What to buy (and skip) on Black Friday 2022

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The economy has been a roller coaster for consumers over the last 2.5 years, and the ride isn’t slowing down yet. As COVID-19 and its ripple effects have continued to shape the economy, U.S. households have navigated both prosperity and struggles.

In the early weeks and months of the COVID-19 pandemic, experts feared that widespread shutdowns would devastate households economically. While March and April 2020 did bring brief spikes in unemployment, the economy overall fared better than expected early in the pandemic. Expansive government relief programs gave a boost to household finances, and because people spent less during lockdowns, the personal savings rate — calculated as the percentage of disposable income that people save — increased to record heights. Over the course of 2020 and 2021, low interest rates for borrowing and rising wages in a tight labor market continued to make it easier to save, keeping the rate elevated.

The rise and persistence of inflation more recently has reversed that trend. Year-over-year increases in the Consumer Price Index have exceeded 5% in every month since May 2021 and topped 8% in each of the last 6 months. With everything from housing to energy to groceries becoming more expensive, money that consumers had previously been setting aside is increasingly going toward essential spending.

These economic headwinds have sent the household personal savings rate back down to pre-COVID-19 levels. The savings rate peaked at 33.8% early in the pandemic but had fallen to just 5% as of July 2022 — less than half the rate of the previous July and the lowest level since the Great Recession. Today’s figures are more in line with recent history: despite steadily rising real disposable income over time — where disposable income is defined as total personal income less any personal taxes paid — personal savings rates have fallen from 10% to 15% in the mid-1970s to between around 4% and 8% in more recent decades.

Low savings rates can have a positive effect on economic activity because they signal that consumers are spending on goods and services. But in today’s environment, with high prices and rising interest rates, low savings could expose more households to financial difficulties. If the U.S. economy enters a recession and unemployment rates increase, households with depleted savings may struggle with essential spending.

Having more disposable income is important for positioning families to pay for necessary expenses and weather hardships when they arise. On this count, residents in certain parts of the country will be better off than others. Looking at the cost of living alone is not enough, as less expensive places to live — such as Mississippi, West Virginia, and Arkansas — are all ranked near the bottom for disposable income. Without taking cost of living into account, states in the South tend to have the lowest per capita incomes on both a pre- and post-tax basis. In contrast, most of the states where disposable incomes are highest are coastal locations, which tend to have higher concentrations of well-educated workers and well-paying industries. But these states also often have higher cost of living.

It’s important to factor in all relevant factors to find the states whose’ residents have the most money to spend or save. In doing so, we see that Connecticut leads the way, followed by the Dakotas, Wyoming, and Massachusetts. On the other hand, residents of Mississippi, Hawaii, and Arizona average the least disposable income.

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• Per capita post-tax income (adjusted): $57,586
• Per capita post-tax income: $56,794
• Per capita pre-tax income: $65,486
• Per capita taxes paid: $8,692
• Cost of living (compared to average): -1.4%

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• Per capita post-tax income (adjusted): $57,805
• Per capita post-tax income: $64,258
• Per capita pre-tax income: $74,805
• Per capita taxes paid: $10,547
• Cost of living (compared to average): +11.2%

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• Per capita post-tax income (adjusted): $58,131
• Per capita post-tax income: $56,715
• Per capita pre-tax income: $64,054
• Per capita taxes paid: $7,339
• Cost of living (compared to average): -2.4%

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• Per capita post-tax income (adjusted): $58,161
• Per capita post-tax income: $58,438
• Per capita pre-tax income: $67,095
• Per capita taxes paid: $8,657
• Cost of living (compared to average): +0.5%

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• Per capita post-tax income (adjusted): $58,663
• Per capita post-tax income: $60,344
• Per capita pre-tax income: $69,016
• Per capita taxes paid: $8,672
• Cost of living (compared to average): +2.9%

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• Per capita post-tax income (adjusted): $58,882
• Per capita post-tax income: $64,994
• Per capita pre-tax income: $76,386
• Per capita taxes paid: $11,392
• Cost of living (compared to average): +10.4%

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• Per capita post-tax income (adjusted): $59,617
• Per capita post-tax income: $64,004
• Per capita pre-tax income: $71,889
• Per capita taxes paid: $7,885
• Cost of living (compared to average): +7.4%

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• Per capita post-tax income (adjusted): $60,170
• Per capita post-tax income: $55,892
• Per capita pre-tax income: $62,095
• Per capita taxes paid: $6,203
• Cost of living (compared to average): -7.1%

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• Per capita post-tax income (adjusted): $60,214
• Per capita post-tax income: $62,164
• Per capita pre-tax income: $67,138
• Per capita taxes paid: $4,974
• Cost of living (compared to average): +3.2%

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• Per capita post-tax income (adjusted): $61,930
• Per capita post-tax income: $64,229
• Per capita pre-tax income: $72,003
• Per capita taxes paid: $7,774
• Cost of living (compared to average): +3.7%

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• Per capita post-tax income (adjusted): $64,348
• Per capita post-tax income: $69,137
• Per capita pre-tax income: $82,475
• Per capita taxes paid: $13,338
• Cost of living (compared to average): +7.4%

