As Americans face rising costs on just about everything, the amount of debt they're taking on is going up, too. Credit card balances recently reached a record $1.28 trillion. And according to credit-reporting company Experian, 38% of U.S. consumers now have a personal loan, with the number of these loans on credit reports reaching 67.5 million. Both of those figures represent the highest levels since Experian started collecting data in 2017.

For some, the strain of staying afloat is becoming more evident. The financial stress index from the National Foundation for Credit Counseling (NFCC), which reflects the financial ability of consumers to repay unsecured debts, recently hit its highest level since the NFCC began tracking it in 2018.

“I'm not surprised. I see a lot of people dealing with short-term financial pressure, and it's been going on for a while,” says Leah Hadley, a wealth adviser in Cleveland. A large, unexpected bill can leave households with no choice but to take on debt if they don't have a cash buffer to absorb the extra expense. (Or they may tap their retirement savings. Last year, about 6% of eligible participants in Vanguard 401(k) plans took a hardship withdrawal — an all-time high.) And while the unemployment rate was recently a relatively low 4.3%, the average time it takes job seekers to find work is the longest it has been since 2019. During an extended bout of unemployment, families may rely on credit or retirement savings to make ends meet.

But economic challenges are only part of the picture. Even financially comfortable households are borrowing more frequently rather than paying cash, says Derik Farrar, head of everyday banking and borrowing at U.S. Bank. Some are taking on loans strategically to fund, for example, a badly needed home renovation, while others are incurring debt to keep up with lifestyle inflation — say, upgrading to high-end cars or taking luxury vacations.

Another factor is how much easier it has become to borrow, and to borrow larger amounts, with the click of a button. Financial technology companies such as SoFi, Prosper and LendingClub, for example, let consumers take out personal loans online in as little as 24 hours, without ever speaking to a representative. Buy now, pay later (BNPL) plans from fintechs such as Affirm, Afterpay and Klarna have surged in popularity in recent years, allowing shoppers to delay payment on purchases big and small by signing up for a plan at online checkout. And major retailers, airlines and hotels tout their credit cards to customers, promising ample rewards on their spending — but with the potential to rack up high-rate debt, too.

While borrowing may be quicker and more convenient, the challenge of paying it back remains. Even a decent income isn't surefire protection against debt trouble. People seeking credit counseling now have an average household income of about $70,000, up from $40,000 before the COVID-19 pandemic, according to data from the NFCC.

Ideally, you'll have an emergency fund with at least three to six months' worth of living expenses, stored in a safe, easily accessible place, such as a bank savings account. But if you exhaust those funds — or haven't built them yet — you may have to look to other sources of cash in a pinch. Or, if you need extra money to finance a big project, such as a kitchen remodel, you may be looking to narrow down the best borrowing strategy.

If you decide to borrow, the key is understanding how the loan fits into your finances and how you'll repay it. This guide breaks down the main borrowing options and how to use them effectively.

Questions to ask before getting a loan

Before taking on a loan, step back and ask a few key questions. The answers can help you decide whether borrowing makes sense and, if so, determine how you'll repay the debt.

1. What are you borrowing for? Productive vs unproductive debt

Anytime you consider taking on debt, ask what you're getting in return and how long that benefit will last. For example, borrowing to renovate your home or launch a business can improve your finances over time, boosting your home's value or increasing your income and net worth.

Debt that covers short-term spending, such as shopping for designer clothes or going on a vacation, is less valuable and doesn't build wealth. Farrar frames the former as productive debt and the latter as unproductive, adding that unproductive debt should be minimized.

2. Can you reduce how much you need to borrow?

If you decide to get a loan, try to maximize how much of the expense you can cover yourself, limiting the amount you borrow. Even a small reduction in the loan balance can lower your monthly payments and make the loan easier to repay.

Start by reviewing your budget and identifying areas to cut back on discretionary spending, such as dining out or subscriptions. “People don't always realize how much they're spending until they actually sit down and look at their budget,” says Michael McAuliffe, president of Family Credit Management, a nonprofit debt-relief organization in Rockford, Illinois.

You can also look for ways to bring in additional income through part-time or gig work. This is especially important if you're borrowing to cover ongoing expenses. “In this situation, more loans are not the answer. People need to change their long-term habits,” says McAuliffe.

3. Can you afford to pay off the debt?

Make sure you can comfortably handle the monthly payments on any future loans. This is especially important with secured debt, which is backed by an asset; missing payments can put your home or retirement savings at risk. And keep in mind that being able to make the minimum payment doesn't necessarily mean the debt is affordable in the long run.

McAuliffe says that he has seen clients underestimate their total outstanding balances by tens of thousands of dollars. For that reason, it's important to look beyond the minimums and have a clear plan for paying down the balance. A debt-repayment calculator can help you estimate how long it will take based on your target monthly payments.

4. Are you getting the best terms?

Once you've decided to borrow, the next step is to make sure you do so on the best possible terms. A little preparation can lift your chances of approval and help you qualify for lower interest rates.

Start by checking your credit reports and making sure your accounts are in good standing. You can get your report from each of the big three credit-reporting companies (Equifax, Experian and TransUnion) weekly for free at AnnualCreditReport.com. Are there any mistakes dragging down your credit score, such as a credit card issuer reporting a missed payment that you made on time?

You'll also want to gather basic documentation, such as recent pay stubs, bank statements and tax returns, especially if you're applying with a new lender. “The more you borrow, the more you’ll need to verify,” says Farrar. Working with a bank or credit union where you’ve already developed a relationship can improve your chances of qualifying. However, check with a few other lenders to see whether any of them offer you a better rate. Some lenders also provide prequalification tools that let you estimate potential rates without undergoing a credit check.

Types of loan: Consider your options

When it comes to a loan, the right choice for you depends on how much you need, how quickly you can repay the debt and what assets you have available to borrow against. Here are some options to consider.

Zero-interest credit card offers

For short-term borrowing, a credit card with a 0% introductory interest rate on purchases can be one of the most cost-effective options. These offers typically allow you to carry a balance for 12 to 21 months without owing any interest. If you pay off the balance in full before that window closes, it’s essentially a free source of borrowing. A few of the top options include Chase Slate, U.S. Bank Shield Visa and Wells Fargo Reflect, which all offer new customers a 0% rate for 21 months.

The trade-off: If you’re still carrying a balance after the promotional period ends, interest starts up, usually at a high rate, flipping an initially attractive offer into one of the most expensive sources of borrowing. The average credit card rate is about 24%, according to LendingTree. No-interest credit card offers make sense for smaller purchases that you can pay off relatively quickly, such as car repairs or furniture.

“I don’t have a problem with 0% offers as long as you treat them as a short-term bridge,” says Hadley. “You need a plan to get rid of the debt before the deal expires.”

Home equity lending

If you own your home, you may be able to borrow against its value through a home equity loan or a home equity line of credit (HELOC). To qualify, you typically need to have equity — in other words, the difference between the value of your home and the outstanding balance on your mortgage — of at least 15% to 20%. You'll also need to provide proof of income and have a decent credit score, usually of at least 680.

Home equity loans, which provide you with a lump sum of cash up front, come with a fixed interest rate and a set schedule of monthly payments that do not change. Average home equity loan rates were recently about 8%, according to Bankrate, though your rate will depend on how much you borrow, the length of the loan term and your creditworthiness. A home equity loan can make sense for a large, one-time purchase or expense, such as a home renovation project.

A HELOC is a revolving credit line that offers more flexibility, allowing you to borrow at your convenience, repay and borrow again over time. “Even if you don't see a need right away, having a HELOC in place can give you access to cash in an emergency,” says Kenyon Sutton, a financial coach in Jacksonville, Florida. If you set up a HELOC and then lose your job, for example, you can still borrow against it. HELOCs recently had an average rate of 7%, according to Bankrate. But the rate is usually variable, meaning your monthly payment can go up and down based on market conditions.

Because your home secures these loans, they typically come with lower interest rates and open the door to larger borrowing amounts than unsecured loans. While unsecured personal loans tend to max out at $50,000, home equity lending could allow you to borrow in the six figures or higher, assuming you have the equity to back it up.

The trade-off is the level of risk. If you miss payments, you could eventually lose your home. These loans also charge up-front origination fees of around 0.5% to 1% of the borrowed amount. And you can't turn to home equity loans if you're in a hurry. They take time to launch because the lender has to evaluate your home's value.

