Smart Money Podcast: Small-Business Inflation, and Sign-Up Bonuses

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode starts with a discussion with NerdWallet data writer Liz Renter about the impact of inflation on small-business owners.

Then we pivot to this week’s money question from Xeaiver, who texted us this message: "Hey Nerds. I have a question about credit card sign-up bonuses. I want to hit my credit card bonus and I'm positive I can do it without any extra spending, but I wonder how that would affect my credit utilization. Would it affect my utilization if I paid my balance down to under 10% before my due date?"

Check out this episode on either of these platforms:

• Apple Podcasts

• Spotify

Our take

Inflation is impacting consumers across the nation, but it’s also affecting small-business owners. In fact, as of April, about 41% of small-business owners said they’re experiencing large price increases from suppliers, and 79% said they’re seeing at least moderate price increases. That’s according to the Small Business Pulse Survey, which the U.S. Census Bureau has been conducting weekly since 2020.

Small businesses are feeling the pinch during these tough economic times, and you could soon see (or may already be seeing) the impacts of inflation passed down to you as the customer. As a result, expect higher prices when you shop small. Still, it’s important to support your local businesses when you can. If your budget can’t afford to shop small right now, don’t worry. Compare prices at a variety of retailers to see which store is offering the lowest price.

When it comes to sign-up bonuses, planning out your approach is key. Select a card with a sign-up bonus and spending requirements that will fit your lifestyle. Be careful not to use any more than 30% of your available credit. And never overspend in an attempt to hit the bonus. That will essentially wipe out the value of any rewards you’ll earn.

Our tips

1. Be strategic with your sign-up bonus ambitions: Choose a card that offers points you’ll actually use.

2. Mind your utilization: If you have a balance that's around 30% of your total credit line, pay it down so it doesn’t hurt your credit score, even temporarily.

3. Enjoy the bonus you earned: Plan an amazing trip, or put that cash-back bonus to good use. Earn and burn.

More about inflation and credit on NerdWallet:

What Is Inflation, and Why Is It Surging?

Is a Credit Card Sign-Up Bonus Worth It? Here’s How to Tell

Does Opening a New Credit Card Hurt Your Credit?

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

Sean Pyles: Credit card sign-up bonuses can be a lucrative and fast way to score a trove of points, but are these points worth the potential hit to your credit score? Find out this episode.

Liz Weston: Welcome to the NerdWallet Smart Money podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Liz Weston.

Sean Pyles: And I'm Sean Pyles. To send the Nerds your money questions, leave us a voicemail or text us on the Nerd hotline at 901-730-6373. That's 901-730-NERD. You can also send your voice memos or email us at [email protected].

Liz Weston: Follow us wherever you get your podcast to get new episodes delivered to your feed every Monday. And if you like what you hear, please leave us a review.

Sean Pyles: Later in the episode, occasional Smart Money cohost Sarah Rathner and I talk about smart ways to earn credit card sign-up bonuses. But first, Liz Weston and I are joined by Liz Renter, one of NerdWallet's data writers. Liz recently published a study exploring the impact of inflation and supply chain issues on small-business owners.

Liz Weston: Welcome back to the podcast, Liz.

Liz Renter: Thanks, Liz and Sean. As always, it's great to be here.

Sean Pyles: I always love talking with both of you Lizs at the same time. And to start, Liz Renter, can you talk with us about what small-business owners are saying about how inflation is affecting them right now?

Liz Renter: Just as background, what I was looking at was some survey data from the U.S. Census. They've been surveying small-business owners for the past two years — since the beginning of the pandemic — to see how various things affecting the economy are affecting small-business owners in specific. One of the questions that was changed over the past year was to ask them about rising prices. And so what we found is 41% of small-business owners say they're experiencing large price increases from their suppliers. Also, 45% say they've experienced domestic supplier delays within the past week. And so these are both issues that are obvious stressors for small-business owners, and they're issues that they're ultimately going to have to pass on to their customers.

Sean Pyles: So, one thing that stood out to me in your article is that some states and locales are feeling the effects of these increases in prices and delays in shipping more than other places. Can you talk about that a little bit?

Liz Renter: Yeah Sean, that was particularly interesting to me too. We found that a lot of landlocked states and metro areas were more likely to cite high price increases and supplier delays. I think what that points to is the difficulty in getting supplies to these small-business owners in general at any time. They're not on the coast. They're not near a large airport. So it's going to take more steps for them to get their supplies. Another thing worth noting is places like Nebraska and South Dakota — which were near the top of the price increase list — they rely a lot on 18-wheelers and trucks to bring them their supplies. We know that the trucking industry is having a hard time finding truck drivers. Also, they're heavily relying on gas. So it makes sense that these states with more rural areas are going to probably see greater effects.

