Buying a new car can be one of the most frustrating purchases in a consumer’s lifetime. While it’s not the biggest expense ever, negotiating with a car salesman can be a big enough headache that you’ll never want to do it again. After researching the type of car you want to buy, go to the dealer with a plan for getting the best price. Here are some ideas to help get the best deal.

Shop for incentives

January is typically a slow month for car dealers, who try to boost sales by offering incentives such as cash back or 0 percent financing. Incentives included cash back, sometimes thousands of dollars, and 0 percent financing.

Shop for a loan

Some car companies will finance your car and charge no interest on the loan. They still make money through increased vehicle sales, since the rates are usually only good for certain models.

You’ll usually have to choose between the cash back rebate or the low financing rate from the dealer. Shopping around for a loan will let you get both if you can get a low loan elsewhere.

Before looking for a loan, know your credit score and fix any errors in your credit report. Places to check for loans include Credit Sesame, credit unions, banks, and online auto lenders such as Auto Credit Express. After you’ve found a good loan rate, ask the dealer if they can beat it.

Don’t go to a dealership

Instead of visiting a dealership, call all of the dealers for the car you’re interested in within a 50-mile radius or however far you’re willing to go to buy.

Tell them you plan to buy a specific car and list the options you want on the car, and that you will decide by 5 p.m. today. Ask them for the lowest price they can give you, which should include all taxes, and tell them you’ll go to the dealer with a check for the best price. It’s a great idea if you can afford to pay for a car upfront without financing.

Negotiate everything separately

If you’re trading in your car, you’re unlikely to get much money for it. Don’t let a dealer combine the price of your trade-in with the new car price. It’s confusing and can hide the fact that they aren’t giving you much money for the trade-in. When I bought a new car the salesman quoted me a price with my old car as a trade-in. I asked what the price would be without selling him my old car, and it was $100 less. I sold my old car on my own.

When negotiating everything separately, don’t bargain based on the financing deal or the monthly payments. Focus on the overall price of the car, not how low they can make the monthly payments.

Time your purchase

Since car salesman work on commission, they may be anxious in the final days of the month to meet their sales quotas and may make better deals. Between Christmas and the New Year is a great time to shop for a new car because most people don’t do it at that time of the year and dealers are looking to meet goals for the number of cars sold by the end of the year.

Be ready to walk away when buying a car

If you do go to a car dealer and don’t get the price you want, walk away. You could spend an afternoon haggling, and walking away may be the best way for the salesman to immediately come down to your price. They know you’re unlikely to return if you leave, so it may be their last chance to get you to buy.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

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The average American moves 11.7 times in their lifetime. That can be exhausting and can become more so when moving to a new state. Approximately 4.8 million Americans made interstate moves in 2021, Census data shows.

Packing up everything you own and moving it across state lines is back-breaking and can cost a lot of money. But the expenses don’t end after hiring a moving company or renting a truck.

Moving to a new state incurs many other costs. Here are some to consider long before you start packing.

Moving costs

Let’s start with the costs of physically moving your stuff from one home to another. The distance you’re moving and whether you hire professionals or do it yourself impacts the cost.

The average cost of an interstate move is $4,300 to $4,800, with an average distance of 1,200 miles, according to the American Moving and Storage Association, a nonprofit representing the moving industry in the United States.

Housing

Housing is likely the biggest cost of moving. Renting is often cheaper than buying, but let’s look at the costs of buying a home.

Realtor.com ranked home prices in the largest metro areas in the country from mid-December 2021 to mid-December 2022. It then pulled out the five markets with the biggest increase and decrease in price.

Biggest price increases of 2022

1. Omaha, NE

• Year-over-year change in price per square foot: +21.6%
• Mid-Dec. 2022 median listing price: $342,500

2. Jackson, MS

• Change in price per square foot: +21.6%
• Median listing price: $316,000

3. Wichita, KS

• Change in price per square foot: 21.5%
• Median listing price: $289,900

4. Milwaukee, WI

• Change in price per square foot: +20.9%
• Median listing price: $374,900

5. Little Rock, AR

• Change in price per square foot: +20.1%
• Median listing price: $299,900

Biggest price decreases of 2022

1. Boise City, ID

• Change in price per square foot: -5.8%
• Median listing price: $509,900

2. Denver, CO

• Change in price per square foot: -5.7%
• Median listing price: $599,990

3. Sacramento, CA

• Change in price per square foot: -3.1%
• Median listing price: $591,500

4. New Orleans, LA

• Change in price per square foot: -2.7%
• Median listing price: $325,500

5. Chicago, IL

• Change in price per square foot: -1.6%
• Median listing price: $320,000

Apartment rents rise

According to data from the online listing marketplace Apartment List, the price of renting a one-bedroom apartment rose in almost every state in 2022, Rents are highest in coastal states. The states with the highest monthly one-bedroom rent estimates as of October 2022, according to Apartment List, are:

1. Hawaii: $1,718
2. New York: 1,678
3. California: $1,658
4. New Jersey: $1,538
5. Virginia: $1,419
6. Florida: $1,418
7. Massachusetts: $1,409
8. Maryland: $1,407
9. Colorado: $1,388
10. Washington: $1,360

Living costs

The cost of living is a broad category that people who are moving should look into by researching how much different services cost in areas they’re thinking of moving to. A real estate agent may have some data for you, and checking with individual service providers can help too. 

Living costs to consider include:

• Groceries
• Utilities
• Transportation
• Health

The Missouri Economic Research and Information Center puts out a cost of living data series. It recently ranked states for the third quarter of 2022, which we’ll use in examples below. States are given an index score in various categories to show how they compare to other areas. A score of 100 is average. A 110 score shows that prices are 10% above the national average.

