Investing

Not all home renovations offer the same returns on investment.
Forget a designer chef’s kitchen, the top projects promising the greatest returns in resale value are mostly related to a home’s curb appeal, according to Zonda’s recent cost vs. value report.
“When it comes to adding resale value to a home, exterior replacement projects continue to make the most sense,” says Clay DeKorne, Zonda’s chief editor.

Home renovation activity may have cooled somewhat compared with its pandemic-era frenzy, but homeowners are still investing in their spaces, particularly as the spring housing market heats up.
And when it comes to the return on investment, some projects now offer the highest return values in history — with a few home upgrades averaging returns of nearly 200% for the first time ever — according to the 2024 Cost vs. Value report from Zonda Media, a housing market research and analytics firm.

Garage door replacements offered the highest average return at 194%, followed by upgrading to a steel front door, with a 188% return on investment — both worth nearly double what they were last year, the report found. 

Curb appeal is key

Forget a designer chef’s kitchen, the projects offering the greatest returns in resale value are mostly related to curb appeal rather than more glamorous kitchen and bath remodels, according to Zonda’s report.
In fact, nine out of the top 10 projects with the highest return on investment were exterior improvement projects, the report found.
“When it comes to adding resale value to a home, exterior replacement projects continue to make the most sense,” Clay DeKorne, chief editor of Zonda’s JLC Group, said in a statement.

However, with rising costs for construction labor and building materials, not everyone will get their money’s worth in improved home value.

Only three projects on Zonda’s list can typically deliver even a 100% return on investment, including replacing the garage doors, upgrading to a steel front door and installing a stone veneer.
“Discretionary projects like an upscale bathroom or kitchen remodel will feel valuable to those who make the selections but won’t provide nearly as much return to sellers,” DeKorne said.
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A minor kitchen remodel — such as painting and updating the backsplash — did provide high returns, at 96% of costs recouped. But major upscale kitchen and bathroom remodels did not, the Zonda survey found, with returns of 38% and 45%, respectively.
“Doing expensive upgrades on the kitchen aren’t going to pay off,” said Angelica Ferguson VonDrak, an associate real estate broker based in Rhinebeck, New York.

‘Un-sexy upgrades are more important’

With high home prices and a tight supply of homes for sale, sellers need to be especially strategic in their efforts to attract the buyers willing to pay top dollar in today’s market, according to Todd Tomalak, Zonda’s principal of building products research.
Further, financing renovations or improvements with a home equity loan or home equity line of credit have gotten more expensive along with the Federal Reserve’s string of 11 rate hikes since 2022, including four last year.
“A new garage door or new entry door can make a pronounced difference,” Tomalak said. “It could be the thing that makes one house stand out against all the others, making the home worth a higher price.”

Curb appeal is important in getting the right price from the right prospective buyer.
Dreampictures | Photodisc | Getty Images

To get the best bang for your buck, talk to a realtor in your area about specific renovations that may increase the value of your home and which ones to skip, VonDrak advised.
In some areas, putting in a pool could pay off threefold, in other locations, such a hefty investment can fall flat, she said.
“The un-sexy upgrades are more important,” VonDrak said, such as an HVAC conversion (replacing a fossil-fuel-burning furnace or boiler with an electric heat pump) or a new roof or windows.
And often, a thorough cleaning can go a long way, VonDrak said. “Certainly decluttering and swapping out old furniture for new or adding slipcovers,” she said. “You want everything to feel fresh and new.”

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Fears about Social Security’s future shouldn’t be the primary reason for claiming retirement benefits at the earliest claiming age of 62, experts say.
While those who wait eight more years until age 70 stand to get the biggest benefit checks, it can help to delay claiming even by a few months.

Aj_watt | E+ | Getty Images

A recent Social Security report showed a strong economy has helped the program.
Still, Social Security’s trust funds may be depleted in the next decade, if no changes happen sooner.