Sean Pyles: Interesting. Do you know if these locations are also more dependent upon small businesses than somewhere else in the country potentially?

Liz Renter: That's a good question. I'm not entirely sure what the data would show. I can speak personally. I live in a very small town in Kansas. It's about population 3,000, and we don't have a national chain grocery store. We have one grocery store. It's locally-owned. We have two hardware stores — one's a franchise and then one is very locally-owned. So, I think what you're saying makes sense, that there's less likely to be chains in these areas.

Sean Pyles: Yeah, and so in your at least anecdotal experience, how have you seen the effects that you were talking about, the impact of inflation and supply chain issues play out in your local economy?

Liz Renter: The grocery store that I go to here in town, prices have definitely risen. It was already a little more expensive for me to shop locally at the grocery store than it was to drive 40 miles up the road to the bigger town where there are chain stores, but that has definitely grown more pronounced. I still shop at my local grocery store, but I've had to become a little more strategic about what I buy there versus what I buy on the weekend when I go, quote, into town.

Liz Weston: Yeah. I grew up in a rural area as well and that's exactly the pattern we had. We had a small local chain where my mother did most of her shopping, but every once in a while, we went to the big city, Olympia, to do a broader shopping experience.

Sean Pyles: Yeah, I have the same experience in Ocean Shores as well. There's one full-on grocery store, but things tend to be significantly more expensive, in part because there's so many tourists in town. And so I think they hike up prices for them. But if I'm doing a big restock, I'm driving 45 minutes to Aberdeen and loading up on toilet paper and things like that.

Liz Renter: I think that's a good point. As consumers see these higher prices at small businesses, even if they really want to support small businesses and they really want to shop local, just because we're all experiencing price increases, they may have to cut back on their support of small businesses and maybe choosing big-box stores when they previously hadn't.

Sean Pyles: Yeah. And one thing I continue to struggle with as I'm doing this equation in my head of, should I just buy this in Ocean Shores or should I drive all the way to Aberdeen to get whatever I want, is the price of gas because my car takes premium gas. It is not cheap at all. And so I don't know quite how to shake that out. Sometimes it depends on my mood and if I'm feeling up for the drive, but other times I want to go out and just get something at the larger grocery store because they are more likely to have deals in my experience. So, that's really hard to think through as well. I don't think there's a clear-cut way to make that decision.

Liz Renter: But I do think you do need to just be more strategic about it. I agree, I don't know that there's a formula. I mean, I'm sure we could come up with one, but I think it's just being more aware of how the costs to drive out of town, you might save a little bit, but yeah, you're paying more in gas money. So for me, for instance, I used to like making that drive, quote, into town, four miles down the road because I like driving.

Sean Pyles: Yeah.

Liz Renter: Then I can go there and go to Target and do all that stuff. Well now, because of the price of gas, I'm just being a little more conscious of how often I go into town and what I buy there. I'm much better at making my grocery list and sticking to it, now that I know I'm not going to like go tomorrow or every other day just because I can.

Sean Pyles: Well Liz, what do you think consumers should make of the price hikes and other supply chain issues affecting small businesses?

Liz Renter: One thing consumers need to think about is if you want to support small businesses, and small businesses are increasing their prices, it doesn't have to be an all or nothing decision. It's not either I shop small businesses or I shop big-box stores. You can pick and choose. You can buy some things at small businesses, other things at big-box stores and it's about finding the solutions that both fit your budget and can help support your community in a way that makes sense. So, for instance, maybe you can't afford, or you can't justify shopping at an artisan bread store anymore, but you can buy your greeting cards at the local bookstore because you'd buy them anyways. So, that might be one tradeoff you can make, where it's, "Yeah, maybe I can't shop at all the small businesses in my community, but I can still frequent some of them."

Liz Weston: And it's important to keep in mind that when you're spending local, more of your money stays local. According to the U.S. Small Business Administration, $48 out of every $100 spent at small businesses stays local. And that's only true for about $14 out of every $100 spent at a big-box store.

Sean Pyles: Yeah, it makes a big difference. So, Liz Renter, how can businesses cope with this new normal it seems like we're stuck in for a little while?