In general, the most expensive areas to live were Hawaii, Alaska, the Northeast, and the West Coast. The least expensive were the Midwest and Southern states.

Groceries

Buying groceries for a year in moderate-cost meal plan for a family of four costs $15,021, according to data from the U.S. Department of Agriculture.

Here are the 10 states with the highest average grocery store prices, according to the Missouri Economic Research and Information Center.

1. Hawaii: 148.5
2. Alaska: 131.8
3. Massachusetts: 113.0 
4. California: 112.3
5. Maryland: 112.2
6. New York: 109.2
7. New Jersey: 107.0
8. Washington state: 107.0
9. Oregon: 106.4
10. New Hampshire: 104.6

Utilities

If you want a low electricity bill, find a state that hasn’t deregulated its electricity system. California and 34 other states that have deregulated all or parts of their electricity system tend to have higher rates than the rest of the country, the New York Times reports.

Some states haven’t deregulated gas and electricity, and energy costs are lower. Some states only regulate one market, such as Florida, which has deregulated gas markets but not electricity.

On average, residents in deregulated markets pay $40 more per month for electricity than in states where individual utilities control most or all parts of the grid.

States with regulated gas and electricity markets, which can make utility bills lower, are:

• Alabama
• Alaska
• Arizona
• Arkansas
• Hawaii
• Idado
• Kansas
• Louisiana
• Minnesota
• Missouri
• Nevada
• North Carolina
• North Dakota
• Oklahoma
• South Carolina
• Tennessee
• Utah
• Vermont
• Washington state
• Wisconsin

Transportation

U.S. households spent an average of $10,961 on transportation in 2021, according to federal data. Rural households spent more on transportation ($13,665) than urban households ($10,362). 

Taxes

Taxes can eat away at your disposable income, so it’s worth checking what the property, state and local sales, income and estate taxes are before moving.

Local jurisdictions can add their own district taxes to sales taxes. California, for example, has a statewide sales tax rate of 7.25%, but most areas have added tax rates from 0.10% to 1%. Some are higher, such as Burbank’s total sales tax rate of 10.25%.

Eight states have no personal income tax:

• Wyoming
• Washington state
• Texas
• Tennessee
• South Dakota
• Nevada
• Florida
• Alaska

According to the Tax Foundation, the 10 states with the highest personal income tax rates are:

1. California: 13.3%
2. Hawaii: 11%
3. New York: 10.9%
4. New Jersey: 10.75%
5. District of Columbia: 10.75%
6. Oregon: 9.9%
7. Minnesota: 9.85%
8. Vermont: 8.75%
9. Iowa: 8.53%
10. Wisconsin: 7.65%

Weigh pros and cons

There are many reasons to avoid moving to a new state. You may not know anyone there, the costs of living are much higher, and you really don’t want to pack up all of your belongings.

But there are probably more pros than cons, otherwise you wouldn’t be seriously considering a move. New jobs, college, relationships, being unhappy where you live now, and looking for a lower cost of living are some reasons to move. Whatever your reasons are, start by doing some homework on what the actual costs will be.

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Mistakes happen, and they can often be forgiven. However, make a mistake using your credit card and you may not be forgiven easily. Some issues could cost you money and cause your credit scores to fall. Here are some of the biggest mistakes to avoid with your credit cards.

1. Not paying on time

Not paying any of your bills reported to the credit bureaus can hurt your credit score, but not paying a credit card bill on time can hurt in a few other ways too.

By paying late, we mean more than 30 days late, when the major credit bureaus are notified. Late payments can stay on a credit report for up to seven years after the delinquency date, even if you catch up on the missed payment later.

Payment history accounts for the largest percentage of a credit score, 35%, so late payments can make it harder to qualify for credit at the best interest rates.

Late fees may be assessed by your credit card company, though they’re limited by federal law to:

• Up to $30 for an initial late payment
• Up to $41 for subsequent late payments in the same or one of the next billing cycles.

Your interest rate may be increased by a penalty APR if you don’t make a credit card payment for 60 days or longer. Rates vary but can be as high as 29.99%

Eventually, your credit card provider will likely contact you about missing payments. If you still don’t pay, the account will default and your account could be sent to a collection agency.

2. Only making the minimum payment

Making only the minimum payment on your credit card bill is tempting. Few other bills have this option. Your landlord, cable provider, utility company and others typically require you to pay the entire balance of each monthly bill.

A high credit card balance, or even a moderate one, can look overwhelming on a statement. That may push you to make only the minimum payment due, which may seem logical at the time. But carrying a credit card balance by paying only the minimum can get expensive.

Credit card interest rates can change, and interest is usually compounded daily, meaning you’re paying interest on interest and the principal balance. 

The minimum payment is usually based on a percentage of your balance if you owe more than $1,000, such as 1-2%. Owe less, and you’ll either be charged a fixed dollar amount such as $25, or the full balance if you owe less than $25.

Suppose you carry a $5,000 balance on a card that charges 18% interest. The minimum payment is 2%, or $100 on a $5,000 balance. It would take seven years and 10 months to pay off the balance. The total interest paid would be $4,311.

But the interest rate rises to 29% if payment is more than two months late and the penalty APR kicks in. If the minimum payment increases to 3%, you must pay at least $150 per month. It would take five years and 9 months to pay off the balance. The total interest paid would be $5,286.

That’s more than the amount borrowed in interest alone and 22% more than paying $50 less for almost eight years. The good news? The bill would be paid off about two years earlier with the higher minimum payment.

