well. It can be an annoying adjustment, but remember that you’re saving money.
- Find Other Cost-Saving Materials and Services
Some library districts offer free tutoring services as well as resources to help students study for the SAT or graduate placement exams.
I also found out that my library card gives me access to Lynda.com’s online educational training. This allowed us to replace a $29-per-month membership my husband had been using to brush up on his web development skills and brought our annual savings up to $713.
Take a look at some of the streaming services available with your library card. You might have access to free workout videos, which could replace a gym membership.
- Watch Out for Late Fees
Of course, it’s important to watch out for library card fees. One of the reasons I prefer digital library content is that it’s automatically returned when the time is up, so I never get a late fee.
But I’ve racked up some significant late fees and replacement fines for physical items I didn’t return to the library in a timely manner. If you’re not careful, your library fine could wind up in collections and damage your credit.
If you do check out physical copies, get in the habit of keeping track of them and making regular trips to return them on time.
- Know When to Keep a Subscription
Some library districts are well-funded and have great selections. Others, not so much. If your library’s pickings are slim, you might decide you’d rather keep your paid subscriptions. Even a big library district with awesome options won’t be able to offer you everything you could hope for.
Although my library offers a robust selection of services, I decided to keep a few subscriptions. My Amazon Prime membership offers tremendous value for its $99-per-year price, including access to free shipping and streaming services for music, movies, and TV shows. My husband loves podcasts and decided he wanted to keep his $5-per-month Stitcher subscription to support the platform.
Take the challenge to turn to your library card before your credit card, and you might be surprised by the savings. And remember: When you cut out monthly subscriptions, you’re saving money not just once, but also every month thereafter.
You can take your new cash flow even further by using it to pay down credit card debt—a smart option, considering the average credit cardholder owes over $4,000. Or you could look for other ways to build lasting wealth, such as saving for retirement or building a side hustle. Find more ideas on how to save money without depriving yourself at Credit.com.
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