Liz Renter: I think one primary thing businesses can do is to be transparent. So, one of the big appeals of small businesses and community businesses is the relationships they have with their customers. I mean, you guys are shopping at the same grocery store. You see each other when you pick up your kids from school. You know the owner and you see the person running the store all the time. And so, these relationships are such that there's some sense of loyalty there. And if store owners can be more transparent with the people they see every day, about the troubles they're experiencing with rising prices, with supply chain issues, I think the customers are going to be more understanding and more likely to try to support them through that tough time.

One other thing I would point out, Sean, is because of that relationship and because of that sense of loyalty, one concern would be that small-business owners would think, "Well, I need to wait until I can't stand it anymore before I can raise prices on my customers, because I don't want to hurt their budget anymore." In theory, that sounds great. But when you can't stand it anymore, that price bump that you're going to have to make is going to be big, and that's going to be much, much harder for your consumers to fold into their budget than it would be if you were making incremental price jumps over time. So, I would say do not wait until the last minute and not only because of what it does to your customers, but it could put you in a precarious financial situation as the business owner.

Sean Pyles: Yeah, so I guess it would be good for folks to try to avoid sticker shock for their customers if possible.

Liz Renter: Right, exactly. And I think those two issues go hand-in-hand in avoiding sticker shock. Be transparent, let them know what's coming, let them know you're going to have to adjust it, and then do it. I mean, people understand, we all understand. Prices are up everywhere. No one's expecting you to never raise your prices because you're a small-business owner. We're there because of the relationship and because of the value you add to the community.

Sean Pyles: Well Liz, thank you for talking with us today.

Liz Renter: Absolutely, Sean. Always a pleasure.

Sean Pyles: One quick note, before we move on. Over the past few weeks, we have been asking you, our beloved, dear listeners, to share your feedback with us through a survey that we're running. We've already received some great responses, so I want to say thanks to everyone who has shared their thoughts so far. We work really hard to help our listeners improve their finances and with your input, we can make the show even better. So, if you have not yet, please take a few seconds to fill out the survey. You can find a link in our episode description. Thanks in advance. And now, let's get into the money question conversation with Sarah Rathner about the smart way to earn credit card sign-up bonuses.

Sara Rathner: This episode's money question comes from Xeaiver who sent us a text message. Here it is. "Hey Nerds. I have a question about credit card sign-up bonuses. I want to hit my credit card bonus and I'm positive I can do it without any extra spending, but I wonder how that would affect my credit utilization. Would it affect my utilization if I paid my balance down to under 10% before my due date?"

Sean Pyles: To help us answer Xeaiver's question on this episode of the podcast, we are joined by credit cards Nerd Erin Hurd. Welcome onto Smart Money, Erin.

Erin Hurd: Hi Sean. Thanks so much for having me. I'm so happy to be here.

Sean Pyles: It's great to have you. And can you start us off with the basics? How do credit card sign-up bonuses work?

Erin Hurd: First, let's talk about what a credit card sign-up bonus is. Plainly, a credit card sign-up bonus is an offer to earn an incentive when you open a new credit card and you agree to make purchases on that card. So you must meet specific terms. Those terms will be laid out on the application when you apply for the new credit card. But generally, you'll need to spend a certain amount of dollars in a certain time frame in order to qualify. So for example, maybe you need to spend $2,000 in the first three months.

Sean Pyles: All right. And then if you do that, you'll get 20,000, 30,000 points, something like that?

Erin Hurd: That's right. You can get credit card sign-up bonuses that come in the form of cash incentives, rewards points, airline miles. Sometimes you can even earn free hotel nights or flights.

Sean Pyles: These seem like a pretty good deal for customers. What do the banks get out of it though?

Erin Hurd: Really this is a win-win for both the bank and the customer. The issuing bank will acquire a new customer, which is important for any business. And on the other hand, the card holder will get a nice incentive to open up a new card.

Sara Rathner: So, when it comes to credit card awards, why are sign-up bonuses such a big deal?

Erin Hurd: Well sign-up bonuses really give you a huge jumpstart on your reward stash. So for example, let's say there's a popular card that's offering a big bonus to new cardholders. Maybe it's an eye-popping amount of 100,000 points. So, even if that credit card has a solid earnings rate for many of the categories that you'll spend once you have the card, you would still have to spend a large chunk of change in order to earn 100,000 points just from spending on that card. So, by opening up a new card, meeting the requirements and getting a sign-up bonus, you'll get a huge influx of rewards points or cash back to your stash.

Sara Rathner: So, here's a big question, because there are so many cards out there that offer sign-up bonuses because they are really sweet deals. But how do you determine if a particular sign-up bonus you're considering with the card that you're considering is worth the effort?