Many Americans have a misplaced worry that benefits will disappear.
“The biggest myth about Social Security is that when the trust fund runs out, the program is just going away,” said Emerson Sprick, associate director of the economic policy program at the Bipartisan Policy Center.

Even if Social Security’s trust funds are depleted, the program will still have revenue from payroll taxes. Benefits will still go out, though they may be reduced.
Nevertheless, 75% of adults ages 50 and up believe Social Security will run out in their lifetime, a 2023 Nationwide Retirement Institute survey found.

When people claim Social Security

Moreover, data shows retirees often don’t wait until they are able to receive 100% of the benefits they’ve earned.

The most popular age at which to claim is 62, with 29% of beneficiaries claiming at that earliest possible age in 2022, according to a Bipartisan Policy Center report based on Social Security Administration data.
But those beneficiaries take about a 30% benefit cut for not waiting until their full retirement age — the point when they stand to receive 100% of the benefits they’ve earned. The full retirement age is generally between 66 and 67, depending on an individual’s birth date.
Most beneficiaries — 62% — claimed before their full retirement age in 2022.
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Just 16% of retirees claimed at their full retirement age.
For every year beneficiaries wait past their full retirement age up to age 70, they stand to get an 8% benefit increase. But just 10% of claimants waited until age 70, according to the data.

Why people claim early

The top reason people claimed early was their worry that Social Security may run out of money and stop making payments, a 2023 Schroders survey found.
The second most common reason was that they needed the money, according to the survey.
Psychological factors may also prompt early claiming, according to recent research from professors Suzanne Shu at the Cornell University SC Johnson College of Business and John Payne at Duke University Fuqua School of Business.
Workers may feel a sense of ownership over the benefits they’ve earned, and consequently want to claim them as soon as possible, the research found.
Or they may be prompted by an aversion to losing money.

Every month increases your benefits

Nevertheless, experts say it’s still generally best to delay claiming retirement benefits.
“Everyone should know that you have a penalty if you collect before 70,” Teresa Ghilarducci, a professor at The New School for Social Research and author of the book “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy,” previously told CNBC.
Someone who is eligible for a $2,000 per month full retirement age benefit at 67 may instead get $1,400 per month if they claim at age 62, according to a Bipartisan Policy Center analysis. Waiting until age 70 would instead provide $2,480 per month.
While delays tend to be positioned in years, waiting even just months can help.
Delays of six months, 12 months or 18 months are “very helpful retirement security moves that you can make,” Sprick, of the Bipartisan Policy Center, said. And that still means retiring at age 62, 63 or 64.
“Viewing it that way, in months, can help some folks who really couldn’t make it years,” Sprick said.

Retirement experts agree on the value of delaying Social Security benefits — unless a personal reason such as a lack of income or poor health condition prompts a need to start benefits early.
Social Security benefits are adjusted annually for inflation, a feature generally unmatched by annuities or pensions.
Those cost-of-living adjustments are another reason it pays to wait to claim benefits, as those annual increases are higher when applied to larger benefit amounts. More

Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2024 in New York City. 
Angela Weiss | AFP | Getty Images

A favorable consumer price index report for April lifted investors’ hopes for rate cuts from the Federal Reserve – and that environment could prove favorable for dividend-paying stocks.
A lower interest rate environment makes dividend payers more compelling to income investors, especially because those stocks would be offering competitive yields versus those of Treasurys.

Recent results reported by several dividend-paying companies have proved their resilience and the ability to pay dividends despite a tough macro backdrop.
Bearing that in mind, here are three attractive dividend stocks, according to Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
Ares Capital
The first stock on this week’s list is Ares Capital (ARCC), a company that focuses on financing solutions for small- and middle-market companies. On May 1, the company announced its first-quarter results and declared a quarterly dividend of 48 cents per share, payable on June 28. ARCC stock offers an attractive dividend yield of 9.1%.
Following the results, RBC Capital analyst Kenneth Lee reaffirmed a buy rating on ARCC stock with a price target of $22. While the company’s core earnings per share slightly missed the analyst’s estimate, he noted that first-quarter portfolio activity, including originations, was much greater than his expectations in what is generally observed to be a seasonally slower quarter.
The analyst added that the credit performance in ARCC’s portfolio continues to be strong. While the non-accrual rate increased slightly quarter over quarter, it still remained low at 1.7% of the portfolio compared to the industry average of nearly 3.8%.

