Credit cards may offer convenience and opportunities to build credit, but they also come with terms and conditions that aren’t always advertised. Here are several credit card secrets that banks may not tell you about.
Minimum payments are a trap. Banks design minimum payments to look appealing (typically 2% to 3% of your balance). But paying only the minimum allows interest to grow on your remaining balance, which can result in you paying two or three times (or more!) of the original purchase price over time. If possible, pay your credit card balance in full each month.
Interest rates are negotiable. If you’ve been a reliable customer and consistently make payment on time, there’s a good chance your bank might lower your annual percentage rate if you ask. Simply call the customer service number on the back of your card and ask if you can lower your rate. Banks prefer to keep loyal customers rather than risk losing them to competitors.
The high cost of rewards programs. Banks design these programs to encourage spending, which increases the likelihood that cardholders will carry a balance and pay interest. Some rewards cards also have high annual fees that can erode the value of the rewards you earn. To truly benefit from rewards programs, only use your card for planned purchases and pay off the balance in full each month.
Late fees are avoidable. Many credit card issuers offer a grace period for late payments. If you miss your payment due date, call your bank immediately and explain the situation. This can often result in the bank waiving its late fee, especially if it’s your first offense. Banks don’t widely advertise this because they profit significantly from late fees.
Introductory offers have strings attached. Offers like 0% interest or bonus rewards often come with terms and conditions that are easy to overlook. For example, some rewards programs require you to spend a certain amount within the first three months to qualify for the bonus. If you don’t read the fine print, you might miss out on the offer or end up spending more than you intended. Always understand the requirements before applying for a new card.
Banks monitor your spending habits. Banks track your spending patterns and use this data to their advantage. For example, if you consistently pay off your balance in full, you might not be as profitable to them, which could result in fewer promotional offers. On the other hand, customers who carry balances and pay interest may receive more marketing for additional financial products. Being mindful of your spending habits can help you avoid falling into costly traps that are pushed by banks.
Credit cards can be a valuable financial tool, but only if you understand how they work and how to avoid the hidden pitfalls. By paying off your balance in full, negotiating fees and rates, and leveraging rewards strategically, you can take control of your credit card rather than letting it control you.
Our tax code contains plenty of opportunities to cut your taxes. There are also plenty of places in the tax code that could create a surprising tax bill. Here are some of the more common traps.
Home office tax surprise. If you deduct home office expenses on your tax return, you could end up with a tax bill when you sell your home in the future. When you sell a home you’ve been living in for at least 2 of the past 5 years, you may qualify to exclude from your taxable income up to $250,000 of profit from the sale of your home if you’re single or $500,000 if you’re married. But if you have a home office, you may be required to pay taxes on a proportionate share of the gain.
For example, let’s say you have a 100-square-foot home office located in a garage, cottage or guest house that’s on your property. Your main house is 2,000 square feet, making the size of your office 5% of your house’s overall area. When you sell your home, you may have to pay taxes on 5% of the gain. (TIP: If you move your office out of the detached structure and into your home the year you sell your home, you may not have to pay taxes on the gain associated with the home office.)
Even worse, if you claim depreciation on your home office, this could add even more to your tax surprise. This depreciation surprise could happen to either a home office located in a separate structure on your property or in a home office located within your primary home. This added tax hit courtesy of depreciation surprises many unwary users of home offices.
Kids getting older tax surprise. Your children are a wonderful tax deduction if they meet certain qualifications. But as they get older, many child-related deductions fall off and create an unexpected tax bill. And it does not happen all at once.
As an example, one of the largest tax deductions your children can provide you is via the child tax credit. If they are under age 17 on December 31st and meet several other qualifications, you could get up to $2,000 for that child on the following year’s tax return. But you’ll lose this deduction the year they turn 17. If their 17th birthday occurs in 2025, you can’t claim them for the child tax credit when you file your 2025 tax return in 2026, resulting in $2,000 more in taxes you’ll need to pay.
Limited losses tax surprise. If you sell stock, cryptocurrency or any other asset at a loss of $5,000, for example, you can match this up with another asset you sell at a $5,000 gain and – presto! You won’t have to pay taxes on that $5,000 gain because the $5,000 loss cancels it out. But what if you don’t have another asset that you sold at a gain? In this example, the most you can deduct on your tax return is $3,000 (the remaining loss can be carried forward to subsequent years).
Herein lies the tax trap. If you have more than $3,000 in losses from selling assets, and you don’t have a corresponding amount of gains from selling assets, you’re limited to the $3,000 loss.
So if you have a big loss from selling an asset in 2025, and no large gains from selling other assets to use as an offset, you can only deduct $3,000 of your loss on your 2025 tax return.