Personal loans

With a personal loan, you get a lump sum of cash and pay back the loan on a set schedule, usually between one and five years. You can see the scheduled repayments and total cost of the debt when you apply.

On average, interest rates on personal loans (at about 12% for those with decent credit) are lower than standard credit card rates. But unlike some credit cards, personal loans don't come with an initial 0% period, so you owe interest immediately. With that in mind, personal loans often make sense for borrowing that will take a few years to pay off, such as home improvements or a new appliance. Borrowers also commonly use personal loans to pay off their high-rate credit cards, refinancing the debt at a lower interest rate. You need to show proof of income to qualify for a personal loan, so don't count on getting one to cover expenses if you lose your job.

Personal loans are widely available through both online lenders and traditional banks or credit unions. Online lenders tend to offer a faster application process and approval, with funds often available within a day or two. Banks and credit unions take longer to process loan applications, but they can offer lower interest rates. And you may have a better shot at qualifying by getting in-person assistance from a representative, especially at financial institutions where you have a long-term relationship.

“Online is faster, but there's no one to advocate for you. There's less flexibility on the borderline,” says Sutton.

Buy now, pay later plans

BNPL plans split purchases into smaller payments, typically charging no interest during this time. The standard BNPL plan lasts six weeks, though it can be stretched out to 24 months or longer for larger purchases. Used responsibly, BNPL can be a tool to spread out the cost of the occasional big-ticket purchase — say, to buy a new dishwasher after your old one breaks down. But BNPL's convenience too often leads borrowers to overuse it, spending more than they can afford on food delivery, clothes or other discretionary purchases.

“The problem isn't the first BNPL purchase, it's that they keep adding up,” says Farrar from U.S. Bank.

You also need to pay attention to the fine print. In some cases, “no interest” offers come with a catch. For example, if the balance isn't paid off in time, borrowers may owe substantial penalties or retroactive interest.

401(k) loans

If you have a workplace retirement plan, there's a good chance it allows you to borrow from your balance. Roughly 79% of 401(k) plans offer loans, according to research from John Hancock. If your plan is among them, your employer determines how much employees can borrow through the program rules, up to the IRS limit of 50% of your vested account balance (the amount you could keep after leaving the job) or $50,000, whichever is lower. You must repay the loan within five years.

Unlike many other types of borrowing, getting a loan through your 401(k) doesn't require a credit check. The interest rate depends on the plan, but typically, it's the prime rate plus one or two percentage points. Recently, that equaled 7.75% to 8.75%.

While those features might make a 401(k) loan sound like an appealing route to take if you need cash, there is a substantial downside: The money you borrow is also out of the stock market until it's repaid.

“People focus on the interest rate, but there's much more to the story,” says Hadley, the Cleveland wealth adviser. “You're missing out on any potential growth during that time.” Considering the S&P 500's average return over the past 30 years is about 10% per year, that's an additional opportunity cost of borrowing on top of interest.

There's also an added risk if your job situation changes. If you leave your employer, the loan typically needs to be repaid within a short time frame — about 90 days, depending on the plan. If it isn't, the remaining outstanding balance is treated as a withdrawal, triggering income taxes on the unpaid amount plus a 10% early-withdrawal penalty if you are younger than 59½.

Because of these risks, 401(k) loans are typically best used only if more-favorable options aren't available to you — say, because you can't qualify for other loans.

How to get on top of your debt

1. Start with a clear payoff plan

As you create a plan to whittle your debt, consider trying the “snowball” method, which involves ranking the debts by size. You make the monthly minimum payment on all of them, and any extra funds go toward the card or loan with the smallest balance. That way, you pay off one account as quickly as possible, banking a win that motivates you to continue to the second-lowest balance, and so on.

Alternatively, the “avalanche” method targets the loan with the highest interest rate first. After that, you tackle your other loans in descending order of the interest rate. This strategy saves you the most in monthly interest charges over time.

2. Consolidate cautiously

Debt consolidation involves combining multiple existing loans and credit card balances into one larger loan, with a single monthly payment and often a lower interest rate. You may, for example, use a personal loan or home equity loan to pay off multiple credit cards and other high-rate debts. But if you go this route, make sure to make changes in the spending habits that landed you in debt in the first place.

"People take out a consolidation loan, and then the credit cards are still available," says Michael McAuliffe, president of Family Credit Management.

"They don’t mean to, but they charge them back up," causing people to sink even further into debt.

3. Reach out to current creditors

Lenders may offer hardship programs, such as deferred payments or rate reductions for borrowers who have lost their jobs, face a sudden medical emergency or are dealing with other temporary setbacks.

4. Turn to credit counseling

If the situation becomes difficult to manage on your own, a nonprofit credit-counseling agency can help create a structured plan and negotiate with your creditors on your behalf to lower interest rates or get more time to pay off the debt. You make one monthly payment to the service, which uses the money to pay your creditors.

The agreement typically forces you to temporarily shut down most of your credit cards for future purchases, and enrolling in a debt-management plan can have a short-term negative impact on your ability to borrow in the future. You can find a local credit counselor through the NFCC or the Financial Counseling Association of America (FCAA).

This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to Kiplinger Personal Finance Magazine to help you make more money and keep more of the money you make.

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Nearly one in four Americans don’t have an emergency fund, according to Bankrate. If you’re among those without enough cash on hand to cover an unexpected expense, you may be tempted to use a credit card cash advance as a quick solution. But you’ll pay for the convenience in high interest and fees.

A cash advance is a short-term loan from your card issuer, allowing you to borrow against your card’s credit limit, with no collateral required. You can typically get the cash at an ATM or a local bank branch. How much you can withdraw depends on your card issuer’s rules. Cash advances may be capped at a few hundred dollars or about 30% of your card’s credit limit.

You’ll pay an up-front fee, usually 
the greater of about $10 or 3% to 6% of the transaction amount. Interest accrues immediately; there’s no interest-free grace period, which most credit cards offer on standard purchases. And the cash-advance interest rate — often in the range of 25% to 30% — is usually higher than the rate that applies to purchases, says credit expert Gerri Detweiler.

Alternatives to a credit card cash advance

Not only do cash advances hit your wallet, they can also hurt your credit score. When you take out a cash advance, the unpaid balance counts toward your credit-utilization ratio — the percentage of available credit that you’re using on your credit card. If your utilization ratio rises because of the cash advance, your credit score may drop.

As an alternative to a cash advance, try asking your bank or credit union for a low-cost loan to help cover emergency costs, Detweiler suggests.

Another option: Open a credit card with a 0% introductory rate on purchases. The Wells Fargo Reflect card, for example, charges no interest for 21 months.

But if you take this route, be sure to pay off the balance before the 0% window closes. After that, you’ll likely owe double-digit interest on any remaining balance.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Many people were caught off guard when inflation surged in 2021 and 2022. And though things have cooled substantially since then, the impact was (and still is) painful for some.

It’s hard to prepare for such a significant surge in prices across such a wide spectrum — from gas and groceries to utilities and housing costs. (And, let’s face it, we had gotten used to the inflation rate hovering around 2% for several years before it spiked to 9.1% in June 2022.)

But the reality is inflation should always be a factor when it comes to planning your finances.

Even when inflation is low, you can expect the cost of goods and services to rise over time and affect your purchasing power.

This is why it’s essential to have a financial plan that helps you keep pace with inflation — whether you’re a young professional working and saving for your future or a retiree trying to get the most from your savings.

Here’s a look at how inflation can affect both your pocketbook and your portfolio, along with practical strategies to help you stay financially resilient.

Erosion of purchasing power

One of the most immediate effects of inflation is the reduction of purchasing power. As prices rise, the same amount of money buys less. That can put a financial strain on just about everyone, especially low- or moderate-income workers and retirees on a fixed income.

Both younger workers as well as retirees and soon-to-be retirees can benefit from thoughtful budgeting, cutting out unnecessary expenses and carefully weighing their priorities before making major purchases.

Younger workers may also want to focus on increasing their earning potential through skill development, career growth and strategic investing.

Impact on investments and savings

Inflation can erode the real value of savings, which makes it crucial to invest in assets that have the potential to outpace rising prices. Market volatility can make “safe” investments (CDs, savings accounts, etc.) seem more appealing to investors of all ages.