3. Cash advances

Many credit cards can be used to withdraw cash from an ATM, a cash advance on a credit card. But it can cost you in a few ways:

• A typical fee is 5%. Withdraw $200 and the fee is $10.
• Interest charges of up to 29.99% start accruing immediately from a cash advance APR.

4. Adding too much debt on your credit card

Making the minimum payment and not paying your credit card balance in full each month is bad enough. Use too much of the credit amount available on a card, called a credit utilization ratio, and your credit score could drop.

And, of course, you’re stuck paying off a credit card balance for months, if not years.

The credit bureaus don’t have a set rule on how much credit consumers should use, but a credit utilization ratio below 30% is a good starting point. Get it below 10% and you should be much better off. Getting to 0% is possible by paying off your bill each month.

The ratio is calculated by dividing your credit card debt by your available credit. With $30,000 in available debt and a $3,000 balance, the equation is 3,000/30,000 = 0.1. That’s a ratio of 10%, which is good.

5. Maxing out your cards

Using all the credit available on your credit cards can hurt your debt-to-income ratio. That measures how much of your gross monthly income goes to your total monthly debts.

Using 43% or more of your monthly income before taxes are taken out can signal to lenders that you have too much debt. Adding a mortgage, credit card, or other debt could overburden your finances and cause you to miss payments.

6. Forgetting a balance transfer due date

Qualifying for an introductory interest rate of 0% on balance transfers is good news if you’re trying to pay off a large credit card debt that charges a high-interest rate. Some cards give you the 0% rate for a year to 18 months, giving you time to hopefully pay off the transferred debt entirely without paying any interest.

But if you forget when the 0% intro period ends — and it will end — then you’ll be charged the standard APR. 

Your forgetfulness could erase the no-interest deal, costing you the money you thought you were saving.

Also, many cards charge a balance transfer fee of 3% to 5% of the amount transferred. Don’t expect to get that fee back if your 0% interest rate rises to 18% or so.

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In the Apple TV+ show “The Big Door Prize,” a mysterious machine offers residents of a small town a chance to learn their true life potential for a few quarters. Once inside the booth, they’re also asked for their fingerprints and Social Security number.

“Scam alert!” my brain yells as actor Chris O’Dowd and others enter their SSN and put their hands on the blue, glowing screen without questioning why. Identity theft and credit card fraud are next, I warn them. Yet no one walks out without getting a small card telling them what their life’s potential is.

This show doesn’t delve into an explanation of credit card fraud, but I’d bet that in a sequel, the characters would all be victims of this type of crime. And the owners of the blue machine would be the criminals.

What is credit card fraud?

Credit card fraud is a type of identity theft. It entails the unauthorized use of someone’s credit card by criminals to charge purchases or remove money in the card owner’s name.

A physical card can be stolen, or account numbers, PINs and other identifying information can be used to open new credit accounts fraudulently.

Credit card fraud is one of the most common kinds of fraud in the U.S. Nearly 390,000 reports of credit card fraud were made in 2021, according to the Federal Trade Commission.

Are consumers liable for credit card fraud?

If you’re the victim of credit card fraud, you’re only liable for up to $50 under federal law. Many credit card companies and banks offer $0 liability.

If caught quickly, unauthorized charges to a credit card can be reversed, and such charges can even be declined before they’re approved. Users can get a new card and account number immediately, in some cases.

But it can also be stressful. Card issuers may take months to investigate fraud, and fraud that isn’t resolved quickly could damage your credit.

Common types of fraud

Credit card fraud can come in many ways. Here are some of the most popular:

Physical theft

If your physical credit card is stolen from your purse or wallet or someone grabs it off your table at a restaurant and runs away, you should contact the police immediately. Be aware that newly issued cards can be stolen from mailboxes. 

Online theft

Thieves don’t need a physical credit card to buy stuff in your name. Security breaches can lead to your credit card data being sold on the dark web. With your name, account number and security code, they could buy many things online before suspicion is aroused.

Credit card application fraud

Without a stolen credit card in hand, criminals can steal your personal information, such as your name, address, birthday and Social Security number, and then apply for a credit card in your name. You may not realize your identity has been stolen until you check your credit reports or apply for credit.

Account takeover

With stolen personal information, scammers contact credit card companies pretending to be you. They change passwords and PINs to take over the account, which you may not learn about until you try logging in to your account online or try to use your card.

How to spot suspicious activity

Awareness of the above types of fraud can help you look out for them, but other signs of suspicious activity should also be on your radar. They include:

• Someone calling or emailing you, saying they’re from the government and are asking you to pay them money you owe the government.
• Any company or person asking you for personal information via email, text or call.
• Suspicious transactions on your credit card that you don’t recognize.
• You’re receiving a credit card statement for a card you didn’t apply for.
• You’ve received a credit card you didn’t apply for.

Steps to take to avoid becoming a victim of fraud

Here are some ways to avoid becoming a victim of credit card fraud:

• Review your monthly credit card statements carefully for charges you didn’t make and withdrawals you didn’t authorize.
• Sign up for alerts from your credit card issuer for transactions over a certain amount, such as $50.
• If a credit card company calls you about suspicious activity on your card, and you didn’t request a call, hang up and call your card provider to see if there’s a problem with your account.
• Don’t leave credit cards unattended when out in public. At home, keep them in a safe place.
• Be aware of scams such as phishing emails, and use two-factor authentication to protect your online accounts.
• If you’re asked at the cash register if you want to apply for a store credit card, you may not want to do it in person. Please don’t share your personal information with the cashier, who could use it later to open a card in your name. Please don’t give them your Social Security number. Instead, review the application details online and apply when you’re at home.

