The 6 Best Ways to Save Money for Kids

If you think higher education is in your child’s future, consider a 529 college savings plan.
Ready to stop worrying about money?
If you plan on covering some, but not all college expenses, you can tweak this formula to suit your situation. For instance, Fidelity recommends targeting a savings goal of ,000 multiplied by your kid’s current age if you plan on covering 50% of college costs and assume your child will attend a four-year public school. The financial institution provides a couple of examples of parents covering different percentages of fees and what that would look like at different ages of their children.
First, assess your total financial picture. Take inventory of your outstanding debt, and create a budget if you haven’t already.
If you want to save money, there are many ways you can go about it. Whether you’re thinking ahead to your child’s college education or just want to set aside a little something for when your child reaches a certain age, you have more than a few options to reach your savings goals.
(Have you picked your jaw up off the floor yet? Good. Keep reading.)
As with all investments, there are fees and risks associated with 529 plans.
There are also plenty of child-friendly bank accounts you can choose from to encourage your children to start saving early and often. A savings account is a good start.

Planning for Your Kids’ College Savings and Future Expenses

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Now on to the good news: You have many options to start saving for your child’s future today, no matter your budget.
Again, that’s just the estimated cost. And there are grants and college scholarships available to help families chip away at the fees.
With this plan, a saver opens an investment account for the beneficiary’s qualified college education expenses, including room and board. This money can be applied toward universities (and some outside the U.S.), and withdrawals can also be used to pay up to K at elementary and high schools.

5 Ways to Save Money For Your Kids’ College Education

What’s the best type of savings account for a child? We’re glad you asked!

1. 529 College Savings Plans

How much money you “should” save depends on a few factors. For one, there are a lot of variables to consider: How much will a university degree cost in X number of years? How long do you think your child will go to school for? (Two years, four years or more years for advanced degrees.) What amount can you afford to regularly sock away for expenses?
These plans are sponsored by state governments as well, but there are fewer residency requirements. Investments in mutual funds and ETFs are not guaranteed by the federal government, but some bank products are protected.
A Roth IRA is an individual retirement account. You fund it with money you’ve already paid taxes on. So, when the time comes (typically at age 59 ½), you can withdraw your Roth IRA contributions and earnings tax free. However, you can withdraw this money earlier, penalty-free, to pay for higher education costs for your child.

Prepaid Tuition Plan

A 529 plan, or qualified tuition plan, is a tax-advantaged investment account. This means the money grows tax free and you can also take it out tax free. Each state (plus the District of Columbia) offers at least one plan. You can view minimum and maximum contribution limits and other considerations by state here.
With this plan, a saver or account holder can purchase units or credits at a participating university and lock in current prices for future tuition costs for the beneficiary. Typically, this money can’t be used for elementary and high school costs, nor be put toward room and board at college.

Education Savings Plan

While interest rates are low and whatever interest you earn is taxed as income, an FDIC-insured bank savings account is a tried and true (and safe) place to store money — whether yours or your kid’s.
With a Roth IRA, they’ll get tax-free money when they retire. They can also use these funds to help pay for their own qualified college expenses. While your child will have to pay taxes on the earnings, they won’t face an early withdrawal penalty.
You generally have more flexibility with brokerage accounts: You can choose from a variety of investments and make withdrawals at any time. Note: If your child does plan on going to college, the value of this account will be included in financial aid calculations.
There are other online calculators that can help you determine what you should save, depending on what your child’s future education plans might entail (like grad school). Again, a financial advisor or certified financial planner (CFP) can help you plan for college costs in way that accommodates your needs.

2. Roth IRA

Anyone can use a 529 college savings plan (no annual income restrictions!) and you can change the 529 beneficiary to another family member without incurring a tax penalty.
Here are three questions we see pop up time and again when it comes to investing in your child’s future. Oh. And this figure doesn’t even factor into university costs.
Of course, you can invest your money in a few different ways — some combination of a 529 plan; Roth IRA; or, UGMA, UTMA, brokerage or savings accounts — so you have options.

3. UGMA and UTMA Accounts

Sticking with college, here are additional ways to save that you and your child can work toward. Whether you’re a new parent or a year out from sending your kid off to college, consider these opportunities to save money.

Uniform Gift to Minors Act (UGMA)

A brokerage account allows you to invest money in stocks, bonds and mutual funds. Once you deposit your money, you can work with a financial advisor or robo-advisor, or both, to invest and grow your money.

Uniform Transfers to Minors Act (UTMA)

File this under “Things You Already Know” — kids are expensive. What you might not know is the best ways to save money for kids, and we’ve got your back on that.
This account establishes a way for someone under 18 years old to own securities without requiring a trustee or prepared trust documents.

4. Brokerage Account

Here are several ways you can invest and save money for your children, whether you want to open a college savings plan or start a rainy-day fund.
A parent or guardian will need to serve as the custodian, since minors generally can’t open brokerage accounts. Children need to have an earned income (part-time jobs, like babysitting, count) to contribute to it. Like adults up to and under age 50, they can only contribute up to K to the Roth IRA annually. Once the child turns 18 or 21 years old (depending on the state in which they live), control of the account must be transferred to them.
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5. Savings Account

College is an investment, and it can be a pricey one. By saving early (and with the magic of compound interest on your side), you can earn a bigger return on your money down the line.
And, mom and dad, when the time comes, make sure you fill out the Free Application for Student Aid (FAFSA).
There are two types of 529 plans: prepaid tuition plans and education savings plans.
Consider meeting with a financial expert to help you craft a plan that’s best for you.
The cost of raising a child from birth through age 18 is roughly 3,610, according to the United States Department of Agriculture (USDA). To break that down further, that’s around K per year, per kid.

graduation cap filled with money on sidewalk
Aileen Perilla/The Penny Hoarder

Additional Ways to Save Money for College

Save early and save regularly, and you’ll be off to a good start.Contributor Kathleen Garvin (@itskgarvin) is a personal finance writer based in St. Petersburg, Florida, and former editor and marketer at The Penny Hoarder. She owns a content-writing business and her work has appeared in U.S. News, Clark.com and Well Kept Wallet.

  • Ask for gifts toward their education expenses. If friends and family would like to give a gift to your child, ask them to consider putting any money toward their college fund. You can do this for any birthday or holiday, though the earlier you start investing in their education, the better. (Bonus: Your 1 year old doesn’t have the capacity to ask for the latest toy and won’t object to this gift.)
  • Encourage your kid to work and save. Once your child is of legal working age, they can get a job and start saving money for their school expenses. Even saving a small amount per paycheck can help them make a dent in later costs; you might also consider “matching” their savings to incentivize them (for example, give them $1 for every $20 they put away for college).
  • Look to companies and professional organizations. Your workplace may offer opportunities to children of employees looking to earn money for college. Some large companies, like UPS, offer such scholarships. Review your company handbook or ask your HR department about any available opportunities. Professional organizations, like the Rotary Club, are also known to offer scholarships and grants for continuing education. If you belong to any organizations or other clubs, look out for these benefits.
  • Apply for scholarships and grants. Additionally, encourage your high school student to look for scholarships and grants to help mitigate their college costs. Universities typically offer money for students who fit certain criteria — such as transfer students or people in certain majors — and meet other requirements. There are all sorts of weird scholarships, contests and even apps that can help them earn money for school, too. Just make sure they weigh the pros and cons of any entry fees and stay on top of contest deadlines.

If we use the earlier figures from CollegeCalc that forecast what a four-year education will cost in 2039 (5,167.67 / 4 = ,792 a year), it’s recommended you put 1 a month into a college savings plan. This calculation assumes an after-tax return of 7%, an annual tuition increase of 7% and four years of school.

Frequently Asked Questions (FAQs) 

It’s great if you’re able and want to contribute to your children’s future expenses and education fund — student loan debt has surpassed a whopping .7 trillion in the U.S. — but you need to be smart about it. If you put yourself in a precarious financial situation, it can be more difficult for you to course-correct later.

When Is the Best Time to Invest Money for College?

With that said, don’t let getting started “later” deter you from saving at all. It’s kind of like the Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now.” You want to save what you can as early and regularly as possible. But if life circumstances prevented you from doing so before, right now is the next best time to start saving.
On average, tuition and fees ran ,411 at private colleges and ,171 for in-state residents at public colleges for the 2020-2021 school year. The estimated cost of a four-year degree, 18 years out?

What’s the Best Way to Invest Money for a Child?

Most prepaid tuition plans have residency requirements for the saver and/or beneficiary, and are sponsored by the state government (and not guaranteed by the federal government). However, not all state governments guarantee the money paid into them, so it is possible to lose money. Additionally, your mileage may vary with this plan if the beneficiary doesn’t attend a participating college, resulting in a smaller return on investment.
First things first: If you have nothing saved for retirement, focus on your own needs before you start saving for someone else. You’re on a more fixed timeline. Plus, you can’t borrow for retirement savings like your child can for their education.
5,167.67.

How Much Money Should I Save for My Child?

Looking for more options that aren’t exclusive to education? You can invest in a taxable brokerage account.
The good thing about putting away money for your children is that there is no one “right” way to do it. You can open a 529 plan for your child early on or later as they get closer to college aid. Or, you can fund a brokerage account so you’re not held to stricter rules about how the money’s spent.
If you want to invest in your kid’s future without choosing an account that’s for education expenses only, look into a Uniform Gift to Minors Act or UTMA Uniform Transfers to Minors Act.
Don’t forget the old standby: a traditional savings account.