But you may actually be losing money if those investments can’t keep up with inflation. A carefully planned portfolio mix that aligns with your time horizon and risk tolerance can help you stay secure while also earning enough to combat rising costs.

For example, investing in diversified and long-term growth assets, including equities and real estate, can help younger workers grow their money for the future.

Signing up for your workplace retirement plan also is an easy way to make investing automatic — and you can take advantage of your employer’s matching contributions to accelerate your savings.

Contributing or converting to a Roth IRA can also be a smart way to mitigate both tax and inflation risk in retirement.

Meanwhile, retirees and soon-to-be-retirees should consider a diversified portfolio that might include dividend-paying stocks, Treasury inflation-protected securities (TIPS) and other income-generating assets designed to keep pace with inflation.

Effects on the broader economy

Although the effects of inflation may feel very personal when you’re paying for your groceries or checking your bank balance, inflation also influences the economy as a whole.

When inflation rises, central banks often respond by increasing interest rates to slow down excessive price growth. Higher interest rates can make borrowing more expensive for businesses and individuals.

This is why, when possible, younger workers should comparison-shop for the best loan offers and lock in lower interest rates. This can help with the cost of buying a home or car or starting and growing a business. Keeping your credit in good standing can help you score the lowest rates.

Retirees and soon-to-be retirees should build a balanced portfolio that can withstand changes in interest rates and inflation. A financial professional can help stress-test your portfolio to determine if you’re prepared for retirement risks like market volatility and inflation.

Dealing with debt in an inflationary environment

While inflation increases the cost of goods and services, it can also reduce the burden of certain types of long-term debt. Those with fixed-rate mortgages and student loans may benefit, for example, but retirees need to be cautious about taking on new debt.

Younger workers with too much debt may want to prioritize paying off high-interest credit card debt while maximizing the long-term benefits of low-interest, fixed-rate loans.

Retirees and soon-to-be retirees can also benefit from managing their expenses and keeping credit card balances low, as well as avoiding excessive borrowing that could strain their retirement income.

Inflation-proofing your plan for the long haul

Investing and saving wisely, managing debt strategically and building a reliable income stream you can live on now and in the future can help ensure long-term financial security.

If you don’t know where to start, a financial adviser can assist you with creating or assessing your overall financial plan. They can also help you identify and implement appropriate inflation-fighting strategies.

Inflation is a natural part of the economic cycle, but it doesn’t have to derail your financial goals. By taking proactive steps to mitigate its effects, both retirees and those who are still working to build their wealth can navigate inflationary periods with confidence.

Kim Franke-Folstad contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Whether you’re planning to consolidate credit card debt, renovate your home or embark on a dream vacation, personal loans can be a powerful tool to help you achieve your financial aspirations.

However, not all loans — or lenders — are created equal. Carefully choosing the right loan can help set you up for success. It requires asking the right questions to ensure your loan fits your needs, aligns with your goals and comes from a trustworthy provider.

To help you make confident and informed choices, here are seven essential questions that Americans should ask when evaluating personal loan options.

1. How will it affect my credit rating?

When you apply for a loan, your credit will typically be checked through either a "soft pull" or a "hard pull." A soft pull, often used during the initial application process by some lenders, doesn’t affect your credit score or appear on your credit history.

However, once you accept a loan, a hard pull is usually conducted, which may temporarily impact your credit score and will appear on your credit report. It’s important to verify that a lender’s initial application process involves only a soft pull to avoid any unnecessary impacts to your credit score during the evaluation stage.

Be diligent in understanding how each step of the process may affect your credit.

Additionally, personal loans, classified as installment credit, can complement revolving credit like credit cards and help diversify your credit profile.

Using a personal loan to pay off credit card debt, for example, may lead to an improvement in your credit score when managed responsibly.

2. What should I know before taking out a loan?

A personal loan is not free money — it’s a financial commitment. Take the time to understand interest rates and loan terms, and how factors like credit history and debt-to-income ratio can impact your loan eligibility.

Educating yourself about these elements helps ensure you’re choosing a loan that fits your situation and goals.

3. How quickly do I need the money?

Timing matters. Online lending platforms often offer faster application and approval processes than traditional brick-and-mortar banks.

Some of these platforms will facilitate loan funding in as little as one business day after final approval, depending on your bank’s transaction processing speed.

4. Is this lender trustworthy?

Research is key to finding a reliable lender. Consumers can visit the local or regional Better Business Bureau (BBB) website or call to find customer feedback and complaints about lenders or lending platforms based in their communities or home states.

Similarly, they can explore the Consumer Financial Protection Bureau (CFPB) website and search its Consumer Complaint Database for customer complaints filed with that organization about specific lenders.

A quick online search on sites like Trustpilot can also reveal customer experiences and help you avoid untrustworthy providers.

5. Can I afford the monthly payments?

Borrowing beyond your means can make your financial situation considerably worse. If you accept a loan with a monthly payment that is more than you can manage, you can quickly rack up penalties and late fees and increase your risk of default.

Review all loan costs, including fees like origination fees, and ensure the monthly payments fit comfortably within your budget.

6. What are the repayment terms?

Depending on the size of the loan, it may take months or several years to repay it. The length of your loan term affects both your monthly payments and total interest.

Shorter-term loans have higher monthly payments, but the total interest paid will be lower when compared to longer-term loans.

Carefully review a loan’s terms, including length, payment schedule, the total interest or finance charge and any penalties, during your evaluation process. Choose terms that align with your budget and financial goals.

Also, check to see if the lending platform offers any hardship programs if your circumstances should change during loan repayment.

7. Is this the right financial option for me?

Personal loans are versatile but may not always be an ideal choice for your situation and financial goals.

For example, if you’re a homeowner, a home equity loan or line of credit could offer better terms than a personal loan. Take the time to shop around and figure out what solution best aligns with your financial circumstances, needs and other factors.

While personal loans can help you achieve financial milestones — whether it’s paying off and consolidating debt, covering emergency expenses, or making home renovations — they are just one piece of a larger financial puzzle.

The path to improving your financial well-being requires an ongoing commitment to manage your spending and saving habits. Remember to ask the right questions and choose a loan that supports — not hinders — your journey to financial success.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

This is shaping up to be the year that thousands of U.S. workers will need to put away their soft pants and return to the office — at least for a couple of days a week.

A summer 2024 survey of chief executive officers by accounting firm KPMG found a sharp turnaround in views toward remote work. More than three-fourths of CEOs expect employees to return to a traditional in-office schedule within three years. Earlier in 2024, only one-third of CEOs predicted a return to an in-office model. Only 17% of CEOs expect their employees to have a hybrid schedule, and just 4% expect their employees to be fully remote, according to the summer survey.

The news isn’t all bad for the comfy-pants crowd. Eighty-six percent of CEOs said they would reward employees who return to the office with favorable assignments, raises and promotions. And research by the Flex Index, a technology research firm based in San Francisco, found that while the number of companies that allow a fully flexible workforce has declined since 2023, the percentage of companies that use a hybrid model increased in 2024.

Employers’ willingness to allow their employees to work from home, at least some of the time, also varies significantly by industry, according to research by Stanford economist Nicholas Bloom, who has studied remote work for more than two decades. Workers in the technology and finance industry, for example, work from home an average of 2.39 days a week, while workers in the hospitality, transportation and retail industry work from home less than one day a week, according to Bloom’s research.

Do workers want to return to the office?

Companies that mandate a return to the office face pushback from employees who place a high value on a flexible work schedule.

A 2024 workplace benefits survey by Charles Schwab found that many workers say having a flexible work schedule is an important benefit, particularly for younger workers. Fifty-seven percent of workers said they would forgo anywhere from 5% to 15% of a salary increase in exchange for a more flexible work arrangement. The survey also found that the ability to work from home was a must-have benefit for 27% of men and 36% of women, and more than half of Generation Z workers and 46% of millennials viewed flexibility in work hours and location as an essential benefit.

A survey by Payscale, a compensation consulting and research firm, found that more than 60% of companies with return-to-office mandates have encountered resistance from their employees. Payscale’s research also revealed that providing flexible work arrangements can help companies attract and retain talent. Payscale discovered, for example, that companies with remote work environments have much lower turnover than those with traditional office hours or even hybrid work arrangements.