What to do if you suspect fraud

If you think your credit card or personal information has been stolen or you are the victim of a fraudulent transaction, you should notify your card issuer online or by phone. Your card can be canceled and a new card with different numbers can be issued.

After that, here are some other steps you may want to take:

• Request a fraud alert from one of the three main credit reporting companies: Equifax, Experian, and TransUnion. This alert requires creditors who check your credit report to verify your identity before opening a new account, issuing an additional card, or increasing the credit limit on a card at the cardholder’s request. 
• Request a free credit freeze from the credit reporting companies. Also called a security freeze, this prevents you and anyone else from opening accounts in your name.
• If your credit card provider isn’t helping, you can submit a complaint to the Consumer Financial Protection Bureau.
• File a complaint with the Federal Trade Commission, which will help you create a personal fraud recovery plan.
• File a report with your local police department if you suspect credit card fraud. Police may be unable to help much unless a card is physically stolen, but creditors may need police reports when investigating fraud claims.
• Check for fraudulent activity on your credit reports, which all three of the major credit reporting agencies are offering for free through the end of 2023.

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Life is expensive enough without a poor credit history. Without good credit, you may not get the apartment or job you want and borrowing money can be more expensive.

One way to establish credit and a credit score is to open a traditional or unsecured credit card and pay it off in full and on time each month. A traditional credit card does not require a security deposit or collateral and allows the cardholder to make purchases and borrow money up to a predetermined limit.

Securing a traditional credit card may be difficult if your income is low and you have not already established credit. It seems you need credit to get credit, but where to start? Is it possible to establish credit without credit cards?

Pay your bills on time

You don’t have to have a credit card to use this tactic to raise your credit score. Pay your regular bills on time—car loan, rent, utilities, phone, water and others—and make sure they are reported to the credit bureaus. This can help you build payment history, accounting for 35% of a FICO Score.

Get a secured credit card

A secured credit card is technically a credit card, but it works differently from a traditional credit card. With a secured credit card, you provide a security deposit upfront to the credit card issuer, typically equal to the card’s credit limit. This deposit serves as collateral and reduces the risk for the issuer. You can then use the card to make purchases and build credit, just like a traditional credit card.

For example, you deposit $500 in an account tied to the card and get a card with the same credit limit as your deposit. You make payments just like for a traditional card, which are reported to the credit bureaus. If you fail to make repayments, then the card company can withdraw money from your deposit.

After six months or so of using the card responsibly (meaning paying the bill on time), some unsecured card companies offer you an unsecured card and return the deposit to you. Or the deposit amount is returned to you when you close the account.

The new Credit Builder from Credit Sesame is a new kind of credit-building account that allows you to build credit with your everyday purchases and does not require a security deposit.

Open a credit-builder loan

A credit builder loan is a type of loan designed to help you establish or improve your credit scores. Instead of receiving the loan funds upfront, you make monthly payments with interest over a fixed period of time. The lender reports each payment to the credit bureaus, which can help improve your credit score over time. You receive the funds paid into the loan at the end of the loan term.

These loans are meant for people with poor or no credit. Money from the loan is only given to you after you pay off the loan in full. On-time payments are reported to credit agencies, which can be the start of your credit history.

Your loan payments are deposited into a bank account held by the lender, usually a credit union or community bank. You make the monthly payments for six months to two years to pay off the loan, and then you get the loan proceeds.

It may seem to be a counterintuitive way to build a credit history by paying interest on a loan you do not have access to for months or years, but it is designed specifically to establish and build credit.

Get a co-signer on a loan

A co-signer can be added to a credit-builder loan, and one with good credit can help you get a lower interest rate than you would on your own. Other types of loans also allow co-signers and a personal loan may be cheaper than a credit-builder loan.

A loan can be easier to qualify for with a co-signer since their good credit is used to get the loan. And if you repay the bill on time, your credit score should rise.

A co-signer accepts equal responsibility for the loan and is liable for paying it if you fail to pay. If you miss payments or make late payments, you risk damaging your credit score and your co-signer’s credit score.

A parent or relative with a good credit history can be a big help as a co-signer.

Become an authorized user

This is another way to access a traditional credit card without applying for one yourself. An authorized user on a credit card has been granted permission to use someone else’s credit card account. This may be a parent, relative or trusted friend with good credit. It’s like a piggyback ride for improving your credit score.

There is no requirement to use the card, but as an authorized user you benefit from the cardholder’s good credit habits. If you receive the card and used it and fail to make repayments you could damage the cardholder’s credit score.

Repay student loans

Repayment of federal student loans usually begins six months after graduating from college or dropping below half-time enrollment. 

Payments are reported to the credit bureaus, so repaying student loans that are in your name can improve your payment history, which makes up the biggest percentage of a credit score. Missed and late payments could hurt a credit score.

Check your credit scores

Checking your credit score is free and it’s a good idea to check regularly while establishing your credit history. Checking for and correcting mistakes on your credit reports may help improve your score.

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A credit card is an easy way to buy almost anything at any time. Impulse purchases, going out to dinner with friends, an extra drink at the bar, airline tickets and many other things that you must repay when you receive your credit card bill. Maxing out your credit cards and carrying high balances can affect your credit score. Why? Because using too much of the credit available to you, called credit utilization, is a big factor in setting credit scores. Too high of a utilization rate and your score could drop.

How is credit utilization ratio calculated?

Credit utilization ratio, also known as a credit utilization rate or credit usage is a financial metric that measures the percentage of your available credit in use. To calculate your credit utilization ratio, divide your total credit card balances by your total available credit limit and then multiply by 100 to get a percentage. For example, if you have a total credit limit of $2,000 and you have balances totaling $500, your credit utilization ratio would be (500 / 2000) * 100 = 20%.