“We maintain our Outperform rating, as we favor ARCC’s strong track record of managing risks through the cycle, well-supported dividends, and scale advantages,” said Lee.
Overall, Lee is bullish on ARCC due to its scale and capital position, access to the resources of the broader Ares Credit Group platform, experienced leadership team, and expectations that it can deliver annualized return on equity above peer averages.
Lee ranks No. 40 among more than 8,800 analysts tracked by TipRanks. His ratings have been successful 71% of the time, with each delivering an average return of 17.2%. (See Ares Capital’s Ownership Structure on TipRanks)
Brookfield Infrastructure Partners
Next up is Brookfield Infrastructure (BIP), a leading global infrastructure company that owns and operates diversified, long-life assets in the utilities, transport, midstream and data sectors. The company recently announced its first-quarter results and declared a quarterly distribution of $0.405 per unit.
This quarterly distribution marks a 6% year-over-year increase and is payable on June 28. With an annualized distribution of $1.62 per unit, BIP offers a yield of 5.3%.
Following the Q1 print, BMO Capital analyst Devin Dodge reaffirmed a buy rating on BIP stock, stating that the first-quarter results were largely in line with expectations. However, the analyst lowered his price target to $36 from $40 to reflect the impact of higher interest rates on the stock’s valuation.
Dodge noted that Brookfield’s investment in container-leasing company Triton International is exceeding its underlying assumptions. BIP’s transport business is benefiting from the Triton acquisition as the Red Sea crisis has led to the lengthening of some shipping trade routes and increased global demand for containers.  
Meanwhile, the analyst expects BIP’s capital deployment to be focused on tuck-in opportunities in its existing businesses. He highlighted that the company’s acquisition pipeline also includes large-scale opportunities focused on Asia-Pacific, North America and Europe. The analyst expects new investment activity to pick pace through 2024.
“We believe BIP’s portfolio companies are performing well, the yield is attractive and valuation appears undemanding,” said Dodge.
Dodge ranks No. 582 among more than 8,800 analysts tracked by TipRanks. His ratings have been profitable 68% of the time, with each delivering an average return of 10.6%. (See Brookfield Infrastructure’s Insider Trading Activity on TipRanks)
Realty Income
This week’s final dividend pick is Realty Income (O). It is a real estate investment trust that invests in diversified commercial real estate and has a portfolio of over 15,450 properties in the U.S. and seven countries in Europe.
On May 15, the company paid a monthly dividend of $0.257 per share. Overall, based on the annualized dividend amount of $3.08 per share, the stock’s dividend yield stands at 5.6%.  
In reaction to Realty Income’s first-quarter results, RBC Capital analyst Brad Heffern reiterated a buy rating on Realty Income stock with a price target of $58. The analyst noted that Q1 2024 results slightly exceeded his expectations, marked by an impressive capitalization rate of 8.2% on acquisitions.
Heffern added that the vast majority of the first-quarter acquisitions were in Europe, with the region accounting for 95% of the acquisition volumes. The company attributed the opportunity in Europe to improved confidence in the macroeconomic outlook and motivated sellers. In comparison, higher interest rates and macro uncertainty in the U.S. affected Q1 deal volumes. That said, the company expects the U.S. volumes to pick up in the second half, with a clearer picture of interest rates and the macro outlook.
“We think O has one of the highest-quality net lease portfolios in the space, with an above-average investment grade weighting, a strong industrial portfolio, and a high proportion of tenants with public reporting requirements,” said Heffern.
Heffern ranks No. 505 among more than 8,800 analysts tracked by TipRanks. His ratings have been profitable 48% of the time, with each delivering an average return of 12%. (See Realty Income Stock Buybacks on TipRanks) More

Several provisions from the Tax Cuts and Jobs Act of 2017 are scheduled to expire at the end of 2025 without changes from Congress.
Enacted by former President Donald Trump, the law included lower tax brackets, a higher standard deduction and a boost to the child tax credit, among other changes.
However, the future of these provisions is unclear with control of the White House and Congress uncertain.