The Best Way to Save Money for Kids

This account is similar to a UGMA. However, minors can also own property such as real estate and fine art.
A custodian will also need to be set up for this type of account. Parents can set up a custodial account and then make withdrawals to cover child-related expenses. Once the child is of legal age, the assets are transferred to their name. Since the funds for both UGMA and UTMA accounts are in the child’s name, they cannot be transferred to another beneficiary. <!–

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Where to Find Cheap or Free Tutoring for Your Kids

Whether your kid is struggling to read or to understand advanced calculus, some additional one-on-one instruction can make a world of difference. That’s why parents hire tutors — to boost their kids’ academic progress beyond the constraints of the school day.

But finding the funds to pay a tutor can be tough for a family on a budget. Costs vary, but it’s not unheard of to spend between $40 and $80 … per hour. And if your child is really struggling, chances are you’re going to need way more than one hour.

Here are some alternative ways to get educational assistance, even free tutoring, without breaking the bank.

6 Low-Cost or Free Tutoring Options

1. Get Extra Help With an Online Tutor

Online tutors don’t need a brick-and-mortar building, and they eliminate the need for anyone to commute. Everything is accessible with the click of a mouse. Your screen is your virtual whiteboard.

Some free or low-cost online tutoring websites include:

  • Khan Academy — a nonprofit organization that provides a wide range of free lessons to students all over the world.
  • Learn to Be — a Los Angeles-based nonprofit organization that provides free one-on-one tutoring to K-12 students in underserved communities.
  • Chegg Study — a 24/7 tutoring service for high school and college students where you pay $14.95 a month for expert homework help from a variety of subjects including math, science, engineering and business.
  • Free Tutoring Center — a student-run service that provides free one-on-one tutoring to elementary and middle schoolers from economically disadvantaged backgrounds.
  • UPchieve — a free online tutoring app where volunteer tutors provide academic help in various math and science subjects. This service also offers free college counseling.
  • Varsity Tutors — an education platform that offers free large group classes and free learning tools for self-study. For more individualized help, Varsity Tutors charges for one-on-one tutoring and small group classes.
  • Outschool — an online learning platform that has a variety of classes for kids ages 3 to 18. Filter your class search by price to find offerings for $9 or less.

2. Browse Your Library’s Offerings

If you’re only using your library card to check out books, you’re likely missing out on all the neat opportunities your library has to offer. Some tutoring companies like Tutor.com and Brainfuse partner directly with public libraries to provide free online tutoring to students.

Ask your librarian about what your local branch offers. Outside of partnering with an online service, your library might host free or low-cost test prep or homework help. Your librarian might also know of students or teachers who offer affordable tutoring. At the very least, you can get pointed in the direction of helpful reference books and research materials related to your child’s topic of study.

3. Go Back to School

Sometimes the best place to get help is directly from your child’s teacher. He or she already knows your child’s unique challenges and learning style and is invested in seeing your kid improve.

Schedule a parent/teacher meeting to ask about opportunities for extra instruction. The teacher may be free to help your child during a study hall period, and you can bypass paying for a Saturday afternoon tutoring session.

Also, ask if there’s a peer tutoring program at school where older students or students excelling in a particular subject volunteer to aid those who need extra help.

Consider that the help may come from outside your kid’s individual school. National Honor Society members at the local high school might have an outreach program that would benefit your struggling middle schooler. Community colleges sometimes have academic resources available for high school students at low or no cost.

4. Be Selective About After-School Programs

Until kids are old enough to go home to an empty house, working parents often turn to after-school programs and extracurriculars. While karate practice and dance lessons sound fun, your kid won’t be working on math equations or language arts.

You can save money by choosing an after-school program that includes tutoring services. The Boys and Girls Club and the YMCA are two national youth nonprofits that often provide help with homework or studying for tests.

5. Call on Your Community for One-on-One Tutoring

Don’t underestimate the power of your social circle. Your friends or coworkers may know of organizations in your city that provide free or low-cost tutoring.

Ask the parents of your kids’ friends for recommendations on affordable tutors. An older sibling of your child’s best friend might be a math whiz. You may be able to barter with a classmate’s mom, exchanging tutoring sessions for free babysitting.

6. Give Into Screen Time on YouTube

Now this last one isn’t quite tutoring in the traditional sense, but you can turn to YouTube for almost anything these days — including K-12 subject matter. In most cases, you’ll be able to access instructional videos at no cost.

Has physics or chemistry got your kid down? Check out these YouTube science channels. This list of YouTube history channels may help students master the details of major world events.

The video-sharing platform just might get your kids to see their worst subject in a new light and find learning — dare I say it? — fun.

Nicole Dow is a senior writer at The Penny Hoarder.

Source: thepennyhoarder.com

5 Strategies for Paying Off Car Loan Early

Is your monthly car payment a burden to your budget? Paying off your car loan early can earn you much-needed financial freedom and save you potentially hundreds (or thousands) of dollars in would-be interest. 

You can pay off your car loan early using several effective strategies, but before you do, consider any potential penalties and effects to your credit score.

The True Cost of a Car Loan

It’s no secret that cars are our worst big-ticket investment. Unlike houses, which typically increase in value over time, and education, which theoretically opens the door to higher earning potential, cars lose their value over time. In fact, a new car depreciates in value as soon as you drive it off the lot and will lose 20% to 30% of its value in the first year.

That’s a big deal, especially given the average cost Americans are spending on new cars in 2021. According to KBB, that hard-to-swallow number is over $40,000, up more than 4% over 2020.

That means Americans are shelling out $40,000 for a car that, in a year, will be worth anywhere from $28,000 to $32,000, representing an $8,000 to $12,000 loss.

But there’s more than just the sticker price to consider. In addition to sales tax (average of 10.12% in 2020, though it varies by state), be prepared to pay interest on your car loan. Right now, the average car loan interest rate (also referred to as APR, the annual percentage rate, though there’s a difference) is over 4%.

APR includes the interest rate, in addition to other fees, like loan origination fees or mortgage insurance. You should use the APR, not the flat interest rate, when calculating what you’re paying.

Your APR will depend on the current market and your credit score. The better your credit score, the lower your APR. If you have a weak credit score and can put off buying a car, it is advisable to build up your credit score before applying for a loan.

For 2021, rates are expected to hover between 4% and 5% for 48-month (four-year) and 60-month (five-year) loans. 

Car Loan Calculator: An Example

Interest on a car loan adds up. Let’s take the $40,000 new car as an example, with a $995 dealer fee. Assume you put $2,000 down and have a tax rate of a clean 10% and an APR of 5%. You’ve agreed to pay off the loan over 60 months, or five years. (The typical car loan is anywhere from three to seven years; the shorter the loan period, the higher the monthly payment.)

In this scenario, the total cost of the vehicle after tax and dealer fees is $44,995, minus your $2,000 down payment. That leaves $42,995 to be financed. Given the 5% interest rate over 60 months, your monthly payment would be $811.37.

Over 60 months, you will end up having paid $50,682.20 (including down payment) for a car that, with taxes and dealer fees, cost just $44,995. That means, over five years, you’ve paid $5,687.20 in interest. 

And let’s just ignore the fact that, due to depreciation, that car that you’ve just paid $50,000+ on is now worth just $18,752.41 (average value of 37% of original cost after five years).

Use The Penny Hoarder’s car loan calculator to figure out how much you’ll pay with real-life numbers that match your scenario.

How Car Loan Interest Rates Work

Paying off your car loan early, if you can afford it, seems like a no-brainer then. However, before you start strategizing about how to pay off your car loan ahead of schedule, do some digging to determine what kind of car loan you have.

In an ideal world, your loan will be a simple interest loan. If you have not yet purchased your car, only consider lenders that will offer you a simple interest loan. This means the interest is calculated entirely on the principal balance of the loan.

But if your lender charges precomputed interest, that means they will calculate how much you will pay in interest over the life of the loan and include that in your total balance. That means, even if you pay off your car early, the payoff quote will include all the interest you would have paid had you kept the loan open. In this case, there are absolutely no financial savings in paying your car loan off early.

One other element of your loan to research is payoff penalties. Payoff penalties are legal in 36 states and allow lenders to charge you a penalty (usually a fixed percentage of the remaining balance) for paying off your car loan early. In this case, it may be more expensive than what you would have paid in interest over the life of the car loan.

Will Paying Off Your Car Loan Early Hurt Your Credit Score

It is not likely that paying off a car loan early will hurt your credit score, but it could be keeping you from growing your credit score. Regular, on-time payments account for roughly 35% of your FICO credit score, making it the most important factor. Making monthly payments on a car loan is a great way to show lenders you are responsible with repaying your debts.

In addition, lenders like to see a nice mix of credit (mortgage, car loan and credit cards are the big three). Keeping your car loan open also helps extend the length of your credit history. If you have no other open credit (like a credit card), keeping your car loan open may be advantageous in building up your score if you eventually intend to buy a house.

5 Strategies for Paying Off Your Car Loan Early

If you have a simple interest car loan, your credit is in good standing and your loan doesn’t have any payoff penalties, it may be wise to pay off your car loan ahead of schedule. Not only will you avoid spending heaps of money on interest, but it will also give you the financial freedom of hundreds of dollars back in your monthly budget.