A lower credit utilization ratio is generally considered better for your credit score. Lenders view a lower ratio as a sign of responsible credit management, while a higher ratio can indicate a higher risk of potential financial difficulties. It’s often recommended to keep your credit utilization ratio below 30% to maintain a good credit score and the utilization ratio accounts for 30% of a FICO Score. What are some ways to lower your credit utilization?

Pay off balances each month

If you pay off your credit card completely each month, then your ratio should not change. Your credit utilization ratio may change monthly depending on how much you spend and the balance carried. If you carry a balance and fail to pay your credit card bill in full, then your rate could increase and this may impact your score negatively. The higher the utilization ratio, the more your score could fall.

When you pay off your credit card bills on time and in full each month you lower your credit utilization ratio to zero. This also means you won’t pay any interest on a credit card that’s paid off by the monthly due date.

If you can’t get to a zero balance each month, then at least try to keep them low so that your credit utilization ratio is below 30%. Don’t max out your credit cards.

Increase your credit limit

Successfully getting your credit card company to increase your credit limit lowers your credit utilization ratio, but only if you don’t use the extra credit available. The way this works is as follows.

Suppose your credit limit on a card is $5,000 and you’re using $1,500 of that. Your credit utilization ratio is 30%, which is good. But if you raise the limit to $7,500 and still use only $1,500 of the higher available credit, and the ratio drops to 20%. This may help your credit score.

If you use that extra $2,500 in credit, along with the $1,500 balance, you’re now using $4,000 of a $7,500 limit, or 53%, which is well above the recommended level of 30% or less. This may damage your credit score.

Open a new credit card

Opening a new credit card can lower a credit score for a few months, but it may be worth it if you have credit cards with high balances that you can’t afford to pay off.

A 0% introductory rate balance transfer credit card can help you transfer a balance from a high-interest card to a card with no interest charges for up to a year or so. Such cards can be difficult to qualify for unless you have excellent credit, but if you qualify and have high balances elsewhere, it can be worth doing.

It essentially increases your credit limit, so it’s important to not charge anything with your higher overall credit limit. 

Bear in mind that a new account can hurt your credit score by lowering the average age of your credit accounts and can be an enticement to spend more. Applying for too many credit cards at the same time can be a sign that you’re in financial trouble and that you’re a credit risk.

It’s important to remember that yu can lower your credit utilization ratio with a new card, but only if you don’t use the extra credit amount you’re given and you maintain on-time payments.

Keep existing credit cards open

Closing a credit card can sound like a good way to lessen the temptation of using a credit card, but it won’t improve your credit utilization rate. If anything, it can increase it because you’ll have less available credit. 

The average age of your accounts will drop, which can keep a credit score low for years.

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Making the most of your credit card rewards shouldn’t require a complex spreadsheet and knowing every last detail in your card’s fine print of how its rewards program works.

With some basic knowledge and insight into how to get the most value from your credit cards, along with a few lesser-known perks that are worth aiming for, you should be able to maximize your credit card rewards and save money. And you won’t have to know any algebraic equations to get there.

Maximizing card rewards: cashback

Cash-back rewards are easy to understand and redeem. They’re earned at a flat rate such as 1.5% as you use your credit card for eligible purchases. 

One of the best ways to accumulate them is if your card offers bonus categories, such as 3% back when buying groceries, 2% back on gas, and 1% on everything else you buy. If you have a large family and buy a lot of groceries, you may want to look for a credit card that has a high cash-back reward for grocery purchases.

Some cards change categories each month. This requires keeping on top of the changes so you can match your spending. If one of your credit cards offers 4% cash back on gas in July and another one drops it to 1%, then the 4% card is the obvious choice for buying gas during a summer vacation trip in your car.

Cash back rewards are usually paid in a statement credit each month or through cash that’s paid every few months by a deposit into your bank account.

Brand loyalty can extend to partners

Credit cards are often co-branded with specific airlines or hotels that cardholders can earn miles or hotel points for flights and rooms. If you’re loyal to one brand, then these rewards can be worth concentrating on.

But just because a credit card is tied to one airline doesn’t mean you can’t use its airline miles elsewhere. Airline travel cards usually partner with many airlines where credit card points are accepted. Go to the website of the card you’re considering and check which airlines it works with. Transferring your points to airline miles may get you more miles at certain partner airlines.

Find a great bonus

A welcome bonus for opening an account can give you enough travel miles for a roundtrip flight across the country or a large cash-back bonus that can help you pay for a big expense. From 100,000 bonus points or 6% cash back, many credit cards offer great bonus offers.

Most require charging a certain amount in a specified time to get the bonus, such as spending $3,000 within three months to get 50,000 reward points as a bonus offer. The higher your credit score, the more likely you are to receive the best offers.

Look for awesome travel perks

If you fly twice overseas at least twice a year, then a credit card that offers two or so free airport lounge visits each year and free Global Entry or TSA PreCheck can be worthwhile. 

Just be sure to check that the annual credit card fee doesn’t pull too much value out of those perks. If you’re paying $500 for $300 worth of perks you’ll use, then check for other perks that you may use too.

Buy that furniture set with no APR for a year

Some credit cards offer 0% introductory APR for the first year, which is essentially an interest-free loan. 

This can make a big purchase such as furniture for your living room more affordable, provided you pay off the balance before the free interest period ends. If you don’t, then interest charges from the day you bought it can accumulate and be due.