Planning next year’s tax obligation tax surprise. It’s always smart to start your tax planning for next year by looking at your prior year tax return. But you should then take into consideration any changes that have occurred in the current year. Solely relying on last year’s tax return to plan next year’s tax obligation could lead to a tax surprise.
Please call to schedule a tax planning session so you can be prepared to navigate around any potential tax surprises you may encounter on your 2025 tax return.
If juggling priorities were an Olympic sport, young parents would win the gold medal. Raising kids, advancing careers, paying off student loans, and saving for a home is a lot. All this makes estate planning feel like a tomorrow problem.
But estate planning puts you in charge of your family’s financial future if the unexpected happens.
Here are three ways you can protect your family’s future by starting your estate planning today.
Protect your current income
Your current income is the fuel that keeps your household going. Here are several ideas to protect your earnings:
Minimize tax liabilities using tools such as trusts or family limited partnerships can shield assets from estate or capital gains taxes.
Protect against lawsuits and creditors by structuring ownership through legal entities or trusts. These separate legal entities can make it harder for lawsuits or creditors to reach your personal income or business revenue.
Ensure income continuity if incapacitated. With powers of attorney and living trusts in place, you can tap someone you trust to manage your income and financial affairs if you’re unable to do so.
Protect your future income
Estate planning isn’t just about distributing assets—it’s a proactive way to secure financial stability down the road. Here are several ideas to protect your future income.
Preserve wealth using tax planning strategies. Trusts, retirement accounts, and gift giving can minimize your future estate and income taxes, helping you retain more of your earnings over time.
Safeguard business and investment income. Planning for succession or setting up buy-sell agreements ensures that income from businesses or investments can continue in the future, even after death or incapacity.
Provide long-term control over assets. Set specific terms in wills or trusts to dictate how and when income-generating assets are used. This can protect them from mismanagement or being wasted in short order.
Protect your children
Estate planning isn’t just about money – it’s also about protecting your kids if something happens to you. Here are several ways to protect your children.
Ensure guardianship. If you pass away or become incapacitated, a will lets you name who should raise your children. Without this, the decision goes to the courts, and a judge will choose a guardian. Naming someone in your estate plan ensures your children are raised by someone you trust, in a stable and familiar environment.
Control their inheritance. A well-structured estate plan allows you to manage how and when your children receive their inheritance. For example, you can create a trust and decide when to distribute money and for what purposes, such as education, health care, or buying a home.
Minimize conflict. When your wishes are clearly written in legal documents, it leaves less room for disagreements among family members. This can help prevent costly legal battles or emotional fights over who should care for the kids or how money should be used.
Many people believe estate planning is only for the very wealthy. But as you can see, managing an estate is important for everyone, regardless of income level. Consider reviewing your situation with a qualified expert and help create peace of mind for yourself and your loved ones.
With summer just around the corner, now is the perfect time to plan a warm weather getaway that won’t break the bank. Whether you’re jetting off to a tropical paradise or exploring a bustling city, getting the best travel deals requires a bit of planning. Here’s how you can save big on your next adventure.
Book airfare on Sundays. Data from the Expedia 2025 Air Hacks Report shows that Sunday is the cheapest day to book airfare, just as it has been the last four years in a row. According to the study, travelers who book domestic flights on Sundays can save as much as 6%, while those who book international airfare may save up to 17% compared to booking on Monday or Friday.
Be flexible with travel dates. Being willing to fly on different days of the week can also help you score some savings. Data also shows that flying domestically on Saturday instead of Sunday can save 17%, while flying internationally on Thursday instead of Sunday can save 15%.
Use fare comparison and deal websites. Several websites can help you compare flight costs across multiple airlines and destinations with ease, including Google Flights and Skyscanner. The Hopper app can even tell you when it’s the best time to book airfare and hotels to get the lowest price.
Leverage loyalty programs and credit card rewards. Frequent flyer miles, hotel loyalty programs, and travel credit cards can help you save on flights, accommodations, and even dining. Many cards offer sign-up bonuses that can cover a free flight or hotel stay.
Consider alternative lodging options. Hotels can be pricey in peak summer months, so consider alternatives like vacation rentals, hostels, and guesthouses if you want to pay less. If you can share a vacation villa or rental home with other family members or friends, you may be able to pay even less.
Bundle and save. Booking flights, hotels, and rental cars together through sites like Expedia, Kayak, or Priceline can help you score a lower total package price on your summer vacation. You can even search for vacation packages at a discount through your favorite frequent flyer program using options like American Airlines Vacations and Delta Vacations.
Don’t forget travel insurance. While it’s an added expense, travel insurance can save you thousands in case of cancellations, lost luggage, or medical emergencies. Some credit cards even offer free travel insurance when you use them to pay for your trip.