The best advice for paying off a car loan early: treat it like a mortgage. If you are a homeowner, you have likely heard that making an extra (13th) payment toward your mortgage principal every year can shave years off your loan. If you pay even more toward the principal each year, you can easily get your 30-year mortgage down to 15 years—and you’ll be able to drop PMI (private mortgage insurance) costs much earlier.

Of course, home loans tend to be much bigger than vehicle loans, so the potential to save is much larger, but the logic works the same with your car loan.

These strategies for early payoff are all effective, if done right:

1. Make One Large Extra Payment Every Year

If you can count on your grandma slipping a fat check into your Christmas card every year without fail, don’t use that money to splurge on alcoholic eggnog (OK, maybe one bottle). Instead, apply it directly to your car loan as a lump sum.

If you have autopay scheduled online, you can log into your account and simply arrange to make a one-time payment. If you’re old-fashioned and pay by phone or mail, simply call your lender and let them know you’d like to make an extra, one-time payment toward the principal.

Apply this logic to any unbudgeted (aka, not-planned-for) funds, like a bonus at work or a tax refund.

2. Make a Half Payment Every Two Weeks

Talk with your lender to see if you can switch to biweekly payments, instead of monthly. If your lender allows you to pay half of your monthly loan amount every two weeks, you will wind up making 26 half payments. Divide 26 by 2, and you get 13 full months of payments, paid over 12 months. That means, by the end of the year, you will have essentially made an extra car payment.

Just check your budget first to ensure that kind of payment plan is feasible.

3. Round Up

Rounding up to the nearest $50 or even $100, if you can swing it, is a great way to add extra money every month to the principal. For example, if your monthly payment is $337, you could round up to $350 or even $400 to essentially pay an extra $13 or $63 a month. This will wind up knocking a few months off the life of your loan.

If you have autopay scheduled, log onto your loan platform and see if you can add the additional funds toward the principal each month so you don’t even have to think about it.

4. Resist the Urge to Skip a Payment

Some lenders may let you skip one or two payments a year. So kind of them, right? Wrong. They do this knowing it will extend the life of your loan, meaning they will rake in even more of your hard-earned cash in interest fees.

Unless you fall on very hard times, fight the urge to skip a payment. You will wind up paying more in the end if you do.

5. Refinance, but Exercise Caution

If you had a poor credit score when you bought your car and opted for a seven-year loan to keep payments low, it might make sense to refinance. Perhaps you’re two years into the loan, you’ve got a higher-paying job, and your credit score is in great shape. You could potentially refinance at a lower APR and build the loan out over 36 months, saving you two years and lots of money in interest.

But borrower beware: Don’t refinance to get a lower monthly payment by extending a loan, as you will end up just paying more in interest. 

When You Shouldn’t Pay Off Your Car Loan Early

As we’ve seen, it doesn’t always make sense to pay off your car loan early. But there are more reasons to hold your horses than just payoff penalties and precomputed interest.

Here are some other reasons not to pay off your car loan early:

  • Lack of emergency savings. Bankrate reported early in 2021 that most Americans could not afford a $1,000 emergency. Just 39% have enough to cover such an unexpected expense. If you are a part of that 61% without a well-padded emergency fund, prioritize adding funds to a high-yield savings account to protect yourself and your family should the unthinkable happen. And it’s not just your family’s medical emergencies; you may need to cover a deductible on your renter’s insurance in the case of a break-in, the cost of an unexpected car repair or even a terrifying trip to the vet when your dog eats something he shouldn’t.
  • Higher-interest loans. If you have a reasonable interest rate on your car loan but are drowning in credit card debt, focus on the debt that has the highest interest rate. Credit cards historically have interest rates in the high teens, so they make the most sense to pay off first. If you are free of credit card debt but have a mortgage or student loans, compare those interest rates to that of your car loan to figure out which makes the most sense to pay down with extra funds.
  • Lack of credit history. If you refuse to get a credit card and don’t yet have a house, a car loan is your best bet for building your credit score. Keeping your car loan open could positively affect your credit score.
  • Investments. For most drivers, car loan APRs are not terrible. If you have some extra funds and are thinking about paying off your low-interest car loan, consider instead investing in your retirement fund or even buying a few stocks on your own. The average stock market return is about 10%. Obviously, you could wind up losing money, but in general, if you invest and hold, over time, you should expect your money to grow.

Timothy Moore is a managing editor for WDW Magazine, and a freelance writer and editor covering topics on personal finance, travel, careers, education, pet care and automotive. He has worked in the field since 2012 with publications like The Penny Hoarder, Debt.com, Ladders, Glassdoor, Aol and The News Wheel. 

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Source: thepennyhoarder.com

Best Money Transfer Apps: How They Stack Up

In July 2019, Venmo surveyed 1,000 users and then partnered with an etiquette expert to help create some modern money manners.
International transfers: You can transfer money internationally, but if you’re sending money to someone outside of the United States, be aware that you’ll be subject to a different fee structure.
Sadly, that depends on the app. In some cases, you can contact customer service and they can help reverse the process. In others, you have to rely on the honesty of the wrong recipient to decline the transfer

How Money Transfer Apps Work

How it works: Facebook Pay isn’t a standalone app, but rather an enhancement to those primary social media apps, so you’ll need to set it up in each app.
To set up Facebook Pay: Pros and Cons: The fact Venmo feels like social media can be both good or bad, depending how you look at it. Others you are connected to will know who you’re conducting business with and when. For those of us who are bad at math, a function of the app will help you split bills. It is also easy to request money from people within the app.
When someone sends you money through the app, you can get access to the money by initiating a transfer to your bank account. Some apps allow you to store money with their service for easy access.
Pros and Cons: PayPal has many protections in place to keep you from losing money. If either the sender or recipient has an issue, PayPal will put a hold on the funds. There are also business accounts to pay for goods and services, but the fees are higher than for personal use.

What to Look for With Money Transfer Apps

Zelle is part of most banking apps and allows you to securely send money almost instantly between bank accounts. It works with hundreds of US banks.

  • Fees: Some apps charge a fee for paying someone by credit card or sending money internationally.
  • Transfer time: How long does it take to get your money? Some are instant, while some take some time.
  • Security: Is the transaction encrypted on both ends?
  • Limits: Some apps limit the number of transactions you can do in a set period of time. Others limit the amount of money you can send.
  • Customer service: How can you contact someone if there is a mistake with a transfer or a transfer happens that you didn’t authorize?
  • Protection: Unlike bank accounts, many balances in money transfer apps are not insured against loss or fraud.
  • Correct information: Make sure you check and double check the recipient’s information before you confirm a payment. Once you send a payment, is it often impossible to get it back unless the recipient refuses it.

How the Best Money Transfer Apps Stack Up

From our research, you don’t need dedicated international money transfer apps. One of the apps discussed in this story will work as an international money transfer service.

App Fees Speed of Transfer Best Feature Protection & Security
Zelle None for transfers between bank accounts; can also enroll debit cards tied to a bank account Almost immediate Most accommodating Uses bank’s security infrastructure, so it is as secure as your bank
PayPal New as of Aug. 2, 2021: Free for linked bank account, 2.9% for credit or debit card A few days for bank account, instant transfers cost 1.5% Most experienced Encryption, fraud protection, dispute resolution, purchase protection
Venmo New as of Aug. 2, 2021: Free for linked bank account, 3% for credit card 1-3 days for standard transfer, instant transfer for 1.5% fee Most like social media Uses PayPal security features
Cash App None for linked bank accounts, 3% for credit card A few days, instant transfers are 1.5% Most global friendly Encryption, security locks, fraud protection, account notifications
Facebook Pay Uses credit cards, debit cards, or PayPal account, does not link directly to a bank account; No fees Up to one business day Most socially connected Can create a PIN or use device’s biometric security
Google Pay No fees With debit card up to 24 hours; 3 to 4 days with bank account Most adaptable Multiple layers of security protection
Apple Pay No fees 1 to 3 days or 30 minutes with Instant Transfer linked to eligible debit card Like Google Pay, also an adaptable app Multiple layers of security protection

PayPal: Most Experienced Money Transfer App

How it works: You need an email address or a phone number to send money. The sender and recipient don’t need to be customers of the same bank; they only need to both be enrolled in Zelle.
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In today’s world of instant gratification and constant connections, what is proper money transfer etiquette?
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The best app for you might not be the best for someone else. It all depends how you plan to use them. Chances are, you’ll use different ones for different purposes.
Tiffani Sherman is a Florida-based freelance reporter with more than 25 years of experience writing about finance, health, travel and other topics.
Source: thepennyhoarder.com
Pros and Cons: It’s super-convenient to be able to send money, donate money, and buy things from whatever app you might be using and familiar with. You might want to set up extra security features just in case someone gets a hold of your accounts. Customer support is available 24/7 via chat or email.
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You can also get special offers called “cash boosts,” which can include discounts like 20% off DoorDash or 15% off Chipotle. The cash boosts change regularly, which many users say makes the app worth checking out on a regular basis.
Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Three men look at one of their phones while hanging out in a dorm.
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Venmo: Most Like Social Media Money Transfer App

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Zelle: Most Accommodating Money Transfer App

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Cash App (Formerly Square Cash): Most Global-Friendly Money Transfer App

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

A trio of friends sit on the sidewalk sipping coffee while taking a break from bike riding.
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Facebook Pay: Most Socially Connected Money Transfer App

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Google Pay and Apple Pay: Most Adaptable Money Transfer Apps

Fees: There are no fees to send or receive money between friends if you have a linked bank account or debit card with accepted financial institutions. There is a 3% fee to send money using a credit card.