Use the travel portal

Some travel cards have a travel portal where points can be redeemed and are worth more than they are if used elsewhere. A 25% redemption increase is common in such portals, which are rewards programs set up through the credit card with its airline and hotel transfer partners.

A card’s travel portal may not have all of the flights and destinations you want but can be worth checking out if your card has one. And be sure to compare prices at airline websites to make sure you’re getting the most value for your points.

Look for entertainment bonuses

If a card offers a high cash-back reward for entertainment purchases, that may be enough to apply for it. But you should also look out for cards that offer discounted entertainment events for its card members. Rewards points can be used for some events, or cardmembers may get first crack at buying tickets with their card before they go on sale to the rest of us.

Events can include music festivals, concerts, live theater, high-end dining, and discounts on Marvel and Disney purchases or free Uber One memberships with $0 delivery fee on some Uber Eats orders and discounts on Uber rides.

Some cards that focus on entertainment spending give high cash-back rewards for movie tickets, TV, internet and streaming services.  Some also allow cardholders to update their preferences every quarter, so you can change categories based on your needs.

Maximizing card rewards: Statement offers

Once you get a credit card, you are likely to receive get offers for discounts or freebies on your statements. The main requirement is that you sign up for them.

These rewards may seem like minor ways to save but can result in freebies or discounted 25% items. Statement credits or bonus points at select retailers are offered, usually for a few months.

For example, a TV streaming service that you were thinking of trying may be free for three months if you sign up for the offer and confirm it with your credit card. You get a statement credit each month you use the card to buy the streaming service for up to three months, and then the regular price is charged. Just remember to cancel the service before the free trial ends so you are not charged the full price in month four and beyond.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post Credit card hacks: maximizing card rewards and saving money appeared first on Credit Sesame.

Without the workplace retirement plans that full-time employees are often offered, freelancers, gig workers and other types of contract workers are usually left on their own to save for retirement.

A new federal law is changing that by giving a “saver’s match” to help low- and moderate-income workers in the gig economy. The Secure 2.0 Act retirement law that was signed into law by President Biden in December provides for a direct government contribution to the retirement accounts of these nontraditional workers. However, this new savings option won’t start until 2027.

Until then, nontraditional workers are on their own. But they can save for retirement in other ways.

What happens in 2027?

The “saver’s match” incentive starts in 2027, replacing the Saver’s Credit of up to 50% of an IRA contribution. The maximum credit amount of the Saver’s Credit is $2,000 ($4,000 if married filing jointly), so with a 50% credit, up to $1,000 can be credited on a tax return (or $2,000 of married filing jointly).

The dollar amounts are the same in the new matching program, but instead of a tax writeoff the money goes into a workplace or individual retirement account, or IRA. Single filers who earn up to $35,500, and joint filers earning up to $71,000, qualify for at least a partial match.

A $1,000 deposit to your IRA from the federal government isn’t a huge bump to a retirement account, but the government hopes it’s an incentive for freelancers and others to start saving.

But what to do until this program starts in 2027? Here are some ways that nontraditional workers can start saving now for retirement.

SEP-IRA

The Simplified Employee Pension plan individual retirement account, or SEP-IRA, is one type of IRA that self-employed workers can contribute to. For 2023, a worker can contribute up to 25% of their net income (after expenses), or $66,000, whichever is less.

Roth IRA

If you’ve met income ceilings in other retirement vehicles, then a Roth IRA may work for you. Roth contributions aren’t tax deductible, but are tax-free at withdrawal if you’re 59-1/2 or older and the account has been open for more than five years.

The contribution limit for 2023 is $6,500 for workers under 50, and $75,000 at 50 and older.

Solo 401(k)

To lower taxes immediately, nontraditional workers can contribute to a Solo 401(k), which is meant for self-employed people. As a business owner, the self-employed can make contributions as an employer and employee.

As both an employer and employee for 2023, total contributions to this plan can be up to $66,000 if under age 50, and a catch-up contribution of an extra $7,500 if 50 or older. These limits apply across all 401(k) plans if you have a side gig, not each individual plan.

If you choose a traditional 401(k), your contributions are tax-deductible in the year they’re made. Distributions in retirement are taxed as ordinary income.

Health Savings Account

Freelancers must usually pay for their own health insurance. If you have a high deductible health insurance plan with an annual deductible of at least $1,400 per individual and $2,800 per family, then you’re eligible for a Health Savings Account, or HSA.

Pretax dollars can be put aside in an HSA to pay for out-of-pocket medical costs, including deductibles. An HSA can also be used as an investment vehicle.

At age 65, account holders can withdraw money in an HSA for any reason, and not just for medical costs. But only HSA funds used for qualified medical expenses aren’t taxed, while withdrawals for non-medical purposes are taxable.

In 2023, HSA contribution limits are $3,850 for individuals and $7,750 for family coverage. An additional catch-up contribution of $1,000 is allowed for anyone 55 or older.

Save through tax filings

Many nontraditional workers make quarterly estimated income tax payments, which can be a reminder to also add money to their retirement plans. 

Tax refunds can also be moved into an IRA. The Internal Revenue Service already allows taxpayers who are owed a refund to instruct the IRS to direct deposit the refund into a variety of accounts, including an IRA.

Join a union

Belonging to a trade or professional body such as a labor union or a chamber of commerce can allow nontraditional workers to join a group retirement plan. 

The Freelancers Union offers a retirement savings plan to its members, and the union is the largest organization representing the nation’s independent workers.

Automate savings

One of the best ways to save for retirement is to automatically transfer money from your paycheck or bank account to the retirement plan you’re funding.