Scoring the best summer travel deals is all about planning, flexibility, and knowing where to look. By using these ideas, you can enjoy an amazing vacation without overspending. Start searching now, and you might just land your dream trip at a great price.
Summer work can be financially rewarding, but it can also come with tax consequences that are sometimes overlooked. Here are several ideas for managing your tax obligations that come with seasonal jobs.
Keep it separate. If you mow lawns, babysit or do another cash job where you haven’t filled out a Form W-4 for tax withholdings, the IRS may consider you to be a business for tax purposes. If you are considered to be in business, it’s a good idea to keep your business transactions separate from personal transactions. If you do comingle both types of transactions, the IRS may disallow all business expenses and leave you with a much higher tax bill.
Document your driving. If you are driving for business purposes, document your mileage as it happens. The IRS allows 70 cents a mile for the portion of driving time you spend on business use. Use an app or driving log to record your business driving, and don’t forget to hang on to all receipts.
Keep your receipts. If you want to deduct a business expense, you need to prove that you paid for it. The IRS says any recordkeeping system is okay as long as it clearly shows your expenses. Keep receipts, canceled checks, bank statements and other easy-to-understand records of what you spent the money on and when. Many bookkeeping and accounting systems can help digitize these records, making them easier to corral for tax time.
Calculate your estimated tax bill. Plan to file a tax return (it may be your first return) early next year. Depending on how much you make the rest of the year, you may get back every dollar that was withheld from your paychecks for taxes. If you were self-employed for your summer job, remember that you’ll need to set aside some of your earnings to pay federal, state, and local taxes.
Remember that all income is taxable. No matter how you earn your money, all earned income is taxable. Even tips, cash payments and income from freelance platforms must be reported on your tax return. If you receive a W-2 from an employer, the income is automatically reported to the IRS. If you freelance work, you might receive a 1099 form. But even if you don’t get a 1099, you’re still responsible for reporting all income you earn.
Summer work can provide much more than a temporary income boost — it can also be an opportunity to build good financial habits. By staying mindful of your tax obligations, you can avoid tax surprises and enjoy your hard-earned money.
Lowering your tax bill next year works best as a planned event. So if you are interested in breathing a sigh of relief come next April, consider a review of these four areas as you create and implement your tax plan for 2025.
#1 – Your Home
Your home can create unexpected tax liabilities. Property value appreciation, home improvements, and refinancing your mortgage influence how much tax you pay.
When your home’s value increases substantially, you might pay higher property taxes. Selling a home can also lead to capital gains taxes if you’ve lived in the property for less than two years or exceed the home sale exclusion amounts.
Tax Planning Tips for Your Home:
Get a professional property assessment to ensure you’re not overpaying property taxes. If so, know your location’s time frame and process to amend your property’s value in their formula.
Consider timing home improvements to manage potential tax consequences by being smart about when assessments are applied in your location’s property value.
If selling, understand capital gains exclusion rules ($250,000 for single taxpayers, $500,000 for married couples)
#2 – Your Investments
Review your refinance closing disclosure to identify deductible mortgage points or fees
Investment income can impact your tax bill. Capital gains, dividend distributions, and frequent trading can all cause tax consequences.
Different investments also face different tax rates: Short-term capital gains get taxed at higher ordinary income rates and long-term gains typically receive more favorable treatment.
Tax Planning Tips for Your Investments:
Implement tax-loss harvesting to offset capital gains
Hold investments for more than a year to qualify for long-term capital gains rates
Consider tax-efficient investments like index funds or ETFs
Maximize contributions to tax-advantaged accounts like 401(k)s and IRAs
#3 – Your Retirement
Retirement accounts offer financial opportunities. But they can also cause tax pitfalls. Required minimum distributions (RMDs), early withdrawal penalties, and the tax treatment of different retirement account types influence your tax bill.
Tax Planning Tips for Your Retirement Accounts:
Understand RMD rules and plan withdrawals strategically. Sometimes the most cost-effective plan withdrawals occur long before the RMD rules come into play!
Consider tax-efficient Roth conversions to manage future tax liability
Maximize health savings account (HSA) contributions as an additional retirement account
Explore catch-up contributions if you’re age 50 or older
#4 – Your Life Events
Major life changes can dramatically change your tax situation. Marriage, divorce, having children, changing jobs, or experiencing significant income shifts can all reshape your tax liability.
Tax Planning Tips for Life Changes:
Reassess your filing status as life changes may affect your tax bracket and deductions
Track new deductions and credits as life events like adoption or education expenses may qualify for specific tax breaks
Understand the age triggers built into the tax code and plan accordingly. This is especially important to understand as your children get older.
Sometimes your tax plan will show you an unavoidable, upcoming tax event, but you can plan for it to avoid a surprise. But other times your plan can help lower your tax liability, so it is best to begin as soon as possible.