Transferring Money Internationally

As for advice from the etiquette expert, Venmo suggests:
International transfers: Facebook Pay is expanding to other countries outside of the United States.
PayPal is the grandparent of money transfer apps, as it’s been around the longest and is probably the most familiar to many people.

  • WorldRemit: People in more than 50 countries can send money to people in more than 130 countries  using a phone or computer. Many of the transfers happen instantly. Fees vary. One recent change is WorldRemit no longer accepts Google Pay.
  • Western Union: Has been around for years and works in more than 200 countries and territories.
  • OFX: Competitive rates compared to banks and has a minimum of $1,000.
  • Azimo Money Transfer: The first two transfers are free. Instant or one-hour transfers are possible to many countries.
  • Remitly: This app adds the possibility of physically delivering the money to the recipient’s home instead of just a cash pickup or depositing it into a bank account. The rates vary by country.

People can also request payments through PayPal.

Money Transfer Etiquette

All of the apps mentioned have several security features in place to keep your account numbers and personal information private. Just make sure you send money to the right person. Once you tap send, it’s sometimes difficult to get the money back.
How it works: PayPal is secure and you can send money both domestically and internationally, although fees apply for international transfers. You can also use PayPal online and not just from a phone app.
However, popular apps for international money transfers are:

  • 75% said it’s appropriate to wait 24 hours before issuing a request for payment.
  • 24 hours is the longest you should wait before paying someone.
  • 42% said the person who pays for dinner when the check comes back for the entire group should be paid immediately — before anyone leaves the table.
  • 24% said no amount is too small to ask for, even $1 to $5.

Fees: There is no fee to send or receive money through Facebook Pay.

  • Practice social awareness: When using apps that have a social component, be careful of emojis and inside jokes that could embarrass someone. You never know who might see it.
  • Respond quickly: If you can’t pay someone within 24 hours, send the person a text or email saying why you can’t pay them back.
  • Stay in contact: Don’t just ghost someone and make your friends and family track you down. It isn’t fun.
  • Discuss: If you’re going to split payments, discuss this plan before an event. Don’t surprise someone with a money request. Also, if you pick up the check and say something like “I got this,” don’t expect people to pay you back.
  • Correct mistakes: If a money request has the wrong amount, politely point out the discrepancy, and decline the transaction. Send back money if someone sends you more than you were expecting.

Like the other apps, Cash App is secure and transferring your money to your bank account is free but can take a few days. Instant cash outs will cost 1.5% with a $.25 minimum.

A man checks his phone while laying in the grass on a blanket.
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Frequently Asked Questions (FAQ)

What Is The Safest App to Transfer Money?

PayPal also offers business accounts, which can be a simple way to get paid for goods and services you provide through your job or business. Please note the fees are different for merchant accounts. Many fees for business users increase Aug. 2, 2021.

What App Transfers Money Instantly to a Bank Account?

How they work: Now they’re also handling peer-to-peer payments, which means you can send or receive money if you have the other person’s email address or phone number.

What Happens If I Send Money to the Wrong Person?

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Do I Need a Smartphone to Use Money Transfer Apps?

Money transfer apps are an easy, secure way to exchange money between friends or family. By downloading an app on your phone, or in some cases going to a web site, you can send money to people. All you need is their mobile phone number or email address.
Transferring the money from PayPal to a linked bank account is free, but can take a few days. Instant transfers are available for a 1% fee. That fee increases to 1.5% on Aug. 2, 2021. You can also have PayPal mail a paper check to you for .50.
Cash App allows you to use your money to buy stocks or convert dollars to bitcoin, but there are fees associated with these services.

5 Self-Employment Retirement Plans for 2021

SIMPLE IRAs are often chosen by small business owners because they are easy to administer. Some employees choose not to open a SIMPLE IRA because of its required annual contribution to accounts.
There has not been a push to assist self-employed citizens. The motivation to set aside funds for retirement for self-employed people must come from workers themselves.
Many retirement accounts penalize the account holder for withdrawing the funds early, usually before 59½.
The way to look at Roth IRAs is to consider how they differ from traditional IRAs.
Ready to stop worrying about money?

Two Kinds of Retirement Accounts

But you are doing so as the owner of a small business with one employee (you!) or as a freelancer or contractor. Maybe you have two lucrative part-time jobs as part of the robust gig economy. The money is coming in, but you are living without the benefit of benefits.

  1. A defined benefit plan which promises a specified monthly benefit upon retirement. The pre-determined amount is set by the number of years of contribution and the salary of the employee. Pension plans, which are not available to self-employed people and are becoming more scarce especially in private industry, are an example of a defined benefit plan. This is effectively a savings plan.
  2. A defined contribution plan receives contributions for the employee and perhaps the employer, at a set percent of earnings. These funds are then invested in the employee’s name and the account balance can fluctuate based on the value of the investments. A 401(k) is an example of a defined contribution plan. It is actively related to the stock market or mutual fund investments. These plans can be started by self-employed workers who can contribute to them regularly.

SIMPLE stands for Savings Incentive Match Plan for Employees, and it really is simple. Employers can establish such a plan simply by filling out one federal form, and the IRA is set to go.
This is an advantage of investing in a brokerage account, in which income is taxed annually.

5 Retirement Savings Plans for Self-Employed Workers

A solo 401(k) allows a person to serve as both an employer and an employee, making contributions to the 401(k) account in both capacities, and allows the account holder to contribute up to ,000 in elective deferrals annually. This is true, however, only for those age 50 and older.
There are effectively two kinds of retirement accounts:

1. Individual Retirement Arrangement (IRA)

If there is a downside to the SEP-IRA, it is that when the employer contributes to the account, contributions must be equal to all employees. Also, employers can only contribute up to ,000 or 25 percent of the employee’s compensation annually, whichever is the lesser amount.
The negative aspect of the Roth IRA is that you cannot contribute to that kind of account if you make too much money. There is a formula involving your modified adjusted gross income and your tax filing status, but the more you make, the less likely you are to qualify to contribute to a Roth IRA.
Any money you make from investments made through that IRA are also untaxed until the money is withdrawn.
Privacy Policy
Sounds sad, doesn’t it? But it’s not, really.
The federal government wants citizens to save for retirement. There are frequent attempts to induce retirement savings for employees working for private firms, and the retirement programs for those working for federal or state organizations are plentiful and well-run.

  •  It often comes with lower annual contribution limits (It would be nice to be self-employed and be in a situation where you want to contribute more to your retirement fund than you are allowed to.)
  • At the age of 70½, you must begin to take distributions from the account. Those distributions are then taxed (but at a rate lower than if they had been taxed as income).

2. Roth IRA

The retirement accounts differ in terms of how much an account holder can contribute to the account over a period of time, how much can be withdrawn over a period of time, and the age of the person withdrawing from the account.

  • You can make contributions at any age.
  • The funds you contribute are part of your taxable income, but your withdrawals during retirement are tax free, including any earnings from your retirement account investment, assuming you withdraw the funds after you turn 59½.
  • You can make contributions to a retirement plan from work and still get the full tax benefit of traditional IRA contributions.

You are making a living, and perhaps enjoying financial success like never before.

3. Solo (one participant) 401(k)

The most workable retirement plans for the self-employed are the Individual Retirement Arrangement (IRA), the Roth IRA, the Solo 401(k), the SEP-IRA and the Simple IRA.
Two other details of the traditional IRA are:
You are on your own in preparing for retirement. You are in a position to put money away for that eventuality, but you don’t know the best options. Perhaps you don’t know any of your options.
A SEP-IRA can only receive contributions from the employer; the employee cannot contribute their own funds. The benefit of a SEP-IRA is that the employer can choose to contribute to the account in years when the business is operating in the green and choose not to contribute when cash flow is low.

4. SEP-IRA

Traditional IRAS are available to anyone under the age of 70½ with earned income. However, if a person contributes to a workplace retirement plan such as a 401(k) or 403(b), their IRA contributions may not be tax deductible.
They differ in how much you can invest annually, the rules for eventually taking that money out, whether you actually work alone or with others, and whether you own your own business. There are qualification rules and age requirements and the next few paragraphs will explain all of that (or tell you where the details can be found).
Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013. He is a contributor to The Penny Hoarder.
But this is a look at the opportunities for people who are self-employed, so that situation may not come up.
The employer contributions can occur if the self-employed individual has created an S corporation or similar business arrangement. The business can then contribute up to 25 percent of the employee compensation to the 401(k) as long as the total contributions to the account do not exceed ,000.

5. SIMPLE IRA

The SIMPLE IRA forces employers to contribute to it annually, either up to 3 percent of employee annual compensation or a 2% nonelective contribution. Employees are allowed to contribute as well, and they are fully vested in the SIMPLE IRA, meaning they can take those funds with them if they leave the company.
As the name suggests, this type of retirement account is for individuals only. Contributions to an IRA are subtracted from your annual income, thus avoiding the annual income tax. Contributions are usually made regularly by automatic withdrawal set up by you.
Again, such limits are a nice thing to be in a position to complain about.
Employees are vested in a SEP-IRA, and can take their funds with them if they leave the company. <!–

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How to Write a Check: 6 Easy Steps to Follow in 2021

When it comes to the banking and financial world, writing checks is not a popular pastime anymore. In fact, many people under 30 — or even 40 — may not even have checks.