Lexi Clarke, chief people officer at Payscale, says the company went fully remote in fall 2022 but provides coworking spaces in Seattle, Boston, and Denver, where most of its employees are located. The coworking offices provide a way for managers to meet with their teams and give employees an alternative if they’d prefer to work in an office, she says. “We use remote work as a lever to help us find the best talent,” she adds.

Employees who want to maintain a remote or hybrid work schedule should talk to their employers about ways in which a flexible work environment improves their productivity, Clarke says. Research supports that position. A survey of productivity growth between 2019 and 2022 by the U.S. Bureau of Labor Statistics found that remote work increased productivity in 61 business sectors. A big reason is that those employees no longer spent time and money commuting to the office.

“I’ve enjoyed working remotely,” Clarke says. “From 5 a.m. to 7 a.m., it’s just me and my coffee.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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As recently as 1974, banks were legally allowed to deny women credit or charge them higher interest if they failed to get a male cosigner. But that year, on Oct. 28, President Gerald Ford signed into law the Fair Credit Opportunity Act, giving women the right to open a credit card in their own name.

The act came after women complained they were denied credit for reasons other than income or credit history, according to The New York Times account of the Senate passage. Married women were denied credit regardless of their income and single women were denied loans or were given smaller amounts than single men with identical financial backgrounds, the newspaper reported.

According to Smithsonian Magazine, until then, “many banks required single, divorced or widowed women to bring a man along with them to cosign for a credit card, and some discounted the wages of women by as much as 50% when calculating their credit card limits.”

Getting equal access to credit

Seeking to end these troubling practices, the law barred financial institutions from discriminating against borrowers based on sex or marital status. 

The act was hugely consequential, enabling women to establish their own financial security and helping free them from circumstances of domestic violence, says Megan McCoy, assistant professor of personal financial planning at Kansas State University.  “Financial abuse is rampant and this act helped curb some of the power that men once held over all women.”

The law was amended two years later to cover discrimination against borrowers based on religion, race, national origin, age and receipt of public assistance benefits. This meant lenders could consider only credit worthiness in loan decisions. 

Lindsey Lewis, executive director and chair of the American College Center for Women in Financial Services, notes that women couldn’t open bank accounts on their own until the 1960s. 

The Fair Credit Opportunity Act “truly gave us the freedom to be in control of our lives and not be controlled by others,” McCoy says. “I can't imagine being a woman today and not being able to buy my own home unless my dad or my brother or my husband said it was OK.”

McCoy says the law empowered women by “allowing us to start our own businesses, buy our own home, and even get student loans to further our education.”

She says the law also required creditors to report credit histories in both spouses' names on shared accounts, safeguarding women’s credit rights in cases of divorce or widowhood.

The passage of the law, she adds, “enabled greater participation of women in the economy, contributing to social and economic progress and fostering a more inclusive and equitable society.”

Waiting until 1988 for business protections

Yet, the act related only to personal lines of credit. Until the Women’s Business Ownership Act was signed by President Ronald Reagan in 1988, women in some states were still required to have male relative cosigners when they opened business lines of credit. 

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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Buy now, pay later (BNPL) — but also pay every month. That’s the model for Klarna’s newly launched subscription program.

The financial services company, which allows shoppers to pay for purchases over time, recently announced a new $7.99 subscription plan called Klarna Plus. 

Here's how it works: In exchange for a monthly fee, subscribers can have fees waived from stores that are not included in the Klarna network. They can also earn double rewards through a club program and have access to exclusive discounts at various retailers, totalling $30/month.

In announcing the plan, Klarna said that loyal customers, or those who use its services multiple times each month, can save up to $12 in fees. To get started and get $10 off your first purchase, visit the Klarna Plus website.

BNPL safeguards

BNPL plan usage is popular and hit an all-time high over the holidays, according to Adobe’s 2023 holiday shopping trend report. In the last few months alone, a number of companies including Google, Walmart and Apple have announced new BNPL offerings.

While subscribing to a service that is already in place to help you save cash or spread out your payments seems counterproductive, there are advantages, according to Klarna. The subscription will offer even more perks to Klarna customers who use BNPL as an alternative to high-interest credit cards, a company spokesperson told Kiplinger in an email.

"Akin to popular loyalty programs and fully regulated through our partnership with Webbank, Klarna Plus enhances the Klarna shopping experience with a monthly subscription that includes unique benefits like waived service fees and exclusive deals,” the spokesperson said.

“In contrast to credit cards, which underwrite large sums and charge sky-high revolving interest, Klarna Plus upholds our commitment to responsible lending," the spokesperson said, adding that Klarna already has many safeguards in place for its products.  These also apply to Klarna Plus users, the spokesperson said, "including individual lending decisions on each transaction and restricting the use of our services until missed payments are fulfilled to prevent debt from accumulating."

Late fees can pile up

But, as with any loan, late fees incurred by users who neglect to pay their installment payments on time can be a problem. Customers who are late on payments may also be reported to credit bureaus, according to Klarna’s website. For those already falling behind on payments, paying an additional $7.99 to save $12 per month may not be worth the cost. 

The launch comes amid growing concern over the hazards of using BNPL. As Kiplinger previously reported, an October 2023 report from the Center for Responsible Lending found that nearly half of BNPL users have incurred overdraft fees. 

Experts advise being mindful of using debt, which could help or hurt your long-term finances. For help on discerning good debt versus bad along with tips to manage it, check out this guide.

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There are more millionaires in North America than ever before. But making it into the millionaires’ club is not what it once was, making many people feel their net worth is average. 

A wide-ranging Chubb survey of 800 wealthy individuals discovered that despite achieving considerable financial success, two-thirds do not consider themselves rich, including many with investable assets of more than $10 million. 

The survey, conducted this past September and October, asked how people view their wealth, what they value most, who they turn to for advice, and what keeps them up at night. The report also highlighted concerns over the loss in value of their investments due to inflation, geopolitical pressures, a volatile stock market, and the climate crisis affecting the value of their homes. 

Other risks the respondents mentioned include being the victim of financial fraud, the competitiveness of the domestic economy, job loss, and lower profits from business ventures.

On the other hand, a notable aspect of the survey showed that whether the respondents’ wealth was inherited (25%), self-made (40%) or a mix (35%), they distinguished themselves by working hard and playing hard. The majority are still working (83%), and nearly one-third said they would prefer never to retire. 

Even so, many wealthy Americans plan to spend more on their homes, education and collections, as well as travel in 2024, and about 73% anticipate spending more on real estate, while 65% anticipate spending more on entertainment.

Despite being better off than many Americans, two-thirds of respondents in the Chubb survey said that building wealth today is more challenging than ever before. 

But, the definition of "rich" is changing for many.

Defining wealth

Respondents of Schwab's 2023 Modern Wealth Survey concluded that an average net worth of $2.2 million would be considered wealthy in 2023 — unchanged from 2022. But with a growing cost of living, that number may jump in 2024. 

The Schwab survey also highlighted that many Americans consider family strength and good health to be a measure of wealth. In fact, according to the data, four in 10 Americans define wealth in terms of "well-being," while only three in 10 describe it in terms of "money."

Another interesting point was that the two youngest generations self-reported the highest levels of financial comfort. Roughly six in 10 millennials and five in 10 Gen Zers reported feeling wealthy, while only four in 10 Gen Xers and four in 10 Baby Boomers said the same.

No matter where you stand — champagne wishes and caviar dreams or simply wishing for an extra chunk of change in your pocket — it's possible to build wealth. Follow these wealth creation basics to steadily improve your financial picture.

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To help you understand what is going on in the Buy Now, Pay Later (BNPL) lending sector and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

The Buy Now, Pay Later lending industry is facing mounting headwinds. The tightening of financial conditions over the past two years has brought challenges for independent lenders offering the service. These companies have expanded rapidly in recent years, leaving them with low recurring revenue alongside sky-high costs for marketing and customer acquisition. While factors like high inflation make BNPL more attractive for cash-strapped shoppers, credit losses will likely rise for the lenders.

Financing is also becoming more difficult for the industry’s lenders to secure as they have relied on venture capital and equity financing to cover operating losses. High interest rates and slowing growth have made investors more risk-averse, a switch from the COVID era when BNPL loans surged in popularity amid low interest rates.