Former President Donald Trump speaks during a campaign rally in Wildwood Beach on May 11, 2024 in Wildwood, New Jersey. 
Michael M. Santiago | Getty Images News | Getty Images

Individual rates

“The biggest tax cut that’s expiring is the lower rates and wider brackets,” said Erica York, senior economist and research director with the Tax Foundation’s Center for Federal Tax Policy.

The TCJA reduced federal income tax rates across the board, with the top rate falling to 37% from 39.6%.
Without updates from Congress, the individual rates will revert to pre-TCJA levels after 2025. That would return the federal income tax rates to 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.

The standard deduction could fall

When filing taxes, you claim the standard deduction or itemized deductions, whichever is greater. Both options reduce your taxable income.
Some itemized deductions include charitable gifts, a certain percentage of medical expenses, and state and local taxes, or SALT, a tax break that TCJA capped at $10,000.
The TCJA nearly doubled the standard deduction, which made it less likely that filers would itemize tax breaks. That could change after 2025 if the standard deduction reverts to 2017 levels, experts say.
Before 2018, about 70% of taxpayers claimed the standard deduction, compared with 90% in tax year 2020, according to the Tax Policy Center.

The $10,000 limit on the SALT deduction was enacted to help pay for TCJA changes — and it’s been a key issue for some lawmakers in high-tax states such as California, New Jersey and New York.
The SALT cap is scheduled to expire in 2025. But “there are problems with the politics of the cap” because a higher limit primarily benefits higher earners, Gleckman said.

The child tax credit could drop

The TCJA boosted the child tax credit by doubling the maximum tax break to $2,000, increasing the refundable portion to $1,400 and widening eligibility. That will revert to 2017 levels without changes from Congress.
House lawmakers in January passed a bipartisan tax package, including child tax credit enhancements. While the bill has stalled in the Senate, the debate could influence negotiations as the 2025 deadline approaches.

The ‘biggest issue’ for high-net-worth Americans 

There are also higher federal gift and estate tax exemptions through 2025, which allow more ultra-wealthy Americans to transfer tax-free assets to the next generation. 
In 2024, the tax-free limits on gifts during life or death rose to $13.61 million per individual or $27.22 million for spouses. But those limits will drop by about half in 2026 without new laws from Congress.

[It’s] the biggest issue that we’re talking with clients about right now.

Robert Dietz
National director of tax research at Bernstein Private Wealth Management

“[It’s] the biggest issue that we’re talking with clients about right now,” Robert Dietz, national director of tax research at Bernstein Private Wealth Management in Minneapolis, previously said in an interview with CNBC.
The looming change to the higher exemption has prompted some ultra-wealthy Americans to make lifetime gifts to remove assets from their estate, experts say.
However, lower federal gift and estate tax exemptions wouldn’t impact most filers. Less than 0.2% of people who died in 2023 were expected to have a taxable estate, according to estimates from the Tax Policy Center. More

Women and Wealth Events
Your Money

Women say they are worried about their finances, from a higher cost of living to reduced retirement income.
Those concerns could affect the results of the November presidential election.
Here’s what changes women say they hope to see from elected leaders to improve their financial security.

A voter casts her ballot in the Pennsylvania primary elections at the Rockledge Fire Company in Rockledge, Pennsylvania, May 17, 2022.
Hannah Beier | Reuters

Older women are the largest bloc of swing voters — and the biggest concern they have heading into the November election is their financial security, according to the AARP.
Most women cited a higher cost of living as a top issue, according to the organization’s January poll of women ages 50 and up.

Nearly half of women surveyed — 48% — said their financial circumstances fall short of what they had expected for this point in their lives. Meanwhile, 54% said they don’t think they will have enough money to retire at their desired age.