We live in a world where we can pay with a debit card or credit card for just about everything — and in some cases, simply swipe a phone over a payment terminal to access your cash before whooshing out the door. Sitting down every month with your checkbook to write out paper checks to pay bills? A thing of the past with automatic bill pay.

But it’s not a bad idea to have some on hand, especially when a new employer asks for a voided check to use for direct deposit information.

We don’t exactly expect a resurgence of check writing, chances are good that the time will eventually come when you need to write a check.

Maybe it will just be a monthly rent check. Maybe it will be a down payment for something exciting, like a car or a house. Maybe you’ll be feeling benevolent and want to write up some snazzy-looking birthday gifts. Maybe you shop at a small business in a small town and realize you don’t have enough cash to cover your purchase.

So we would still advise you to learn the easy and important skill of how to write a check. Many people don’t learn how until college, so don’t feel bad if you’re reading this while shielding your computer screen from passersby.

Other Things to Consider

This post also provides information on Security Tips for Writing a Check and How to Write a Check From an Online Account.

Pro Tip

Need some physical checks? Read our how to order checks guide to help get a new checkbook without excessive fees.

Here Are the Parts of a Check

What are all these lines, boxes and numbers? Stop guessing. We’ll tell you.

The graphic shows the parts of the check.
Getty Images and Chris Zuppa/The Penny Hoarder
  1. Your info: This includes your full name, address and sometimes your phone number. If this isn’t printed on the check, many vendors ask you for it at check out, so having it printed there saves you time.
  2. Check number: This is to help you keep track of the checks you write so you can check them against your monthly bank statement; the vendor doesn’t use it.
  3. Date line: This records when you wrote the check.
  4. Recipient line: For the person or business you write the check to.
  5. Payment amount box: To include the numerical amount of the check for additional clarity.
  6. Payment amount line: To spell out the amount of the check.
  7. Your bank information: Including the name and address of the financial institution.
  8. Memo line: To explain what the check is for, for your and the recipient’s reference.
  9. Signature line: For you to sign to verify you’re authorizing the check.
  10. Your bank’s routing number: This helps the computers know which institution holds your money.
  11. Your checking account number: This helps the computers know which account to pull the money from.

How to Fill out a Check: Our Step-by-Step Guide

Writing a check is easy if you know these steps.

Step 1. Write the Date in the Upper Right Corner

the graphic shows the date circled on the check
Getty Images and Chris Zuppa/The Penny Hoarder

If you want the recipient to wait until you have money in your checking account before depositing the check, you might post-date the check.

You might post-date a check if you’re paying ahead of time for a service. For example, if your rent is due on the first of the month, but you mail your check on the 15th of the previous month because you’re going on vacation, you would postdate the check for the first of the next month.

Step 2. ‘Pay to the Order of’ Means the Person or Business You’re Paying

the graphic shows the pay to the order circled on the check
Getty Images and Chris Zuppa/The Penny Hoarder

Write the name of the person, company or payee in the field labeled “Pay to the Order of.”

If you’re not sure of the correct title, organization or business name, make sure to ask before writing out the check to ensure they can deposit it. Never leave this line blank when you write a check — you risk someone taking the liberty of finishing writing that check out to themselves!

Step 3. Write the Dollar Amount You’re Paying by Check

the graphic shows the amount on the check circled.
Getty Images and Chris Zuppa/The Penny Hoarder

Write the cash amount in words on the next line directly below the payee name (including dollars and cents). You might write “twelve dollars and eighteen cents,” or “twelve dollars and 18/100” — either is fine as long as it’s clear how much you’re paying.

If your words don’t take up the whole space, draw a straight line through to the end of the field so no one else can edit what you wrote.

Pro Tip

You’re doing this in pen, right? Pencil is too easy to alter. We used to be advised to write checks in cursive, but now, writing in pen is enough to indicate legitimacy.

Step 4. Write the Same Amount in the Box on the Right Side of the Check

the graphic shows the amount circled
Getty Images and Chris Zuppa/The Penny Hoarder

Now write the numerical dollar amount of the check in the box next to the dollar sign. Noting the amount in two ways gives the person cashing it a safeguard to ensure it’s correct.

Be sure to fill the whole box so the amount can’t be altered. It’s more important to align your dollar amount all the way to the left side of the box so no one can change your $12.18 to $112.18, for example.

Step 5. Write a Memo If You Want To

the graphic shows the memo section of the check circled
Getty Images and Chris Zuppa/The Penny Hoarder

The lower left line of the check, labeled “Memo,” is for your reference and the recipient’s. It’s a way to record exactly what the money’s for.

For example, you might make a note that you purchased “Mom’s birthday present.” This is especially helpful if you write a lot of checks in a day and have a checkbook that makes carbon copies.

More likely, if you’re using checks to pay bills, the recipient might ask you to include identifying information like a billing account number.

Step 6. Sign the Bottom Right Hand Corner of the Check

the graphic shows the signature section of the check circled
Getty Images and Chris Zuppa/The Penny Hoarder

Here is where you need to sign your name. Your recipient can’t deposit the funds unless you’ve signed the completed check!

P.S. Make sure you’re keeping track of the times you make payments via check in your checkbook’s ledger, a paper register that comes with the checkbook.

This way you can keep track of your available balance and check it against your checking account to avoid any accidental overdraft fees from banks or financial institutions.

Security Tips for Writing a Check

Checks are legal tender anyone can use to make a purchase or receive cash. Treat them like a legal document, and fill out each line carefully to ensure they can’t be used if they get into the wrong hands.

Include Your Information on the Check

When you order checks, have your name, address and telephone number printed on the check. Vendors and banks tend to ask for I.D. when taking checks, so this helps protect you from identity theft if someone gets hold of your blank checkbook.

Double Check All the Information

This is the simplest and best way to ensure your check is cashed for the correct amount by the intended recipient is to fill out all the information correctly.

Double check after you’ve written the check that everything is correct:

  • Include the correct payee name for the person receiving the money.
  • Include the exact amount of the check, and make sure the written amount is the same as the numerical amount.
  • Draw a line to fill any empty space along the payment amount line, and fill the payment amount box.

Keep a Good Record

Immediately document the check amount, date and payee in your check register, so you can track it and make sure it’s cashed for the correct amount.

Don’t Write a Post-Dated Check

In many cases, you have the option to post-date your check to encourage the recipient to wait to cash it until you have the money in your account. However, this isn’t foolproof.

In some states, businesses aren’t technically allowed to accept post-dated checks, and in almost all cases, banks aren’t required to honor the future date for cashing. You might think you’re writing a check that won’t be cashed until after payday, but the bank could legally pull money out of your account before you planned — potentially risking overdraft fees or a rejected payment.

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How to Write a Check From an Online Bank Account

Knowing how to write a check is still an important skill to know… even though we’re all writing fewer checks than ever. Debit cards and online banking have all but eliminated the need for this tedious payment process.

If you have to make a payment with a check — for something like rent or an odd bill — and all you have is an online bank account that doesn’t issue checkbooks, you usually still have the ability to write checks.

Ask your bank about one of these options:

1. Order Checks From a Third Party

Tons of online businesses, and even Costco and Walmart, print checks with your personal information and bank routing and account numbers.

Check the FAQs for your online bank checking account to make sure your account information works for these services. Some don’t, and they should say that explicitly.

2. Schedule a Check to Be Sent

Even if you can’t order checks for yourself with your bank account, nearly every checking account in existence lets you schedule checks just like you make digital payments.

Log into your account through the bank’s app or website, and search for a section on “bill pay” or “mail a check.” This will give you the option to fill out the payee and amount, and schedule a date for the check to be sent. The bank will print the check with the information filled out and mail it to the payee for you.
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Source: thepennyhoarder.com

Mark Your Calendar for Your State’s Tax-Free Weekend (or Week)

A father holds his daughter as they reach for school supplies at Walmart.

Mike Brassfield, a staff writer for The Penny Hoarder, and his daughter, Annabelle Brassfield, reach for a school supplies box while shopping at Walmart Supercenter in St. Petersburg, Fla. Chris Zuppa/The Penny Hoarder

Back-to-school shopping may be exciting for the kids who get new gear, but less so for the parents who have to pay for it all.

A survey from the National Retail Federation found that parents with kids in elementary through high school planned to spend an average of $789.49 on clothing, electronics and school supplies last year.

Some shoppers will get a little relief as 16 states have tax-free holidays coming up in July and August, saving consumers from paying sales tax on certain school-related items.

Now, you may not save a ton of money by shopping during tax-free holidays. For example, if you bought $500 worth of clothes, shoes and school supplies during Florida’s tax-free weekend in a county where the sales tax is 6%, you would save about $30. But what parent wouldn’t want to save 30 bucks?

And if you use the tax-free holidays in conjunction with smart budgeting strategies and comparison shopping, you’ll save even more on your back-to-school supplies.

Some states’ tax-free holidays are held over a weekend, while others are a week long. Each state has different criteria for what merchandise won’t be taxed, and many states require the purchases to be under a certain price threshold.

And if you live in Alaska, Delaware, Montana, New Hampshire or Oregon, every day is a holiday — those states don’t have a sales tax.

Tax-Free Weekends: When, Where and What

The 16 states that have back-to-school tax-free holidays this year are Alabama, Arkansas, Connecticut, Florida, Iowa, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Virginia.