Overall, 17% of folks with a credit file used BNPL to finance at least one purchase in 2021. BNPL borrowers also had significantly higher usage in several other loan products when compared to non-borrowers, including retail accounts (62% compared to 44%), personal loans (32% compared to 13%), and student loans (33% compared to 17%). 

Regulatory scrutiny is increasing for BNPL providers. Regulators say that the growing use of these types of lending options poses several potential risks to borrowers, like inconsistent consumer protections and excessive debt accumulation.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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For many, the Holidays are the most wonderful time of the year, filled with Christmas lights, hot cocoa and school recitals. For others, this season can bring about anxiety and stress. But something invariably happens to many people over the Holidays — an uptick in generosity in the form of tipping.

Average Tips This Holiday Season

According to Bankrate’s November 2023 Holiday Tipping Survey, 15% of Americans plan to tip more for services this holiday season, compared to 13% who will tip less. That means 44% plan to tip about the same amount this year as last year — even in light of inflation and higher costs for necessities. The survey also found that 23% of people who didn’t tip last holiday season don’t plan to this year either, and 5% haven’t decided one way or the other. 

The median tip amounts overall are expected to mimic 2022 levels for service providers and essential workers such as teachers, housekeepers, landscapers, trash/recycling collectors, childcare providers and mail carriers.

What age tips the most and least?

Younger generations — millennials and Gen Z — are most likely to tip and also most likely to increase the amount they tip this year. Just over 20% of millennials (ages 27-42) and Gen Z (ages 18-26) plan to increase their tip amounts, compared to 12% of Gen X (ages 43-58) and 9% of baby boomers (ages 59-77).

Younger generations are also much more likely to seek holiday-tipping advice from friends, family, neighbors, or through social media or the Internet. More than half of Gen Z (51%) and 47% of millennials plan to do so, compared with 24% of Gen X and 18% of baby boomers.

Who do people tip?

Consumers this year are prioritizing housekeepers, childcare providers, the person who delivers the mail each day, the server at a favorite restaurant, or the barber or hairdresser who always makes sure you look your best. In 2022, housekeepers and teachers topped the list. The 2023 USA TODAY Blueprint study on tipping showed that California residents tip the most, averaging about 23%, while Illinois residents tip the least, averaging just over 14%.

Why people tip

People generally like to reward hard work, and most people will tip to ensure workers are paid a fair wage or to show appreciation for good service. They may also tip because they’re familiar with the industry and know how demanding the work can be. 

By the same token, tipping fatigue is real. In another Bankrate survey, roughly two in three, or 66% of U.S. adults have a negative view about tipping. No matter your views on tipping, if "tipping" takes the joy out of the Holidays, call it a bonus instead. 

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Online loan lender Enova has agreed to pay $15 million to the Consumer Financial Protection Bureau’s (CFPB) victims relief fund to settle a series of charges, including withdrawing funds from consumer bank accounts without permission. 

The CFPB also banned the lender from offering certain short-term consumer loans for seven years and required it to link executive compensation with legal compliance.

Enova extends or arranges unsecured installment loans and lines of credit to consumers in 37 states through its CashNetUSA- and NetCredit-branded subsidiaries. Until last year, the lender also extended unsecured payday loans to consumers through its subsidiaries.

Ranning Li, president of Enova Consumer Lending, said in a statement that Enova takes any errors in its systems seriously, “especially those that impact our consumers, and (Enova) will continue to invest in our technology, systems and compliance processes to prevent, identify and ensure appropriate resolution of errors."

The CFPB, among other federal agencies, has been cracking down on the banking sector. Earlier this month it fined Citi $25.9 million in a discrimination case involving the denial of credit cards to Armenian American applicants.

In 2019, the CFPB fined Enova $3.2 million for debiting consumer bank accounts that it was not authorized to use and for failing to honor loan extensions it had granted to consumers.

“Enova decided to keep flouting the law after it was caught taking advantage of its consumers, and violated a law enforcement order,” said CFPB Director Rohit Chopra.

CFPB’s other charges against Enova include: the cancellation of loan extensions that were granted to consumers; failure to provide or misrepresenting the details of loan repayments, which ultimately led to extension cancellations; and failure to provide consumers with copies of signed authorizations detailing which bank accounts were approved for making repayments.

The CFPB wants to hear from you

If you have a problem with a loan or other financial products or services, the CFPB encourages you to file a complaint at its website or call (855) 411-CFPB (2372).

Editor's note: This headline was updated to reflect Enova is banned from certain short-term loans, not all. 

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This article only reviews the Chase Sapphire Preferred Credit Card. We may get compensation if you visit partner links on our site. We may not cover every available offer. Our relationship with advertisers may impact how an offer is presented on our website. However, our selection of products is made independently of our relationship to advertisers. The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.

The Chase Sapphire Preferred® Card is a powerful travel tool that could land you a sweet vacation with a welcome bonus of up to $750 in Chase Travel℠ value. Earn 60,000 bonus points after $4,000 in purchases in your first three months from account opening. That’s worth $750 when redeemed through Chase Travel.

I use this card frequently, especially for transactions that earn the most points, like booking travel, ordering online groceries or dining. Recently, I transferred Chase Ultimate Rewards points to Southwest Airlines for a last-minute trip. The redemption was easy and was processed immediately. Southwest Rapid Rewards points are worth about 1.5 cents each, so by transferring my Chase points at a one-to-one ratio, I got a nice half-point value boost.

This new intro bonus beats much of the competition among rival rewards credit cards as it’s one of the most generous. You earn points the moment you begin using your card, even while waiting to hit the spending limit for the bonus.

It's also an excellent card to take abroad as there are no overseas transaction fees. In fact, I signed up my teen for the card as an authorized user before she went on a semester abroad program.

And because Chase permits transferring points between members of the same household, your spouse may also sign up and earn the same bonus, giving your family up to 120,000 bonus points plus $600 in travel credit, or $1,500+ in travel value. With good planning, you and your partner could be on a flight to Europe or the Caribbean with airfare covered by these bonus points.

Kiplinger readers' voted this card "outstanding" for customer service, overall satisfaction and most recommended in the 2024 Kiplinger Readers Choice Awards for travel rewards credit cards.

Kiplinger's take on Chase Sapphire Preferred

The Chase Sapphire Preferred card is the Swiss-army knife of travel cards, providing solid benefits for frequent travelers from a trusted brand. In addition to the generous bonus offer, cardholders can accrue points quickly, especially if they use the card for travel expenses. There is no limit to the rewards points you can earn, and they never expire as long as you have an open Chase card at the Ultimate Rewards tier.

The Chase Travel℠ program outperforms many of its competitors for ease of use and the value of its points. You can transfer your Chase points to any of its 11 airline partners at a one-to-one rate. And you get 25% more value when you redeem points for airfare, hotels, car rentals and cruises through the Chase Travel℠ portal; for example, 10,000 points are worth $125 toward travel.

This card also stands out for its ability to help you rack up frequent flyer miles. Most cards do not let customers earn frequent flyer miles when booking with their travel card but the Chase Sapphire Preferred card allows you to accrue frequent flyer miles when booking air travel, increasing the overall value of your points. Hotel and other travel expenses are excluded from this perk.

Finally, Chase cards are highly rated for their travel perks. For example, WalletHub found that Chase credit cards provide the best rental car insurance coverage.

What can you spend the bonus points on?

You may use the 60,000 bonus points in several ways.

Cash Back ($600 value) – By logging into your Chase Ultimate Rewards account, you will see options for cash back at the rate of one penny for each point. You may redeem any amount for deposit into your checking or savings account – at Chase or other major banks – or as a statement credit on your Sapphire Preferred account. And with the Chase Pay Yourself Back program, you can get 1.25 cents back per point when donating to certain charities.

Transfer points to a partner airline frequent flyer or hotel program ($600 variable value) – Chase Travel℠ partners with eleven airlines and three hotel chains, so you can easily transfer your Chase points to your preferred partner program at a one-penny-per-point ratio. Since the points on these partner programs may vary in value depending on how and when you use them, the actual value of your transferred Chase points may be more or less than 1:1.

Purchase airfare, hotel or other travel through the Chase Travel℠ portal ($750 value) – You may redeem the points through the Chase Travel portal at a 25% higher value.

As an example of using the bonus points, imagine you are planning to use the 60,000-point bonus on an upcoming trip. Once you’ve spent at least $4,000 in the first three months of owning the card, you will need to wait an additional six to eight weeks for the bonus points to post to your account, so don’t plan on redeeming the bonus points immediately.