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• Per capita post-tax income (adjusted): $64,422
• Per capita post-tax income: $59,434
• Per capita pre-tax income: $65,627
• Per capita taxes paid: $6,193
• Cost of living (compared to average): -7.7%

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• Per capita post-tax income (adjusted): $65,244
• Per capita post-tax income: $60,051
• Per capita pre-tax income: $65,544
• Per capita taxes paid: $5,493
• Cost of living (compared to average): -8.0%

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• Per capita post-tax income (adjusted): $65,334
• Per capita post-tax income: $59,792
• Per capita pre-tax income: $64,720
• Per capita taxes paid: $4,928
• Cost of living (compared to average): -8.5%

Photo Credit: Jon Bilous / Shutterstock

• Per capita post-tax income (adjusted): $66,740
• Per capita post-tax income: $69,035
• Per capita pre-tax income: $82,082
• Per capita taxes paid: $13,047
• Cost of living (compared to average): +3.4%

There’s no such thing as a universal best credit card. The right card for you depends on your lifestyle, your goals and your credit history. For instance, if you’re looking for travel rewards but your friend is building credit, the best card for each of you will differ greatly.

And while there may not be one best card for you — the average American has about three cards, according to a 2021 Experian study — there are many times a card can be wrong for a specific situation.

Here are eight times you could be using the wrong credit card, and what you can do instead.

You may have started out by building your credit with a secured card, student card or alternative card, but once your credit is in better shape, it may be time to upgrade.

If you’ve used a starter card responsibly by keeping your utilization rate low and paying balances in full every month, you may qualify for a card that’s a better fit now. A different card could offer a higher credit limit, better rewards earnings and perks like cellphone protection and travel benefits. Some card issuers may automatically upgrade your card once you’ve reached certain thresholds, while others may not. Contact the issuer to check your options.

New cardholders can often earn a lucrative welcome bonus but usually with a caveat: You have to spend a minimum amount within a specific time frame to get it. Note the spending requirements for a card’s sign-up bonus, and use the new credit card enough by the deadline. If you continue to pay with an older credit card that’s already in your wallet, you risk missing out on the bonus if you don’t spend enough on your new card.

A little planning can help. Think about upcoming big purchases you need to make, such as a car repair or a new laptop. Just one of those could be enough to hit the bonus’s spending requirements.

It’s true a store credit card can save you money, especially if you are a frequent, heavy spender at that store. However, the rewards earned with a store credit card are often only redeemable at that store, limiting their usefulness.

Most shoppers would be better off using a general rewards credit card and earning more flexible rewards. Some cards have elevated rates for online shopping purchases, while others earn as much as 5% back at popular merchants like Target, Walmart and Amazon.

Several cards boast a top 5% cash-back rate in popular spending categories like grocery stores, restaurants and gas. The catch, though, is that you’ll have to do some work to earn that rate. In most cases, you’ll need to track categories: Qualifying 5% purchases may rotate quarterly, or you may have to choose your own categories. If you’re spending outside of those categories with this card, you’ll likely earn a paltry 1% instead of the juicy 5% you think you’re earning.

Most times, you’ll have to activate the bonus categories before the issuer’s deadline to earn the 5%, even if you’re spending in the right category. Plus, you’ll likely run into spending caps in those 5% bonus categories; once you hit those caps, the rewards rate drops to 1%. For those who find a 5% card to be high maintenance, opt for one that earns a flat 2% cash back on every purchase instead.

According to a 2020 NerdWallet study, 14% of Americans view credit cards as “complicated,” and it’s not hard to see why. Some issuers offer suites of cards in the same family and have names that are nearly identical. The logos of some issuers are strikingly similar, too. Perform a quick audit of your credit cards to make sure that they are the cards you intended to get. Cards that look and sound nearly the same may be worlds apart in terms of fees and rewards structure.

Balance transfer cards can be excellent tools for paying off debt. They consolidate several debts into one place, making them easier to keep up with, and they can give you a breather on interest for many months. However, if you’re using a balance transfer card for everyday expenses as well, it will be hard to whittle that balance to $0. Plus, many balance transfer cards don’t come with rewards. Leave the balance transfer card at home but take the cash-back card with you — and be sure to make regular payments toward both.

It pays to know the rewards rates for all of your credit cards. Say you have two credit cards, one that earns 4% on gas and another that earns only 1%. Using the 4% card whenever you fill up would return $30 more if you spent $1,000 annually on gas. That $30 may not seem like a lot, but small amounts add up, especially if you have multiple rewards credit cards. To help keep track of different rewards rates, you could label your cards with sticky notes or keep a small reference guide in your wallet.

Often you’ll have to keep spending caps in mind, too. Issuers typically cap earnings on their highest rewards rates after you reach a certain amount of spending in a particular category. Make sure you track your progress toward that cap and switch to another card with a better rate when you reach it — until the limit resets.

Though they may look and feel virtually the same, a debit card is very different from a credit card. Credit cards offer protections and perks that debit cards (and cash) do not. You can earn cash back and other rewards with credit cards that you won’t get with debit, and it’s often easier to recover from losing a credit card than a wallet full of cash. More importantly, responsible credit card use builds your credit score, which can translate into more favorable loan terms and insurance rates, among other money-saving benefits.