Alabama

When: July 16-18

What is tax-free:

  • Clothing and shoes — $100 or less.
  • Computers and related equipment — $750 or less.
  • School supplies — $50 or less.
  • Books — $30 or less.

Arkansas

When: Aug. 7-8

What is tax-free:

  • Clothing and shoes — less than $100 per item.
  • Clothing accessories — less than $50 per item.
  • School supplies — no price threshold, but must be on the state’s list of approved items.
  • Computers and electronic devices — no price threshold, but must be on the state’s list of approved items.

Connecticut

When: Aug. 15-21

What is tax-free:

  • Clothing and shoes — less than $100 per item.

Florida

When: July 31-Aug. 9

What is tax-free:

  • Computers and related equipment — $1,000 or less per item.
  • Clothing, accessories and shoes — $60 or less per item.
  • School supplies — $15 or less per item.

Iowa

When: Aug. 6-7

What is tax-free:

  • Clothing and shoes — less than $100 per item.
A person shops for a book bag.
Getty Images

Maryland

When: Aug. 8-14

What is tax-free:

  • Clothing and shoes — $100 or less per item.
  • Bookbags/backpacks — the first $40 is tax-free.

Massachusetts

When: Aug. 14-15

What is tax-free:

  • Most consumer products — $2,500 or less per item.
  • Clothing — Massachusetts does not charge any sales tax on clothes under $175 year round.

Mississippi

When: July 30-31

What is tax-free:

  • Clothing, shoes and school supplies — less than $100 per item.

Missouri

When: Aug. 6-8

What is tax-free:

  • Clothing and shoes — $100 or less per item.
  • School supplies — $50 or less per purchase (exception: graphing calculators must be $150 or less).
  • Computers and related equipment — $1,500 or less per item.
  • Computer software — $350 or less.

New Mexico

When: Aug. 6-8

What is tax-free:

  • Clothing, accessories and shoes — less than $100 per item.
  • School supplies — less than $30 per item (exceptions: backpacks, maps and globes must be under $100 and calculators must be under $200).
  • Computers — $1,000 or less per item.
  • Computer hardware — $500 or less per item.

Ohio

When: Aug. 6-8

What is tax-free:

  • Clothing — $75 or less per item.
  • School supplies — $20 or less per item.
  • School instructional materials — $20 or less per item.

Oklahoma

When: Aug. 6-8

What is tax-free:

  • Clothing and shoes — less than $100 per item.
A little girl tries on shoes.
Getty Images

South Carolina

When: Aug. 6-8

What is tax-free:

  • Clothing, accessories and shoes — no price threshold.
  • School supplies — no price threshold.
  • Computers and related equipment — no price threshold.
  • Bedding, pillows, bath towels, wash cloths and shower curtains — no price threshold.
  • Books and musical instruments — no price threshold (if they are for school assignments).

Tennessee

When: July 30-Aug. 1

What is tax-free:

  • Clothing and shoes — $100 or less per item.
  • School supplies — $100 or less per item.
  • Computers — $1,500 or less per item.

Texas

When: Aug. 6-8

What is tax-free:

  • Clothing and shoes — less than $100 per item.
  • School supplies — less than $100 per item.

Virginia

When: Aug. 6-8

What is tax-free:

  • Clothing and shoes — $100 or less per item.
  • School supplies — $20 or less per item.

Nicole Dow is a senior writer at The Penny Hoarder.

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Source: thepennyhoarder.com

The 5 Best Banks for Small Businesses in 2021

There’s no one “best bank for small business,” so it’s important to take inventory of what you want and need when it comes to business banking. With that said, keep reading for our picks for the best banks for small business owners.
No matter what’s on your checklist, the options listed here should give you an idea of where to look next. If Wells Fargo and Chase were catching your eye, for instance, it might be worth comparing offerings from other big banks like Bank of America and Citibank as well. To be clear, none of these companies paid The Penny Hoarder to make the list. And a reminder: We don’t know your business finances or your cash flow like you do. The best bank for your small business is going to depend on your specific situation.
In general, it’s a good idea to look for business bank accounts that offer the following:
Navy Federal offers credit cards from Visa and Mastercard. The details:

What is a Business Bank Account, and Why Do You Need One?

You have many options when it comes to small business bank accounts. And your mileage with different banks and business checking accounts will vary depending on your wants and needs.
You can select this type of account to build cash reserves and earn interest on your money. And similarly, some banks offer more than one type of account (ranging in monthly maintenance fees) based on how much money you plan on saving and the number of transactions you make in a month.
The Spark 1.5% Cash Select card requires an Excellent credit score and offers:

Banks for Small Business Owners

Axos Business Savings requires a ,000 initial deposit. The account comes with:
There are three main ways you can borrow money for your business. We compared what banks offered across these three categories:
The Spark 2% Cash card requires an Excellent credit score and comes with:

Common Types of Business Checking and Savings Accounts

Do you want to use the same bank for your personal account, for example? Are you willing to step outside of the free checking options to earn more perks? Are you holding out for a debit card you can put your dog’s face on?

Business Checking Account

Ready to stop worrying about money?

Business Savings Account

Unlimited and free transactions (or banks that offer a reasonable limit for your needs) are also good to look for. Related, if your small business is verging into medium-sized-business territory, you might be eligible for free XYZ until you reach a certain limit. In that case, it may be worthwhile to move up to the next business checking account level to match your needs.

Business High-Yield Business Savings Account

The Business Market Rate Savings Account also includes a minimum opening deposit. The account comes with:
Most major banks offer business accounts, as well as many credit unions. You can opt to open an account with an online-only bank or solely brick-and-mortar institution, or choose one that offers a hybrid model.
Capital One offers equipment loans, business installment loans and lines of credit that start at ,000. Loan term lengths and repayment terms vary.

How We Picked the 5 Best Banks for Small Businesses

Navy Federal also offers money market accounts that begin paying dividends at ,500.

Small Business Checking and Savings Account Options

Axos also offers lines of credit and commercial loans. Both require your business to have been in operation for at least two years.
Source: thepennyhoarder.com

  • A low minimum balance requirement
  • A low monthly maintenance fee (or one that can be easily waived)
  • Minimum monthly service fees (bonus for no monthly fees!)
  • Free business checking
  • A business debit card
  • Free cash deposits (at least up to a point)
  • Online banking
  • Mobile banking (an app)
  • Online bill pay
  • Payroll services

With Capital One Business Advantage Savings, you:

Small Business Lending

If that’s your speed, a credit union like Navy Federal might be right for you. These member-owned nonprofits can provide a comfort and familiarity that the big four can’t offer.

  • If you’re a qualified small business owner, you can take out SBA loans, which are backed by the Small Business Administration and, as a result, come with lower interest rates.
  • You can also secure a business term loan, which operates in the same way as a personal loan.
  • You can secure a business line of credit, which can provide you with flexibility if you’re not sure how much money you need.

Business Credit Cards

Your money will earn a high APY, but you’ll have to earn your fee waiver.
No matter how big or small your operation is, it’s strongly recommended that you open a business bank account. At a minimum, a business checking account; it’s a good way to stay organized, period. You want a place to keep track of all the money coming in and out of your business and have a clear-cut record of your finances.

The 5 Best Banks for Small Business Owners

Axos does not offer credit cards.
If that minimum opening deposit is a deterrent, you may consider the Business Interest Checking account instead. The account only requires a 0 minimum deposit and comes with:
The right bank for your business and personal finances is out there. You’ve just got to hunt it down.

A Wells Fargo bank sign.
Tina Russell/The Penny Hoarder

1. Wells Fargo: Best Overall Bank Account for Small Business Owners

Because we’re talking to SMBs about business savings and business checking accounts, we leaned into information specific to that audience. Meaning, we focused more on banking services that cater to those just starting out and whose cash flow might not be cracking six figures yet.
BlueVine is FDIC insured and its online-only structure could mean convenient mobile banking for you. If a brick-and-mortar location isn’t a top priority, add this one to your list.

Business Checking and Savings Accounts

Like with personal accounts, you have many options when it comes to choosing a business bank account. Here are the basics when it comes to business banking:

  • A $10 monthly service fee that’s waived if you maintain an average balance of $500 over the month
  • 100 free transactions before you incur a transaction fee
  • $5,000 in free cash deposits per month

Some banks, specifically larger ones, may offer a variety of business checking accounts. Depending on factors such as your daily minimum balance, the number of transactions performed in a month and the amount of services you need, you can choose a checking account to fit your needs and budget.

  • A $5 monthly fee that’s waived if your average balance is at least $300
  • 20 free deposited items each month
  • $5,000 worth of free cash deposits each month

Small Business Lending

To be clear, BlueVine is a fintech company, not an online bank (The Bancorp Bank provides banking services). While it doesn’t offer credit cards, you can get a business debit card. And BlueVine offers something you can’t find with most banks: 1.0% interest on your business checking balance up to 0,000.

  • Loan amounts range from $5,000 to $100,000
  • Terms range from one year to five years, with no scheduled annual review
  • Fixed interest rates start at 1.75%

If you’ve started your own company — or you’re considering the move — you’ve likely marveled at the logistics required to pull it off.