Let’s say you have a frequent flyer account with United Airlines. You may transfer the bonus 60,000 points to your United account, adding the equivalent of 60,000 miles. However, if you book your flight through the Chase Travel portal, you may redeem them at a 1:25 rate, rather than 1:1, making your United miles worth 75,000 miles on the Chase platform.

If anything goes wrong on your trip, you will interact with customer service agents from Chase Travel rather than United. That’s why understanding how credit card travel portals work is important. Chase tends to get average to high marks for its travel portal customer service. And according to The Points Guy, the airline prices on Chase’s portal are similar to those booked directly with the airline.

Could you find cheaper hotels and flights than those offered on the Chase Travel portal? Quite possibly. You’d also find more variation in hotels, and be more likely to get off the beaten tourist track if you find a small hotel or B&B that’s not affiliated with a credit card brand. But still, you just got yourself a vacation for the card’s annual fee of $95, and that’s a good deal any way you look at it.

Overview of fees and terms

• Sign-up bonus: Get up to $750 in Chase Travel℠ value. Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
• Other benefits: $50 annual Hotel Credit. Get $50 in statement credits annually for hotel stays booked through Chase Travel℠. And on each yearly anniversary of opening your account, you get a 10% points bonus on total purchases made the previous year. Get complimentary access to DashPass which unlocks $0 delivery fees and lower service fees for a minimum of one year when you activate by December 31, 2027.
• Redemption: Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Travel℠. For example, 60,000 points are worth about $750 toward travel. You can transfer Chase points to a partner like British Airways at a one-to-one ratio, where one Chase point is equal to one British Airways frequent flyer point. But if you book your trip through the Chase Travel℠ portal, your points are worth 1.25 miles on British Airway's frequent flier program. This 25% boost does not expire but is built into the Chase Travel program.
• Interest rate: 20.49% - 27.49%  variable APR for purchases and balance transfers, and 29.24% variable APR on cash advances.
• Annual fee: $95
• Foreign transaction fee: None, so this is an excellent card for international travel.

Chase Travel transfer partners

Chase Travel℠ has partnerships with 11 airlines, allowing cardholders to transfer points to the airlines’ frequent flyer programs. These partners cover destinations across much of the globe, including off-the-beaten-path destinations like Martha's Vineyard, Massachusetts and the Canary Islands of Spain.

Chase points are worth one point on each of these carriers when you log in to your Chase Travel account, transfer Chase points to the frequent flyer account of a partner, and book your travel on the partner's website. To get more value out of your Chase points, log in the Chase travel portal and click on "book travel" to get an increased redemption rate of 1.25 points. These Chase transfer partners are:

• Aer Lingus AerClub
• Air Canada Aeroplan
• British Airways Executive Club
• Emirates Skywards®
• Flying Blue Air France KLM
• Iberia Plus
• JetBlue TrueBlue
• Singapore Airlines KrisFlyer
• Southwest Airlines Rapid Rewards®
• United MileagePlus®
• Virgin Atlantic Flying Club

The Chase Travel℠ program also partners with three hotel chains. Points may be redeemed at these properties, but points cannot be earned when using the card to purchase a hotel room. Chase points are worth one point at each of these hotels, but are worth 1.25 points if booked through Chase's travel portal.

• IHG® Rewards Club
• Marriott Bonvoy™
• World of Hyatt®

Avoid this one application hurdle

There are limits to how many Chase rewards cards you can sign up for. With many Chase cards, you can only earn one bonus offer every 24 months, or every 48 months with a Sapphire-branded card. (Just for you, not for other members of your household.) Chase may also reject your application if you have already applied for five credit cards in the past two years from any issuer.

Pros and cons of the Chase Sapphire Preferred card

Pros:

• Very generous bonus offer
• Unlimited points that do not expire
• 25% point bonus when redeeming travel through Chase
• No foreign transaction fee
• One of the best credit cards for rental car insurance and travel insurance coverage.
• Perks designed for travelers

Cons:

• Annual fee of $95
• No airport lounge passes
• You must book through Chase to get the best transfer value for your points
• No credit for Global Entry or TSA Precheck fees

Rewards cards dos and don'ts

As with any rewards credit card, be sure to weigh these benefits against fees — a $95 annual fee in this case — and make sure you understand how to use the card effectively. That said, $95 may be more than offset by those maxing out the benefits.

In addition, while reward credit cards are great if you use them wisely, always pay them off in full and on time each month to avoid interest, which can dwarf any rewards you earn. Don't change your spending habits to earn extra points. That's a slippery slope that can lead to overspending.

If this is your first foray into credit cards, or you just want a refresher, make sure you know how to choose a credit card. And ensure you are familiar with what counts as a good credit score.

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As an independent publication dedicated to helping you make the most of your money, the article above is our view and is not the opinion of any entity mentioned such as a card issuer, hotel, airline, etc. Similarly, the content has not been reviewed or endorsed by any of those entities.

Buying a car isn’t like it used to be. If you're in the market, you've probably discovered that the usual rules about purchasing a new or used car, or leasing, no longer apply. In this environment, patience and creativity are paramount, as well as a willingness to consider car sharing as an option. 

For the past year, the car market has been tighter than any time in recent history, as a pandemic-fueled shortage of semiconductor chips has limited the supply of vehicles and driven up prices of new, used and leased automobiles. Since August 2021, cars have sold above manufacturers’ suggested retail prices on average, according to data from Edmunds.com, an automotive information resource.

Looking for older cars won’t help your budget the way it has in the past;  a 1- to 2-year-old used car often will cost about  as much as as the same-model new car in a dealer’s lot., according to automotive analysts. In the past year, average prices for new cars have climbed 10%, according to Edmunds.com. The price for all used cars is 7% higher, and prices for 9-year-old used cars have spiked 21%.  (Some relief may be at hand here; Kiplinger sees used car prices as past their peak, with farther to fall in 2023.)

“The new car market right now is absolutely bonkers,” says Tom McParland, owner of Automatch Consulting, which helps buyers find vehicles. “Due to global supply issues, automakers can’t make as many cars as they want to make and therefore dealers don’t have as many cars as they want,” he explains. You’re going to overpay for a used car now, he adds, or you can wait for a new car, but “you could be waiting months or maybe a year.  This is an adjustment period for a lot of American car shoppers.” And often you could buy a brand-new car for just a few dollars a month more than leasing it. 

“In today’s market, you’re really up against the biggest problem the industry has ever faced when it comes to inventory allocation,” says Ivan Drury, senior manager of insights at Edmunds. “However you’ve bought in the past, it’s not going to be the same.”

The Car-Sharing Option

One alternative that could be a short-term—or long-term--option if you need to replace your vehicle or need another one: car sharing companies like Turo, Getaround and Zipcar. A twist on traditional rental car companies, these services let you find a car near your home, unlock it with an app on your smartphone, drive it without needing to stand in line or wait for keys at a car rental location, and return it to the same or a nearby location after you’re done.

When considering whether to own or share a car, look at the total cost of ownership, including interest on a car loan, insurance, maintenance, taxes and the cost of gas. On the Edmunds.com website, an online tool lets you estimate the expected annual cost of owning a specific vehicle in a specific zip code for the coming five years. (See https://www.edmunds.com/tco.html.)

“Car payments are budget busters, but the expense of owning a car doesn’t end there,” says Greg McBride, chief financial analyst at Bankrate.com, a personal finance website. 

On average, cars are driven only six hours per week, sitting in a garage, driveway or parking spot for the majority of the time. “Personally owned vehicles in cities mostly go unused, sitting idle about 95% of the time, and for most people, it’s the second-most expensive thing they own,” says Justin Holmes, head of marketing and public policy for Zipcar, which reports that by sharing Zipcar vehicles, members spend $300 less per month than the $600 per month average monthly cost of owning a vehicle.

To be sure, using a car sharing service requires you to plan ahead and be willing to choose among the cars available when you want to rent. Where you live matters, too. The closer you are to public transportation and an urban center, the more likely you’ll have an abundant selection of vehicles and convenient pickup locations.

Whether you’re car sharing temporarily or using it as a permanent transportation solution, it helps to understand the competing services. The three major car sharing companies all allow you to sign up online or via a smartphone app, but you must have a smartphone in order to unlock and drive the vehicle. Some cities, including San Francisco, Seattle and Washington, D.C., provide dedicated car-share parking to make the option more convenient.

