Tuesday, August 7, 2018

KARN ~ Tips To Handle Credit Card & Tax Changes Impacting You In 2018

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Kroger vs. Visa?  How Will I Pay For My Groceries?

Kroger is currently battling with Visa over the credit card fees Visa charges Kroger every time we use our Visa credit card at the checkout line.  Currently Kroger has banned accepting Visa credit cards at their Food 4 Less subsidiaries in California.  These stores still accept cash, check and all debit cards (including Visa debit cards) and other major credit cards.

Retailers pay $90 billion in so-called swipe fees annually, according to Bloomberg, and Kroger is concerned Visa's rates and fees are among the highest.  Kroger indicates without this ban, they will be looking to pass on the higher fees straight to consumers.  If an agreement can not be reached Kroger has indicated they would pass this ban on to all locations/chains of their company. 

Credit Card Interest Rates Going Up in 2018?

Even though many of us learned our lesson during the recession 10 years ago Americans still hold a high volume of credit card debit.  According to a MarketWatch report Americans carry a collective $687 billion in credit-card debt that is not paid in full each month.  As the Federal Reserve increases interests rates in 2018 (they plan to increase 4 times this year) this directly impacts the rates on credit cards because the card companies and banks pass those fees straight on to consumers.  In 2017,  Americans paid banks around $104 billion in credit-card interest and fees, up 11% on the year and 35% over the last five years.  With the forecasted rate increases Americans can expect to pay a total of $110 billion in rates and fees!

What can you do:

  • Make a budget
  • Pay down that high interest credit card and revolving line of credit debit
  • Build savings so you do not have to use credit cards again
  • Pay your credit card and other bills on time to keep your credit score in good standing and rates low

2018 Tax Law Changes ~ What Can You Do Now To Not Owe in April?

As many of us know the tax laws changed in 2018.  What we don't know is how this will impact us when we file our taxes next April.  While the new tax law will lead to bigger refunds for many people, workers who haven't adjusted the amount of money set aside for taxes each paycheck following its passage might owe the IRS in April.  People who depended on a variety of credits and write-offs will not have as many options with the 2018 tax plan.

The most important thing ALL tax payers should do is run their info through the IRS W-4 tax calculator.  This can be done on the IRS website securely since no personal identifying info is needed (really you just need your pay stub).  If the calculator shows that you might owe big in 2019 you should update your withholding or start saving for that payment.  The IRS charges penalties and interest if you do not pay your entire tax debit by Tax Day.

Word of caution.  You are not required to receive a refund or a large refund.  You are paying on your tax bill monthly through your payroll deductions.  Anything you pay in excess of your taxes owed is the refund and basically an interest free loan you are providing to the government.  It would make better financial sense to have as close to "break even" withheld from your check and to then invest your remainder (what would have been that large refund) in a HSA, 401k or even interest yielding savings account.

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