Business Credit Cards

There are several angles you could take to determine the best bank offers, depending on the business needs of your company. To help you choose the best banks for small business, we focused on three banking services:

  • 1.5% cash back on every $1 spent
  • A sign-up cash back bonus between $300 and $500, depending on the card you apply for
  • The Wells Fargo Business Platinum card offers 0% interest for the first nine months — after that, APRs range from Wells Fargo Prime (3.25%) plus 7.99% to 17.99%

2. Capital One: Best for Low Fees

Popular first-time small business owner (SMB) questions include:

Business Checking and Savings Accounts

Full disclosure: The perks are not going to match the big four. Membership is also not available to everyone. Only veterans, active-duty military, employees of qualified government agencies and immediate family of Navy Federal members can apply to this credit union.

  • Unlimited business transactions
  • Free cash deposits up to $5,000 each month with no fee
  • Online and mobile pay, mobile deposits and online bill pay

It will only cost you to open an Initiate Business Checking account at Wells Fargo. The account comes with:
The checking and savings offerings fall short of Capital One’s and Wells Fargo’s, and there are no credit cards. But if you’ve been in business for a few years, are looking for more substantial lending and don’t have a considerable sum of transactions each month, it’s worth a look.

  • Only need an opening deposit of $250
  • Get a promotional interest rate guarantee for the first year (0.20% APY for 12 months)
  • Can have six free withdrawals a month
  • Free Capital One ATM usage

Navy Federal’s Business Checking account comes with:

Small Business Lending

You can likely guess that the “credit cards” category landed Capital One on the list, but the checking and savings account options are worth a nod as well. If your main priority is credit cards, Chase may beat Capital One out, but if you’re looking for comprehensive service (read: better savings and checking options), read on.

Business Credit Cards

The small business checking account, Chase Business Complete Banking, comes with:
With over 4,900 brick-and-mortar locations and 13,000 ATMs across the country, the other appeal is convenience. Customer service is around the clock, and you can handle all your business banking needs in one location.

  • 1% cash back on all purchases
  • No annual fee
  • Free employee cards with spending limits

While we don’t advocate spending just to get credit rewards, there’s no reason to leave perks for your existing expenses on the table. We looked at the annual fees, interest rates and perks each bank offers with their small business credit cards.

  • 1.5% cash back on all purchases
  • A $200 cash bonus if you spend $3,000 in your first three months
  • 0% APR for the first nine months; 13.99% to 23.99% APR after that
  • No annual fee
  • Free employee cards with spending limits

The Spark 1% Classic card requires a Fair credit score and offers:

  • 2% cash back
  • $95 annual fee
  • Free employee cards with spending limits
a man and woman withdraw money from chase bank ATMs automatic teller machines.
Sharon Steinmann/The Penny Hoarder

3. Chase: Best Credit Card Offerings

With this type of account, you have an opportunity to earn higher interest rates on your money. Typically, there is a higher minimum deposit required and tighter restrictions around the number of monthly transactions allowed for this account.

Business Checking and Savings Accounts

A business bank account is where you keep your money for the company. It’s an account used specifically for the business — so, separate from your personal checking or savings accounts — where you hold your earnings, pay for related expenses (supplies, vendor services, utilities, etc.) and more.

  • A $15 monthly fee that’s waived with a minimum daily balance of $2,000
  • 100 free transactions each month
  • Same-day deposits into your Chase Business Complete Banking account for no additional fee

And if you like the idea of Navy Federal, search for credit unions in your area to compare. If your small business is location-based and caters to a local client, working with a neighborhood credit union might benefit you in other ways a bigger bank cannot.

Small Business Lending

The Axos Basic Business Checking account requires a ,000 minimum opening deposit and comes with:

  • Loan amounts start at $10,000, with varying interest rates
  • Terms range from 12 to 24 months
  • Lines of credit up to $350,000 are also available through Chase’s SBA Express

Business Credit Cards

You have lots of options when it comes to banks for small business, so do some research.
If your business can keep a reliable daily balance, Wells Fargo’s business accounts come cheap.

  • No annual fee
  • A $750 cash back bonus if you spend $7,500 in your first three months
  • A 12-month introductory period of 0% APR
  • APRs ranging from 13.24% to 19.24% after the first 12 months (the average business credit card APR is 15.37% as of June 2019, according to ValuePenguin)

Many banks offer business loans and business credit cards (more on those next) and certificate of deposit (CDs). You also want to keep an eye out for new-business-account bonuses (usually in the form of a couple hundred dollars) for owners just opening their account.
Chase’s Business Total Savings charges per month, which is waived if you maintain an average balance of ,000.

4. Axos: Best High-Yield Savings Account

Wells Fargo’s small business credit cards offer:
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Business Checking and Savings Accounts

Your needs may be more complicated, but they likely include these basic merchant services. So here’s how the best small business banks stack up.

  • No monthly maintenance fees
  • Visa debit card
  • 200 free payments and cash deposits each month — after that, you’ll pay 30 cents per transaction

Since vetting banks and business checking accounts probably isn’t how you want to spend your time when you’re self-employed, we did the leg work for you. But first, let’s cover some basics.

  • 0.81% APY — considerably higher than most accounts
  • A $10 monthly maintenance fee that’s waived if you maintain an average daily balance of $5,000
  • 50 free payments and deposits each month; after that, you’ll pay 50 cents per transaction

If you’re willing to pay an annual fee of for the Ink Business Preferred card, the perks go up from there.

  • 0.20% APY
  • $5 monthly fee if your average daily balance is below $2,500

Small Business Lending

While the Ink Business Unlimited will give you 1.5% cash back on all purchases, the Ink Business Cash earns you 5% cash back on select categories.

  • Lines of credit and commercial loans start at $250,000
  • Line of credit terms are generally one-year terms
  • Commercial loans offer three-, five- or seven-year terms

Business Credit Cards

As another “big four” bank, Chase Bank offers familiar perks: a reliable brand and enough resources to keep things convenient. Chase Bank has 4,700 branches and 16,000 ATMs across the country, and its customer service runs around the clock as well. But Chase’s credit card offerings are particularly worth noting.

5. Navy Federal Credit Union: Best Credit Union

Navy Federal offers the following small business lending options:
Capital One offers three business credit cards and includes information upfront about the credit score you need to possess to qualify for each one. Here they are at a glance:
Keeping these transactions separate is helpful come tax time. If you choose to apply for a business loan (some banks require you to have an account for a designated time period) or relief funds down the road, you’ll also need an account to share your financials and house the money.

Business Checking and Savings Accounts

There is a a month fee to maintain the account, but you can waive that by having a ,000 minimum balance for 30 or 90 days.

  • Free starter checks
  • No monthly service fee
  • Navy Federal GO BIZ™ debit card
  • 30 free non-electronic transactions — after that, you’ll be charged 25 cents per transaction

That’s right, you need a business account.

Small Business Lending

Ultimately, only you can determine the best business bank account for you and your business.

  • Secured and unsecured business loans starting at $35,000
  • Term length can match borrower needs
  • Annual fee of $325 for equity up to $100,000

Business Credit Cards

If you need financing for a business vehicle or equipment, you can apply for Business Equipment Financing as well. Details vary depending on the industry, equipment and services.

  • No annual fee or foreign transaction fees
  • You’ll earn one rewards point for every dollar you spend
  • Interest rates start 5.99% (but will fluctuate)

Honorable Mention: BlueVine

With Capital One Spark Business Basic Checking, you get the following:
Now, here are our five favorites.
You probably hear the name Chase and think of credit cards, so it’s no surprise that its offerings in this category are robust — in fact, they’re why Chase made the cut.

Pro Tip
We looked at balance requirements, (monthly) fees and transaction and deposit limits.
A barber shop owner trips a customer's hair.
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How to Choose the Best Small Business Bank Accounts

If your personal bank offers business bank accounts, that might incentivize you to open an account with your current organization — but run the numbers first. While you may have access to the merchant services you’re accustomed to and be able to link accounts (and seamlessly transfer money from your business bank accounts to your personal checking account, for example), there may be higher transaction fees or hidden costs.
The Ink Business Unlimited and Ink Business Cash cards come with:
There are many changes when you run your own show. And when you become a business owner, your banking needs to change, too.
Wells Fargo also offers unsecured business loans for various business purposes. At a glance:
You’re a small business owner now. Maybe you don’t want to do business with a multibillion-dollar corporation.
Chase offers a variety of small business loans. Here are the details: <!–

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BlueVine’s free business checking account has no monthly fees, no monthly transaction limits and no minimum balance requirements. You can pay vendors and bills by ACH, wire or check and set up recurring payments. You can also apply for credit lines up to 0,000 with rates as low as 4.8%.

Time for a Financial Checkup: 11 Healthy Steps to Take

You go to the doctor for your annual physical to make sure your body’s healthy. But when’s the last time you had a checkup for your financial health?

It’s important to know how well you’re managing your money and where you can make changes for the better. Without a regular financial checkup, you might continue to repeat poor money moves, like giving into frivolous impulse buys or only paying the minimum on your credit cards.

Here’s how to examine and improve your financial health.

11 Steps to Complete Your Own Financial Checkup

1. Update Your Budget

Budgets should not be static. Jump in and adjust yours if it’s not working for you.

Increase or decrease spending limits in your various budget categories so they fit your current priorities and desires. Test out a different budgeting method or combine a couple to create your own money management plan, like this woman did.

2. Track Your Spending

Do you often wonder where all your money goes? If so, logging every dollar you spend will give you some insight.

Practice tracking your spending for a month, but don’t just include dollar amounts and what you bought. Jot down notes on why you made that purchase and how it made you feel.