Research by the Pew Charitable Trusts on retirement for nontraditional workers found that about half of those surveyed were interested in making automatic transfers from their bank account to a retirement account, saving through quarterly or annual tax filings, or using an app or website that facilitates automatic retirement saving.

Features that are easy to use may boost participation rates, the survey found. These include automatic enrollment, automated contributions, and auto-escalation of contribution rates.

Why nontraditional workers don’t save for retirement

If an employer offers a retirement plan, workers may be more likely to sign up than start saving on their own. But nontraditional workers who don’t have such a plan from their part-time employer had bigger issues stopping them from contributing — immediate needs and saving for emergencies.

The Pew survey found that 66% of nontraditional workers cited immediate needs and emergencies as the biggest ongoing challenge to saving for retirement. Job security and volatile incomes were other factors, with 15% of nontraditional workers having annual household incomes below $20,000. 

A survey of workers eligible to participate in OregonSaves, an auto-IRA program that started in 2017, found that the most common reason for not participating was that they “can’t afford to save at this time.” Saving for medical, auto or other financial emergencies was more important to them, and 79% wanted pre-retirement access to their savings.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post Federal government Secure 2.0 Act for gig workers appeared first on Credit Sesame.

Planning for retirement? Are you liable for tax on your retirement income? Some retirement distributions are considered income and taxed by the federal government. Some states do not tax retirement income. Some states do tax income of any kind.

Here is our ABC os states that do not tax retirement income. Retirement income is 401(k), IRA or pension income. Most states don not tax Social Security benefits.

Alaska

Alaska has no income tax for anyone. Retired or not, it does not tax incomes. 

For retirees, it doesn’t tax Social Security benefits. For their beneficiaries, Alaska doesn’t have an inheritance tax or an estate tax.

Live in Alaska for a year as a retiree, and you are eligible for the annual stipend that the state pays to legal residents who have lived there for at least one year The Permanent Fund Dividend, as it’s called, was $3,284 in 2022, and the 2023 payout is projected to be $3,800. The money comes from the investment of earnings of the state’s oil reserves.

Florida

Florida also does not have a state income tax for its residents.

Florida also does not tax retiree incomes such as a 401(k), IRA or pension, and Social Security income. There are no inheritance or estate taxes either.

“Snowbirds” who head south to Florida for the winter from other states must establish residency in Florida to take advantage of its tax benefits. The main way to do this is by showing through your actions that Florida is your primary and permanent home. Ways to do this in Florida include:

• Spend six months there.
• Get a Florida driver’s license.
• Register and insure your vehicle in Florida.
• Vote.
• Buy a bigger home.
• Join groups and socialize in Florida.
• Visit doctors and other professionals.
• Bank locally.
• Have all of your bills sent to your Florida home.
• Pay taxes as a Florida resident, including federal income and property taxes.

Illinois

Illinois does not tax pension, Social Security or most forms of retirement income, including a traditional IRA that has been converted to a Roth IRA. The state does have an inheritance tax.

High property taxes, however, may cause retirees or anyone to think twice about moving to Illinois. The statewide median property tax rate in Illinois is the second-highest in the country, at $2,073 per $100,000 of assessed value.

Also keep in mind that Illinois charges a flat state income tax of 4.95%, which retirees must still pay on other types of income. 

Iowa

All retirement income is exempt from the flat state income tax rate of 4.96% in Iowa, including Social Security payments. A new law on exempting retirement income from state taxes took effect in 2023.

Iowa does not have an estate tax but it does have an inheritance tax. The inheritance tax ranges from zero for less than $25,000 in inheritance, to $6,825 plus 6% of an amount over $150,000.

Mississippi

Mississippi does not tax retirement income for anyone 59.5 years or older. Retire earlier than that, and the state takes it share of 401(k), IRA or pension income. 

The state does not tax Social Security benefits. Mississippi also does not charge inheritance or estate taxes.

Nevada

Nevada has no income tax, including on retirement funds or any other type of income.

Social Security benefits also are not taxed by the state, and inheritance and estate taxes don’t exist.

New Hampshire

New Hampshire is the only state in the New England area without a general income tax.

It does, however, impose a tax on interest and dividends, though retirees are exempt from paying it on taxes and interest from retirement plans. The tax on dividends and interest is being phased out and will be repealed on Jan. 1, 2027.

Social Security benefits are not taxed. New Hampshire also does not collect inheritance or estate taxes.

New Hampshire has a high property tax, at $1,766 per $100,000 of assessed home value.

Pennsylvania

Pennsylvania does not tax pension, employer-sponsored retirement plans, or IRAs of retirees. It also does not tax Social Security benefits.

The state’s inheritance tax ranges from 4.5% to 15%, depending on a recipient’s relationship to the deceased and their age. The inheritance tax does not apply to property inherited by the decedent’s:

• Spouse.
• Parents if the decedent is 21 or younger.
• Child 21 or younger.

Pennsylvania has a flat income tax rate of 3.07% for everyone, including retirees. Local governments and school districts may also levy income taxes. Property taxes are a little high, at $1,358 per $100,000 of assessed value.

South Dakota

South Dakota has no income tax and does not tax pension, 401(k) or IRA income in retirement.

The state also does not tax Social Security benefits, and it does not have an inheritance or estate tax.

South Dakota has a property tax homestead exemption for homeowners 70 or older, or their surviving spouses. This delays payment of property taxes until the property is sold. Taxes are a lien on the property and must be paid with 4% interest before the property can be transferred.

Tennessee

Tennessee has no income tax, including on a pension, 401(k) and IRA income for retirees. The state does not tax Social Security benefits, and does not have an inheritance or estate tax.