“There is a concern that America’s best days are behind us,” said Margie Omero, a Democratic pollster and principal at public opinion research and political strategy firm GBAO who worked on the AARP poll.
Older women’s concerns are not limited to their own financial circumstances.
They also worry about how their children and grandchildren are going to fare with student loans or job market challenges, as well as the effects of rising housing costs, Omero said.

Gender pay gap leads to retirement income gap

Notably, younger women share many of those same retirement concerns, according to recent research from the National Institute on Retirement Security, or NIRS.

Of the women ages 25 and over surveyed, 76% said retirement is getting more difficult. Inflation and rising health-care costs were the top two reasons cited, though respondents also pointed to debt and fewer pensions.

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Women tend to have greater financial concerns about retirement compared with men, according to Tyler Bond, research director at NIRS.
“There’s still a persistent gender pay gap, which translates into a retirement income gap,” Bond said.
“In fact, the pay gap and the retirement income gap are almost exactly the same, which is what you would expect, because retirement income is basically a reflection of what you earn while working,” he said.

‘Women say they feel invisible’

Women hope lawmakers will address specific pain points.
“We’ve heard in a lot of these groups women say they feel invisible,” Omero said.
Many women said they wish elected officials could spend a day in their shoes, she said. AARP’s survey found 84% of women ages 50 and up want lawmakers to provide more support for seniors and caregivers.
The NIRS survey found 86% of women believe Congress should act now to shore up Social Security rather than waiting.

With a majority of women — 81% — worried about long-term care costs, many want the government to do more to help Americans access those services, NIRS found. Likewise, most women — 82% — believe all workers should have pensions.
Exactly how women’s concerns will influence their votes remains to be seen.
AARP’s poll found 43% of women 50 and up said they would vote for former President Donald Trump, while 46% said they would back President Joe Biden.
That support will likely fluctuate in the months heading to the November election, Omero said. Notably, women 50 and up are one of the largest and most reliable groups of voters, according to the AARP. More

May 17 is your last chance to claim your 2020 tax refund by filing your federal return.
As of May 6, there was still an estimated $1 billion in unclaimed refunds from tax year 2020, and the median payment was $932, according to IRS data.
Your pending refund could include 2020 pandemic relief, such as the recovery rebate credit if you didn’t receive a stimulus check.

JGI/Tom Grill

May 17 is your last chance to file 2020 returns and claim your refund, which could include missed pandemic relief, experts say.
As of May 6, there was still an estimated $1 billion in unclaimed refunds from tax year 2020, and the median payment was $932, according to the IRS.

There is no late filing penalty if you’re owed a refund. But roughly 940,000 taxpayers could surrender their 2020 refund payment if they don’t file by May 17, the agency said in May.
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The deadline is “terribly important” because there’s a three-year refund expiration after each tax deadline, said certified public accountant John Karls, partner at accounting firm Armanino.
The 2020 tax deadline was postponed to May 17, 2021, amid the pandemic — and the three-year deadline to file 2020 returns and collect refunds is now upon us.
“If you let if you let it slip, there’s nothing anybody can do,” said Bill Smith, national director of tax technical services at financial services firm CBIZ MHM. “You won’t get your refund when the statute of limitations has run out.”

You won’t get your refund when the statute of limitations has run out.

Bill Smith
national director of tax technical services at CBIZ MHM

Plus, “2020 was the year of with additional tax breaks or credits” for certain filers, Karls noted.  
That could include the recovery rebate credit, a nonrefundable tax break for eligible filers who didn’t receive economic impact payments. These payments, also known as “stimulus checks,” are linked to coronavirus relief. 
If you’re eligible for relief and don’t file your return by May 17, you’re “truly leaving dollars on the table,” Karls added.

