Answers to your money questions

There is a direct correlation between risk and reward. The higher the risk, the greater the potential gain, and also the greater the potential loss. The key is finding a balance between the two that works for you.

Less than most people think. Many brokerages let you buy fractional shares, so you can begin with a small amount and add to it every month. Building the habit matters more than the starting number. If you are not sure where your money goes yet, my free budget spreadsheet and net worth calculator are a good first step.

It does not have to be one or the other. Index funds are a simple way to own the whole market, and many investors build around them. If you want to pick individual stocks, do the homework first. Every breakdown I do looks at valuation, catalysts and risks, so you know what you are paying, what could move the stock and what could go wrong. Browse the stock analysis to see how that works.

Start with your plan, not the headlines. Drops and swings are a normal part of investing, so keep each position small enough that one mistake cannot derail you, and own things you understand well enough to hold through a rough patch. Options can help hedge a portfolio, but they cost money and add risk of their own, so learn how they work first.

Two common ways are selling covered calls on shares you already own and selling cash-secured puts on stocks you would be happy to buy at a lower price. In both cases you collect premium up front. The trade-offs are real: covered calls can cap your upside, and puts can oblige you to buy the stock. Know the worst case before you trade. Options involve risk and are not suitable for every investor. Start with the options trading guides.

They can be, if the payout lasts. A high yield can signal opportunity or trouble, so look at why it is high. Check the payout ratio, cash flow and debt to see whether the dividend is safe, and favor companies that raise their dividend over time so your income keeps pace with rising prices. See the dividend articles for lists and breakdowns.

It depends on where you live. In general, rewards are treated as a rebate on your spending rather than income. An unusually large signup bonus, though, may be taxed as income.

Annual fees and interest are generally deductible when they are business expenses. Check with a tax professional about your own situation.

Yes. The IRS has collected credit card spending data since 2008, partly to discourage tax evasion.

Sometimes, at least in part, if the bank or collector agrees. Any amount that is forgiven must be reported as income at tax time.

During COVID-19, many banks offered payment deferral programs. If you are struggling to pay, contact your bank early and ask what options are available.

Yes, especially over unpaid balances.

If a court rules against you for non-payment, it may allow your wages to be garnished.

Unlikely. Credit card debt is usually unsecured, which makes it very hard for a card company to claim your home over it.

Generally not, unless you pledged the car as security for the debt.

Yes, typically for double charges or disputed charges.

High interest rates and damage to your credit score can make it harder to get approved for other credit, an apartment, utilities or even a phone line.

They can. Reasons include a lower credit score, not using the card or late payments. The company may also ask you to pay off the balance.

Yes. Inactivity or a declining credit score can prompt a lower limit.

Yes, at the bank's discretion.

Most major issuers report authorized users to all three credit bureaus. Exceptions include small regional banks, issuers that don't allow authorized users, certain user types or ages, and delinquent accounts. Read more.

APR is the yearly cost of borrowing, expressed as a percentage, and it includes interest and certain fees. It matters only if you carry a balance. Paying your full statement balance each month generally avoids it. Read more.

The method varies by card. This guide explains how minimum payments and interest are calculated.

It depends on your spending habits. Frequent travelers may prefer a travel card, while frequent grocery shoppers may get more from a cash back card. See the best credit cards.

Cards often recommended include the Citi Double Cash Card for cash back, the Chase Sapphire Preferred for points, and the Chase Sapphire Reserve for frequent travelers.

It depends on whether you can be approved. Student and secured cards are aimed at people with little or damaged credit. Read more.

Currently Costco takes Visa cards and some other payment methods, though this can change. Read more.

Synchrony Bank is a major issuer of store and private-label credit cards and financing options. Read more.