Property taxes in Tennessee are well below average, at $560 per $100,000 of assessed value.

Texas

Texas has no personal income tax, and retirement income and Social Security benefits are not taxed either. The state also does not have an inheritance or estate tax.

However, Texas makes up for all of these tax exclusions with the seventh-highest median property tax rate in the country, at $1,599 per $100,000 of assessed home value.

Washington

Washington State does not have an income tax. A retiree’s 401(k), pension or IRA income also aren not taxed by the state, and Social Security benefits escape state taxation too.

The state charges estate taxes on estates valued at least $2.19 million. It does not have an inheritance tax.

Property taxes are close to the national average, with the median property tax rate at $836 per $100,000 of assessed home value.

Wyoming

Wyoming is another state with no income tax, and thus no taxes on 401(k) plans, IRAs or pensions. It also does not tax Social Security benefits, and it does not have an inheritance or estate tax.

Property taxes are low in Wyoming. The statewide median property tax rate is the 10th-lowest in the country, at $545 per $100,000 of assessed home value.

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The post 13 states that do not tax retirement income appeared first on Credit Sesame.

63% of Americans live paycheck to paycheck. This can make financial management challenging.

Paying bills, funding retirement, creating an emergency fund and saving are important components of financial stability. Sometimes it can seem like you do not have sufficient funds to cover everything. Today’s expenses have to be covered, which may leave you short at the end of each month. If earning more is not an option, what can you do to ease the situation? Creating a budget is a good start.

What is a budget?

A budget is a written plan that helps you decide how to spend your money each month. It helps you understand how money flows in and out of your finances and includes:

• How much you earn.
• What your money is spent on.
• What you really need to spend money on.
• Where you might be able to cut spending.

A budget can be for any period of time, but it helps to use your pay cycle and regular expenses as the basis, whether this is weekly, every two weeks or monthly. Creating a budget and sticking to it can help ensure you don’t run out of funds before your next paycheck is deposited and may even mean you can save for a rainy day.

Who needs a budget?

Budgeting is a good idea for anyone who struggles to get by on their paycheck. Careful money management is a worthy goal for everyone and just low-income individuals. High-income earners may also benefit from budgeting as almost half earning $100,000 or more per year live paycheck to paycheck.

A budget can help you develop good money habits for life. If you come up short at the end of every month when paying your bills or you cannot meet your savings goals, a budget can help show you where your money is going and where you might be able to cut back.

For example, suppose you spent $500 last month on dining out and $400 on groceries, but couldn’t afford a $100 power bill and a $100 water bill that were due at the end of the month. If you didn’t keep track of your expenses, then you might not realize why you came up $200 short.

A budget, if followed, can show you where you can cut expenses so that you can pay all of your bills. Cut your dining out budget to $300, and the power and water bills can be paid. All of this, however, is contingent on prices not rising drastically or using much more electricity or water next month.

But you may have bigger problems than not having a budget. If your earnings aren’t as high as your expenses — even if you’re only paying for necessities — then there may be no room in your budget to cut expenses more. You may be among the 37.9 million Americans, or 11.6% of the population, that lives in poverty.

But whether you have a low or high income, starting a budget can help you manage your expenses and improve your money habits.

Creating a budget is also about saving

Only 44% of U.S. adults have enough money saved to cover a $1,000 emergency, according to one survey. A carefully management budget, even if you are on a low income, allows you to save for things that you may not think about on a daily basis. For example,

• Any emergency
• Buying or fixing a car
• Security deposit on an apartment
• Down payment on a home
• Unexpected medical expenses
• Travel
• New clothes
• Christmas gifts
• College
• Retirement
• Insurance premiums
• Home repairs
• Home additions
• Wedding

Although these are not regular expenses, they are life expenses and you can expect to fund some or many of them at some point. They’re big enough that you may need to save for months or years to cover them. The point of an emergency fund is that it is for an emergency; you don’t know it’s going to happen and you don’t need the funds until suddenly you do. Of course, some are “nice to have” rather than essential, such as home additions and travel.

A budget can help you decide how much and where to spend your money for regular expenses and how much you can set aside for emergencies and other financial goals.

How to start creating a budget

Budgeting apps and budget calendars are available online for free or for a few dollars. You can also create one on a computer or write one down on paper. There is no one way that works for everyone.

Document your income and then write down your expenses. Subtract your expenses from your income. If the number you end up with is less than zero, you are spending more than you make. Look at your budget line by line to see where you can cut spending.

Income includes paychecks and any other money you get, such as child support. Expenses include everything you spend money on including:

• Rent or mortgage
• Utilities
• Car insurance
• Food
• Gas
• Entertainment
• Clothes
• School supplies
• Money for family
• Credit card bills
• Unplanned expenses such as car repairs or medical bills

You can create a budget any time, but then you need to check how you are doing against your budget. When you first start spending to your budget, you may find it useful to write down what you spend every day. You may find that the discipline of writing it down deters you from spending $4 on a latte every morning. Try taking a coffee from home each day instead.

What a budget may teach you

Plan to have funds left over each month and put the funds towards an emergency fund, savings or retirement fund. If you are confident in your budgeting and reliably have funds available at the end of each month, you may want to transfer that amount to your savings account each month automatically. Make it a rule that your saved funds are not to be used for everyday expenses.

With a documented budget, you may make fewer impulse purchases or spend less on your credit card. This is because your spending is top of mind and you are more aware of truly unnecessary purchases. Of course, you can still have fun, just budget for it. After a few months of budgeting, you may have saved enough to reward yourself with a treat of some kind. You will have earned it, quite literally.

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