Managing High Interest Rates on Travel Credit Cards and Understanding Home Sale Exemptions

Managing High Credit Card Rates

Planning a trip to Europe and thinking of getting a new credit card with a no foreign transaction fees policy? With a decent credit score, it’s a logical move. However, you might be surprised when you get approved with a high rate. What does this mean for your credit score and how do you handle it?

Firstly, don’t rush to close the credit card. Most rewards cards, which are typically the ones without foreign transaction fees, come with high interest rates. The trick is to use the card wisely: only charge what you can afford to pay off when the bill arrives. If you unavoidably end up with a balance, consider transferring the debt to a low-rate card. However, remember that these low rates are usually for a limited period, which means the debt needs to be cleared off relatively soon.

Borrow responsibly. It’s always advisable to borrow only for items that can appreciate over time. For depreciating items such as cars, opt for the shortest possible loan to minimize the interest you pay. Avoid borrowing for vacations and travel, these should ideally be covered by your current income.

Understanding Home Sale Exemptions for Elderly Widows and Widowers

Are you a widow or widower concerned about losing out on half of the $500,000 home sale exemption if you sell your home? Will your widowed status affect your home sale exemption? The answer may surprise you.

If you sell the house within two years of your spouse’s death, you can qualify for the full $500,000 exclusion, provided you meet the other criteria for the tax break. The criteria include owning and living in the home as your primary residence for at least two of the past five years.

In most states, when a spouse dies, half of the home gets a favorable “step-up” in tax basis to the current market value. In community property states like California, both halves of the house get this step-up. This means you may get more tax relief than you had previously thought.

For personal finance advice, questions may be sent to Liz Weston, a Certified Financial Planner and renowned personal finance columnist.