Founded in 2000, Zipcar is the oldest car share company. Zipcar owns a fleet of 12,000 cars across the U.S. and charges $90 per year or $9 per month for membership. Car rentals start at $11 per hour and $91.50 per day, with prices varying by geographic location. Zipcar reservations include gas, a dedicated parking spot, and secondary insurance, and you can drive 180 miles a day without paying more. Secondary insurance will only pay for an amount in excess of whatever primary insurance pays, whether that’s a car owner’s insurance or the renter’s. 

The company’s website offers simple tutorial videos about how the process works and provides 24/7 member support. After you’re done with a rental, you return it to the same location with at least 1/4 of a tank — or use the included gas card to fill up the vehicle. The Zipcar app shows the exact make and model of the vehicle you will rent. Zipcar offers a discount through AARP. 

The company claims that every Zipcar on the road eliminates the need for up to 13 personally owned vehicles. “Zipcar is driven by a mission to enable simple and responsible urban living by eliminating personally owned vehicles from the road,” Holmes says. “Less vehicles means less congestion and carbon emissions, and more space for people to enjoy.”

Getaround and Turo — both founded in 2009 — are peer-to-peer car sharing services, meaning individuals sign up and allow strangers to rent their personally owned cars through the platform. Both services offer 24/7 support and allow you to view photos of the specific car you’ll rent, with the make, model, year of manufacture, and ratings from people who rented that vehicle. Tesla, Jeep, and Toyota are among Turo's most-booked vehicles. On a recent search for a car in Washington, D.C., 128 Teslas were available, ranging from $56 to $300 a day, and 112 Jeeps were available, from $27 to $261 a day. (Unlike Zipcar and Getaround, Turo only rents by the day.)

You don't need personal insurance coverage if you book a trip with a protection plan made available via Turo, If you do have insurance, Turo’s liability insurance provider will supplement your personal coverage. Gas isn’t included, so you must fill the tank to the same level as when you started your trip. Turo recommends that you photograph the fuel gauge before and after your trip, as well as the gas station receipt.

Getaround is available in nearly 30 states, 8 countries and 950-plus cities worldwide. Rental fees begin at $8 an hour and vary based on the location, trip duration, and vehicle.  People who drive with Uber but don’t own a car can rent a Getaround vehicle through an Uber partnership. That facilitates repeat rentals of the same car, giving both host and guest more predictability and comfort, notes Sy Fahimi, chief operating officer. 

So You Still Want to Buy?  

If you’re not sold on car sharing, experts offer a few strategies to find a car to buy: Take a strategic approach to purchasing, be flexible on features and time the transaction well.

“The greater your level of flexibility, the better your chances of success,” McParland says. Being open to a range of colors, makes and models, and options raises your odds of finding a vehicle. If you can wait longer and order a car from the factory or from a dealer in another city, even better. 

Zaneilia Harris, 52, president of Harris Wealth Management in Upper Marlboro, Md., wanted to celebrate turning 50 by buying a new XC60 Volvo Recharge, a plug-in hybrid midsize SUV. She began looking in December 2021, after some research on the manufacturer’s website to determine which features she wanted. She signed up with CarGuru to be alerted when an available car matched her parameters. But when she visited dealerships to follow up on those notifications, she found that the car she identified on their website was already spoken for. 

She purchased her car in May 2022, six months after first deciding to buy. She went to a dealership because of an alert, only to discover that the car she had hoped to see — dark gray with a light interior — wasn’t available. Instead, she test drove a car with a light gray exterior and dark interior.

“I liked it,” she says. “I wouldn’t have picked that color, but it just felt relaxing. At this point in my life, that matters.”

That kind of patient, flexible, and open-minded approach serves car buyers well, whether they're looking at new or used vehicles, McParland says. “There’s something to be said for, 'here’s my ideal car,' but get something that will hold you over and do the job for a period of time until the market resets,” he says. “Take a very hard and honest look at your finances and what’s going to work for your budget and lifestyle and plan accordingly.”

Purchasing a car generally makes more sense than leasing, says McParland. That assessment is based on the hundreds of lease quotes and purchase prices he has seen recently, That’s because dealers aren’t offering discounts or factory rebates the way they used to, and at the same time, in calculating lease payments, banks haven’t adjusted their depreciation calculations to account for the current hot market for used cars. As a result, for a typical three-year lease period, you’d pay more in lease payments than the combination of what you would pay for a car loan plus what you’d lose in depreciation. After the three years, if you want to trade in a car, you could sell it and end up ahead.

For example, McParland had a customer who wanted a new Toyota RAV4 and would have paid $560 a month for a 60-month car loan, versus $550 a month for a 36-month lease. If she leased the RAV4, she would surrender the car (or pony up additional money to buy it) after three years. But if she bought the car, after three years she would be 24 payments away from owning it free and clear--or she could sell it, pay off the loan and likely make a profit. McPartland says that calculation is consistent across hundreds of quotes and deals he’s looking at right now.

Another change in the market is how quickly vehicles move off lots. As a result, you need to act quickly and be judicious about haggling. “Used cars are generally available, but consumers are going to find inflated prices. Anything that’s popular is going to have a much faster turnaround than in the past,” McParland says. “The more back-and-forth they try to engage in the haggling process, the greater the likelihood that someone swoops in and buys that car out from under them.”

It could be as long as a year before the chip shortage changes, or a recession dampens demand for vehicles, Bankrate’s McBride says. Given how tight the automotive market is, car sharing can be a strategic option while you wait for your preferred vehicle to be in stock at a good price — or for the supply crunch to ease a bit. 

If you have an emergency fund, congratulations. But when emergencies pile up, should you drain the fund to cover every one of them? It’s a question I asked myself recently after I inherited a car from my mom. While having my own wheels has improved my life, the car has needed repairs that I didn’t plan on.

My emergency fund could have covered the work, but I would have been left without a backup fund to pay my rent if I lost my job. Fortunately, I had a credit card with a very low balance. Plus, it had a sufficiently high credit limit to cover the repairs without hurting my credit score.

Loans you can live with. If you know you will need cash for something coming up—such as new tires for your car—you can apply for a credit card with a zero percent promotional interest rate that lasts for the first 12 to 18 months. For example, the Chase Freedom Unlimited Visa rewards credit card currently offers a 0% annual percentage rate on purchases and balance transfers made in the first 15 months. The Wells Fargo Reflect Visa doesn’t charge interest for the first 18 months, and that can be extended up to three additional months if you’ve made on-time minimum payments. Once approved, you could pay your unexpected bills and make a plan to pay off the balance. To qualify for either card, you need to have a good-to-excellent credit score—at least 670, according to FICO, which provides the credit score most lenders use.

But because you can’t plan for most emergencies, applying for a credit card before you need it is a good idea. It could also help you establish good credit. If you use the card sparingly, you’ll have access to more credit than you’re using, which will boost your credit score. Just make sure you’re using your card enough to prevent the issuer from closing the account. One strategy is to put a monthly bill—one for a service such as Netflix or Hulu, for example—on autopay and pay it off on time and in full every month.

If you don’t want to go the credit card route—or you don’t qualify for a credit card—a Roth IRA can also provide a source of emergency funds. Because the account is funded on an after-tax basis, any contributions you’ve made can be withdrawn without taxes or penalties.

Another option is a loan from your 401(k) or other employer-sponsored retirement plan. Currently, the interest rate on most 401(k) loans is 4.25%, and you can borrow up to 50% of your vested balance or $50,000, whichever is less. Generally, you have five years to repay your loan, and the interest you pay goes back into your account.

However, a 401(k) loan could jeopardize your retirement security. The amount you’ve borrowed won’t be invested, and some plans prohibit participants from contributing while they are repaying a loan. And if you leave your job—or are laid off—you must repay the loan by the due date of your tax return for the year when you leave your job (typically April 15, or October 15 if you filed for an extension). If you don’t repay it by that deadline, it will be treated as a taxable distribution; you’ll also owe a 10% early-withdrawal penalty if you’re younger than 59½.

Finally, there’s the bank of Mom and Dad. But if you borrow from that institution, write up a repayment schedule that includes the amount of interest you’ll pay. The upside for your parents is that, with most savings and money market accounts paying less than 1%, even a low-interest loan to you will probably beat what they’re getting from their bank.