Pro Tip

Kakeibo is a budgeting method that incorporates mindfulness about spending.

If you’re overspending on take-out during the work week because you’re too tired to cook, that could be a sign to start meal prepping. If you love how you feel after taking a drop-in yoga class and realize you want to do that more frequently, you could save money with a monthly pass rather than paying per session.

3. Reduce Your Fixed Expenses

Your fixed costs — the unchanging amount you pay for things like rent, cell phone service and auto insurance — may seem inflexible, but they don’t have to be. Research competitors’ rates to negotiate your bills with your current provider or to switch to a new one.

When it comes to housing costs, getting a roommate can significantly reduce that fixed expense. Just make sure to screen all potential roommates so you don’t end up with a dud. Or if you’re cool with the nontraditional, these alternative housing options can help you save money.

4. Add to Your Emergency Fund

An unexpected crisis can pop up at any time. Having a robust emergency fund makes those situations a little less stressful.

During your financial checkup, review how much money you have set aside for emergencies. Many experts recommend having between three to six months worth of expenses saved, but some are advocating for even more — especially after so many people had their savings wiped during the Covid-19 pandemic.

If you have less, make a plan to add to your savings in the year ahead.

A man reviews his finances.
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5. Check Your Progress on Other Savings Goals

Even if you’ve automated your savings for, say, an upcoming vacation or a home down payment, your goals aren’t something to just set and forget. Use this financial checkup time to see how close — or far away — you are from meeting those goals.

Do you need to adjust your deadline or increase regular contributions to your sinking funds? Are you making the most of your money by putting it in a high-yield savings account or money market account?

6. Assess Your Retirement Contributions

Even though retirement may seem like a long way away, the best time to start saving for it is now. Retirement accounts grow the more time you give them to benefit from compound interest.

Are you meeting your employer’s 401(k) match? Did you up your retirement contributions the last time you got a raise? Could you free up a little more each paycheck to divert to your retirement account, even if it’s just an extra 25 bucks?

Every little bit helps.

7. Evaluate Your Debt Repayment Plan

There are different ways to tackle paying off debt. Use this financial checkup to determine if your current repayment plan is working for you.

If you want the gratification of clearing an entire credit card balance, the snowball method of debt repayment focuses on the smallest balances first. If you want to attack the debt with the monster-sized interest rate, try the avalanche method.

8. Improve Your Credit Score

Your credit score is important when it comes to things like taking out a loan or renting an apartment. A low credit score can mean getting denied — or paying significantly more in interest or for a security deposit.

Conversely, the higher your score, the less money you’ll have to pay.

You can raise your credit score by paying down the balance of your existing loans and credit cards, not incurring additional debt, requesting limit increases on your credit cards and paying your bills on time.

9. Pull Your Credit Report

Your credit report delves into the reasoning behind your three-digit credit score. It details who you owe, how much, recent credit inquiries and if you have any debts that have gone to collections.

You can get a free copy of your credit report from all three credit reporting bureaus — Experian, Equifax and Transunion — once a year at www.annualcreditreport.com.

Review your credit reports to check for any inaccuracies. If something is on your report in error, you can dispute it with the credit bureau and potentially raise your credit score.

10. Update Your Resume

Stay prepared to jump on a great job opportunity by keeping an up-to-date resume.

And while you’re making sure your resume is in stellar condition, here’s some advice on how to write a winning cover letter.

11. Protect Your Assets

To maintain good financial health, it’s smart to have a contingency plan for if something goes wrong.

Disability insurance lets you collect income when you’re sick or injured and can’t work. Home, renters and auto insurance pay to repair or replace your property after an accident or disaster. Life insurance takes care of your family in the event of your death.

Review your various policies to make sure you have the coverage you need.

Nicole Dow is a senior writer at The Penny Hoarder.

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Source: thepennyhoarder.com

Frugality Fails: 10 Money-Saving Attempts That Could Backfire

Every now and then, well-intentioned plans to save money simply fail.

You think you’re following the frugality playbook only to have it backfire. It’s when trying to be cheap ends up being expensive.

It happens to the best of us.

Here are 10 situations where trying to pinch pennies has the potential to end up costing you money.

10 Frugality Fails to Avoid

1. Letting Meal Prep Go to Waste

Preparing meals in advance means you won’t be tempted to grab fast food or order takeout whenever you don’t feel like cooking. But there’s always the potential of wasting a week’s worth of chopped veggies or a tupperware full of chicken breasts if they’ve gone bad or you just can’t stomach eating the same meal several days in a row.

That’s just tossing money in the garbage.

The same thing can happen when you try to be thrifty by buying in bulk — but end up throwing out half of what you bought because it’s too much.

The remedy: Meal prep a few days out rather than for an entire week. Store food properly and freeze what you won’t eat soon. Make use of sauces and spices to add variety to staples like chicken and rice.

2. Spending a Fortune on Dinner Ingredients

Cooking at home is usually a much cheaper option than eating out at restaurants — except, of course, when you go overboard buying gourmet groceries and getting 10 unique ingredients for each recipe.

When you total everything up, you realize you could afford to dine out after all.

The remedy: Choose recipes that include ingredients you already have at home or that are inexpensive. If you need to buy new ingredients, make sure you can use them in multiple recipes.

3. Buying Stuff Just Because It’s On Sale

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Sometimes the thrill of saving money can cloud your judgment. You load up your grocery cart with BOGO items, grab clothes off the clearance rack and buy Groupon deals — without much thought to whether you actually need or want it all.

You can easily end up blowing your budget chasing deals and discounts.

The remedy: Before you buy something that’s on sale, ask yourself if it’s something you really want or if you’re just buying it because of the deal. If the sale price was the regular price and there was no discount, would you still want it? Do you have a plan to actually use what you’re buying? Is it in your budget? It’s okay to pass up a good deal sometimes.

4. Driving All Over to Find the Lowest Price on Gas

Sure, you can save 10 cents per gallon filling up your tank at a gas station on the other side of town, but you’re going to waste gas getting there and back.

The remedy: Use a gas-price app, like GasBuddy, to find the cheapest prices for fuel along your normal driving route. Take advantage of fuel rewards programs and discounted gift cards as other ways to save money on gas.

5. Going Carless Only to Spend More Money Getting Around

Car payments, insurance, gas, maintenance… it all adds up. Ditching your vehicle seems like it could help you save.

However, if you’re hailing Uber every day and renting a car every other weekend, those costs might be even more expensive.

The remedy: Before you go carless, make a plan for how you’ll get around and what the costs will be. Research public transportation options in your area. Consider carpooling or biking to work. If giving up your car is not the best option, you can still save money by swapping your current vehicle for one that’s more fuel efficient or that comes with a lower payment.

6. Buying a Used Car Without Doing Due Diligence

You’ll lose money in depreciation just by driving a new car off the lot. That’s what we’re always told.

Buying a used car isn’t much better, though, if you drive away only to have your check engine light come on. Buying used means your vehicle may not be in optimal condition. And if you buy from a shady seller and don’t take the time to really examine the car and dig into its history, you may end up with a money pit.

The remedy: When you buy a used car, where you shop matters. You can find certified pre-owned vehicles at legit dealerships that have been thoroughly inspected and may come with some type of warranty coverage. Check the Carfax report for accident history and past maintenance information. Conduct a thorough test drive and try to get your mechanic to inspect the car, if possible.

7. Signing Up for Free Trials and Forgetting to Cancel

It makes sense for a frugal person to take advantage of free trial offers. And for the first week or 30 days, everything is great.

The problem arises when you forget to cancel your free trials before the free period is over and you end up being charged for stuff you never intended to pay for.

The remedy: If you can cancel a free trial immediately and still take advantage of the service until the trial period ends, do that. If not, set calendar alerts to remind yourself to cancel before you get charged. Signing up for a free trial with a virtual credit card is another way to avoid getting looped into auto pay after the free trial ends.

8. Losing Time and Money on DIY Projects

A woman uses power tools to create a DIY projects with wood.
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Say you drop $20 on equipment and supplies at a craft store to make some home decor piece you could get at HomeGoods for $30.

You think you’re saving money — except your completed project turns out nothing like what you intended. It goes straight into the trash. On top of that, you’ve wasted hours trying to do-it-yourself, and we all know time is money. Of course, the bigger the project, the more money you could lose doing it wrong.

The remedy: Don’t overspend on supplies, and for ambitious home projects, know what to DIY vs. what requires a professional..

9. Replacing Cable With a Bunch of Subscription Services

You’re sick of paying over $100 for cable so you decide to finally cut the cord. But in its place, you sign up for Netflix, Hulu, Disney+, HBO Now, Showtime, Sling TV and more — until what you pay for television and movies exceeds your old cable bill.

The remedy: Ask yourself what content really matters to you and limit yourself to a couple streaming services.

10. Getting Rewards Credit Cards and Going into Debt

Rewards credit cards lure you in with perks like cash back or points to use toward future purchases. Store cards hook you with the promise to save a percentage off each time you swipe.

But if you carry a balance on those cards, what you pay back in interest could easily negate the rewards and savings.

The remedy: Check out these questions to ask yourself before getting a new credit card for the rewards. If you do get a new card, treat it like cash and only charge what you can afford to pay off.

Reporting from contributor Lyndsee Simpson was included in this article. Nicole Dow is a senior writer at The Penny Hoarder. 

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Source: thepennyhoarder.com