Create a ‘roadmap’ for past filings

If you still haven’t filed 2020 returns and are feeling overwhelmed by where to begin, the IRS has tools to make the process easier, according to Karls.
You can log into your free IRS online account to access your wage and income transcripts, which include certain tax forms, such as Forms W-2, 1098, 1099 and 5498.
“For many taxpayers, this is by far the quickest and easiest option” for collecting missing information, according to the IRS.
“That’s going to give a roadmap” and let you know if you need to contact a past employer, Karls said.
But it may take time to collect the missing forms, so you should start the process as soon as possible, he said.
You can also collect missing tax forms online via your bank or other financial institutions. More

When the U.S. Department of Education released the new interest rates on federal student loans, there was some unpleasant news for parents.
So called Direct PLUS loans for parents would come with a 9.08% interest rate for the 2024-2025 academic year. That’s the highest rate in more than 30 years, said higher education expert Mark Kantrowitz.

Wagnerokasaki | E+ | Getty Images

When the U.S. Department of Education released the new interest rates on federal student loans Tuesday, there was some unpleasant news for parents.
So called Direct PLUS loans for parents will come with a 9.08% interest rate for the 2024-2025 academic year. That is the highest rate for parents in more than 30 years, said higher education expert Mark Kantrowitz. The current rate is 8.05%.

The last time rates for parent loans were higher, according to Kantrowitz’s data, was in 1991-92, when the rate was 9.34%. At the time, student loan rates were variable, and parent borrowers would have taken out an SLS loan, which he said is similar to the PLUS loan.
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As college costs soar, more parents are joining their children in borrowing to help pay the bills, experts say.
In the 2019-2020 academic year, the average parent PLUS borrower had a balance of more than $40,000 when their child graduated, compared with around $26,000 in 2010-2011, after adjusting for inflation, Kantrowitz found.
“Parents can easily borrow more than they can afford to repay,” he said.

How much student debt parents can afford

As a general rule, Kantrowitz said, parents shouldn’t borrow more in student loans than their annual income. That total is for all their children combined.
If they stick to that ceiling, he said, “they should be able to repay it in 10 years or less.”
But each family is different.

If you’re planning on retiring within the next decade, you probably should borrow less, Kantrowitz said. That’s because you don’t want a monthly student loan bill still coming in when you’re on a fixed income.
Meanwhile, if you’re still paying off your own student debt, you’ll likely want to think twice about digging the hole deeper, experts said.

Tips for parents taking on student debt

When a parent is considering taking on student loans after their child has maxed out their limit, it is often a sign of overborrowing, Kantrowitz said.
“The alternatives include enrolling at a less expensive college, student employment and applying for scholarships,” said Kantrowitz, adding that an in-state public college can cost a quarter of the cost of a private college while providing “just as good a quality of education.”

Parents who do take out PLUS loans should try not to defer their loan payments while their child is in school, said Betsy Mayotte, president of The Institute of Student Loan Advisors.
“Even though that’s an option, doing so will increase the total interest that accrues on the loan,” Mayotte said. More

Almost half (45%) of Americans plan to take a summer trip requiring a flight or hotel stay, and they expect to spend an average $3,594, according to NerdWallet’s 2024 summer travel report. 
While most travelers intend to finance a portion their trips on debt, some don’t plan to pay it off immediately.
Here’s what to consider about summer travel in 2024 and how to shed costs.

Klaus Vedfelt | Digitalvision | Getty Images

If you plan to spend money on travel as the days get longer, sunnier and warmer, be careful: It could leave you with high-interest debt you will still be paying off through the fall and winter.
Almost half (45%) of Americans plan to take a summer trip requiring a flight or hotel stay, and they expect to spend an average $3,594, according to NerdWallet’s 2024 summer travel report. 

The majority of travelers, 83%, will pay for part of their vacation costs with a credit card. But 20% won’t pay off the balance in full within the first billing statement, NerdWallet found. The report polled 2,092 U.S. adults from Jan. 30 to Feb. 1, 2024.
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“Travel expenditure is not slowing down,” said Hayley Berg, lead economist at Hopper.
The summer wedding season may contribute to travel debt. About 31% of recent wedding guests took on debt, according to a new study by LendingTree. Of those who paid with credit, the cost of travel (32%) and accommodations (27%) racked up the highest bills, LendingTree found.