The COVID-19 pandemic in the U.S. officially turns one year old in March. But despite statewide lockdowns, business closures and widespread layoffs triggered by COVID, personal bankruptcy filings have not increased. Data through November from the American Bankruptcy Institute shows that filings were down 35% from 2019.

Robert Lawless, a pro­fessor at the University of Illinois who specializes in bankruptcy law, credits the economic stimulus enacted in early 2020, which included a moratorium on debt collections, for the decline in bankruptcy filings. Families are spending less and saving more, which is also slowing filings, he says. But this trend could change in the months ahead. In his research, Lawless has found that people tend to struggle financially for two to three years before deciding to file for bankruptcy. If you’re worried about not being able to dig yourself out from under your debts, here’s what you need to know.

Two options. Personal or consumer bankruptcy is separated into two sections, or chapters: Chapter 7 and Chapter 13 (business bankruptcies are known as Chapter 11). Chapter 7 bankruptcy, also known as a liquidation, is simpler to file and takes less time to complete. Most people opt for Chapter 7 because it allows you to wipe out most of your debts. It may require you to sell some of your assets, such as any non-retirement investments you own, to pay your creditors, although you may be able to keep your home. Chapter 13 is designed for people who have enough stable income to pay back some of their debts through a repayment plan. In a Chapter 13 bankruptcy, you can keep all of your property, including your house.

Although Chapter 7 provides the opportunity for a fresh start, it also takes a bigger toll on your assets. Plus, not everyone is eligible for Chapter 7. A lawyer will determine whether you qualify based on your state’s household income requirements, which vary considerably. For example, in California, a family of four with an annual gross (before tax) income of less than $101,315 qualifies for Chapter 7. In Arizona, a family of four must make less than $86,950.

Your attorney will also analyze other aspects of your financial life to determine whether Chapter 7 is the best route for you. Chapter 7 may not be best if you’re a homeowner who has a large amount of home equity (but cannot access it with a home-equity loan because of credit problems) because you could lose your home and the equity you’ve earned, says Gregory Wade, a bankruptcy attorney in Alexandria, Va. Each state has a homestead exemption that protects a certain amount of home equity in both Chapter 7 and Chapter 13 proceedings, but you could still lose equity in a forced sale. For example, in New York the maximum homestead exemption is $165,550, which means a couple with $250,000 in home equity could still lose up to $84,450 in a Chapter 7 bankruptcy.

Other exclusions. The home-equity exemption is just one of several exclusions designed to help consumers who file for bankruptcy start a new financial life. Money in your 401(k) plan and IRAs is protected from creditors, along with veteran’s benefits and pensions. For that reason, it’s not a good strategy to liquidate your retirement accounts to pay off debt, says John Colwell, president of the National Association of Consumer Bankruptcy Attorneys.

It’s also important to understand that some debts can’t be discharged in Chapter 7 bankruptcy or lowered if you file for Chapter 13. A person who files for bankruptcy would be able to discharge or lower payments for their credit card debt, medical debt and any back taxes owed to the Internal Revenue Service. But they would still be on the hook for student loan debt and any child or spousal support owed.

Before Congress revamped the bankruptcy laws in 2005, bankruptcy attorneys were able to negotiate with creditors to reduce interest rates and amounts owed on student loans. Now, though, you must prove that repaying student loans is an undue hardship—an extremely difficult standard to meet. (For more information on how to lower your student loans, go to kiplinger.com/kpf/studentloans.)

Court procedures and costs. When you file for bankruptcy, a court will appoint a trustee to represent the creditors, and all creditors will be treated equally. Expect to pay about $1,000 to file a Chapter 7 bankruptcy. The fees will vary depending on the complexity of your situation, how much debt is expected to be forgiven, where you live and your ability to pay the attorney fees. A Chapter 7 case typically takes about four months to a year or more to resolve. If something unexpected comes up, this can add to your costs and the amount of time it takes to close your case. For example, if you receive an inheritance within 180 days of your Chapter 7 filing, your case may be reopened and payments due to your creditors could be adjusted.

In Chapter 13, the fees of your case, which can be twice the amount for a Chapter 7 filing, are rolled into the payments. Your case is typically open for five years, and during that time you’ll make monthly payments. You can either write a check to the trustee or have the payments deducted from your paycheck. Your payment plan will be tailored to your financial circumstances. For example, if you expect your income to increase, you may be able to start off with a lower payment amount that will increase in six to eight months.

If your situation changes and you can’t afford to make the Chapter 13 payments, your plan can be modified to lower your payments or converted to Chapter 7. For example, if you (or your spouse) lose a job, you can ask the court to renegotiate your plan.

A bankruptcy filing stays on your credit report for 10 years, but the damage isn’t permanent. Although your credit score will take a hit at first, it will typically improve as the amount you owe is forgiven or lowered, Colwell says.

Go to the National Association of Consumer Bankruptcy Attorneys website (www.nacba.org) to search for a bankruptcy attorney near you. Most lawyers will allow a free consultation. If you can’t afford an attorney, you may be eligible for pro bono help through the Legal Services Corp. (www.lsc.gov).

When not to file

Even though bankruptcy is your legal right, not all situations are appropriate for this consumer reset.

For instance, suppose you have crushing student loan payments, but you’re single, you rent a home or apartment, you have a retirement account through work, and you have no other debts. Filing for bankruptcy will probably be a waste of time because it’s nearly impossible to discharge federal student loans in bankruptcy. Your best bet is to go to www.studentaid.gov and look for ways to lower your payments. If you have any private student loans, talk to your lender about lowering your interest rate and other options at your disposal.

Likewise, filing for bankruptcy may not be a good choice for retirees with high credit card or medical debt because income from pensions, Social Security and retirement accounts is off-limits to creditors. If all of your income comes from those sources, creditors can’t collect from you if they choose to sue you.

“I tell clients to not throw good money after bad,” says John Colwell, a bankruptcy attorney. “I know they want to stop the collection calls, but it’s just not worth it.”

Joe Borg is director of the Alabama Securities Com­mission and president of the North American Securities Administrators Association.

The North American Securities Administrators Association says it has disrupted more than 200 pandemic-related scams. Why the increase? Anytime there’s a major event that causes stress in people—a natural disaster, an economic collapse or anything that creates fear on a large scale—there’s a chance that there’s going to be a fraud component. We saw the same thing with Hurricane Katrina and 9/11. And the pandemic is a perfect storm for con artists. People are at home, they’re isolated, and they’re available. Scammers know that the economy is in turmoil, so they combine all those factors to make a friendly pitch.

What kind of scams are you seeing? Throughout the pandemic, we’ve seen everything from phony vaccines and fake cures to scams promising to double your retirement savings. We’re also seeing an increase in romance scams. Widows and widowers who can’t go to their church functions or other places to meet people are being targeted. Scammers start conversations with them online and persuade them to give up their money. Scammers are also trolling social media to look for religious affiliations and political leanings, which they use to pitch to folks with certain traits. After all, how could you not trust somebody who thinks like you?

Who are the primary victims and why are they particularly vulnerable? It would be an understatement to say that seniors are the primary target for many scams. They’re home, and they’re almost incommunicado. Their children and grandkids can’t come visit them anymore. They have money in the bank, usually in savings accounts, and they’re worried about Social Security and health care. These are the kinds of things that scammers know how to take advantage of and make seniors readily vulnerable to fraud.

What are state securities regulators doing to stop this problem? We’re continuing to monitor the internet, averaging two to two-and-a-half newly discovered frauds each day. We issue orders to shut them down, and if the schemes are based in the U.S., we’re sometimes able to freeze and track the funds that have been stolen. But the majority of scams seem to be coming out of countries in Eastern Europe, Asia and Africa. For all practical purposes, a con artist can be located anywhere in the world in today’s technologically connected community. And if the victims have sent the money offshore via wire transfers or gift cards, it’s almost impossible to recover.

What can people do to protect elderly family members from scams? Make sure trusted family members are in constant communication with seniors. Has anyone tried to talk them into an investment? Has someone told them they have won a prize, but they have to pay taxes up front? The conversations must be done with great respect, as seniors may not talk to their children and trusted relatives if they feel that their competence is being called into question. And if your family members are starting to suffer from memory loss, review their financial accounts for signs of fraud.