‘More bang for their buck’

Three quarters of Hopper users said they plan to spend the same or even more on their travels this summer, the 2024 Travel Outlook by Hopper found.

“But they are trying to get more bang for their buck,” she said, by getting more trips out of the bigger or same-size budget.
About 86.6% of Hopper users expect to travel this summer, but 72.5% have not booked their trips yet, according to the outlook.
“It never surprises me how many people wait until the last minute to book their vacation,” Berg said.
Fortunately for travelers, airfares are down 5.8% from a year ago, according to the consumer price index.

Domestic airfare for the months of June, July and August cost around $305 on average, down 6% from this time last year, according to Hopper. Prices are expected to peak at $315 per ticket at the end of May and early June, per Hopper data.
“That is a vast improvement over the prices increases that we have been seeing every year,” Berg said.

But other costs associated with air travel have gone up. For instance, many major airlines like United Airlines, American Airlines and JetBlue Airways increased their checked baggage fees this year.
“Most airlines raised their fees by five dollars,” said Sally French, travel rewards expert at NerdWallet.”That typically means something like 35 dollars now becomes 40 dollars … That’s an additional 40 dollars there for a round trip.”
Some cardholders may believe that carrying a balance while they pay off a vacation or other big-ticket purchase is good because it helps to show they’re using the card, said French.
That’s a common misconception. In 2022, about 46% of Americans believed that leaving a balance on their credit card is better for their score than paying it off entirely, according to NerdWallet data.
“There are many myths about credit cards,” French said. “Leaving a balance in your credit card is not necessarily good for your credit score.”
The reality is, carrying a balance can increase your credit utilization ratio, which has the potential to ding your score. Plus you’re adding to the expense of that purchase, with average credit card interest rates topping 20%.
Cardholders already owe $1.12 trillion in credit card debt, with an average balance of $6,218 per consumer, according to a new report by the Federal Reserve Bank of New York.

‘If you have not booked, book now’

Smart planning and budgeting can help you cut travel costs and make it easier to avoid carrying a balance. Here are three strategies to try:
1. Book summer travel plans soon: The sooner you book your travel plans, the lower the upfront cost will tend to be. Prices for domestic flights in the U.S. tend to spike the weekend before 4th of July week, Memorial Day weekend and Labor Day weekend, per Hopper data.
“If you have not booked, book now,” Berg said.
“The sweet spot” for international trips is three to five months in advance; if you plan on taking a trip in August, now is the time. For domestic flights, about two to three months in advance is best for summertime trips. You might still have time to book late summer, early fall trips, she explained.

2. Be as flexible as you can: If you are able, avoid departing on Thursday or Friday nights; try booking flights on Tuesdays or Wednesdays. Flying in the middle of the week can save about $50 per ticket on domestic airfare, and “a whole lot more” on international, Berg said.
If you’re flexible on your trip dates, booking vacations for September and even early October can save you 30% off hotel and airfare prices. And “the weather is typically just as good, fewer crowds in many destinations,” Berg said. “Easy way to save money and also have a little bit less of a tourist experience.”
2. Save on food costs: When budgeting for a vacation, travelers focus on hotel and flight costs because they typically book and pay for those in advance, said French. Restaurant prices are often a surprise when travelers review their spending and “are shocked by how high it is,” she said.
Look for options to save on food costs by going to counter-service options over table service. Or go to a local farmers market or supermarket and cook something on your own for a meal or two.
“Dining out is a huge part of a lot of people’s trips, so you might not want to skip that entirely,” French said.
3. Leverage credit card rewards: Some credit cards offer benefits and rewards on dining and travel expenses such as checked bag fees. They might also extend those perks to other people you’re traveling with, French said.
But this isn’t a last-minute move: It takes time to apply and then receive your new card. “Many people get tripped up because you do have to apply for this credit card ahead of time,” she said. More