Erin Hurd: We see a lot of times these really juicy and exciting sign-up bonuses, and it can be really tempting to just jump right in, but at NerdWallet, our rule of thumb is that you should aim to get a sign-up bonus value that's equal to at least three years of the card's annual fee. So, let's say a credit card has an annual fee of $99. So, if you paid that $99 annual fee for three years, it would cost you around $300 to hold the card. But if the value of the sign-up bonus is worth, say $500, towards travel, then that bonus covers three years, in this case more, of paying the card's fee. And so we would say, "Yeah, that's worth it, go for it."

But just to note, just make sure that these are rewards that you'll actually use. It is really easy to get excited about a huge bonus and jump right in and sign up for a card on a whim. But if it's say, an airline credit card, really think about how often are you actually going to fly that airline? Make sure the card earns rewards that are actually going to be useful for your needs. Otherwise, that sign-up bonus that could theoretically be worth $500 towards travel, it really isn't going to be worth anything for you if you're not going to use it.

Sean Pyles: You'll also want to make sure that you can use all of those reward points in the amount of time that is allotted before they expire. Because that can be a huge bummer, if you earn a sign-bonus, don't end up using the points and then they just, poof, go away when they expire.

Erin Hurd: Yeah, exactly. That's a great point. Each program and each credit card has different terms and conditions and rules. So, it's really important to make sure that you know what you're getting yourself into.

Sara Rathner: So, a big area of concern is hitting that spending minimum to earn the bonus. I've seen ones as big as $10,000 in six months, and some as small as $500 in three months. That's a huge discrepancy, and how can you consider ways to reach that spending minimum without stretching yourself too thin?

Erin Hurd: Yeah, that's really important. I do have a few tips about strategies to earn it, but first let me just say that you shouldn't overspend in order to hit that bonus. So, if you take your shiny new card and you hit the mall and you buy a bunch of things that aren't in your budget and are out of your reach, the extra purchases that you've now made in order to hit the bonus are erasing the value of the rewards or the cash back you'll earn. So, rule number one, don't overspend in order to hit that bonus.

Rule number two, don't sign up for a card unless you're sure that you can hit those spending requirements. As you mentioned, Sara, sometimes they can be pretty steep. And so, you really have to have a plan in action to make sure that you'll be able to hit those requirements. If you don't spend enough, you are out of luck. There's no do-over. If you don't spend enough, you won't earn the bonus. The end.

Sean Pyles: Well Erin, what tips do you have for folks who do want to make the most of their spending so they can get that sign-up bonus?

Erin Hurd: If your normal spending patterns don't line up with the bonus requirements, but it won't be a financial stretch for you, we do have some ideas to help you meet those requirements. So, my first tip would be to use the card for everything, even the small purchases at the gas station or the convenience store; those can all add up and help you reach the bonus amount. Another idea is to consider using your new card to pay some bills. And you can even inquire about pre-paying some of your bills, like your utilities, your phone bill, even things like your car insurance, or your home insurance.

Now, there may be some small fees associated with using your card to pay those bills, so you'll have to weigh those options. Usually we wouldn't recommend paying a fee in order to use the credit card, but in this case, if it's in order to reach the bonus, the value of the bonus will probably outweigh that small fee that you'll have to pay.

Sean Pyles: OK, interesting.

Erin Hurd: Another thing, just get creative. Say you're going out to dinner with a group of friends, ask everyone if they would be OK if you put the whole bill on your card and then they can Venmo you afterwards. You could see if any trusted, keyword trusted, family members, see if anyone has an upcoming large purchase and they would let you use your card to make the purchase for them and then they pay you back. That can be a good way to meet spend, but just think of some creative ways like that to increase your spending without stretching your budget.

Sean Pyles: All right, that makes sense. In the past I have timed applications for credit cards that have lucrative sign-up bonuses around where I know I'm going to be spending a lot. I've done it ahead of a move or a vacation where I know, like you said Erin, I'm going to be going out with friends a lot, having a lot of meals out and I'll just throw it on my credit card for every single meal. It can be a pain having to keep up with all the Venmos and hounding people and sending reminders and being that squeaky person who's saying, "Hey, give me my money back, because I need to pay down this credit card." But it's often the easiest way that I've found to get that sign-up bonus.

Sara Rathner: If you travel a lot for work, for example, and you can use your own credit card to front expenses and then get reimbursed by your employer afterwards, that could be a very easy way to hit a sign-up bonus and then not actually spend any money because you're putting the cost of this last-minute hotel room on your card. And this is assuming that you have the credit limit to front this, that you have the money available to pay the bill because it might be a while before you get that reimbursement. So I will put that in there as a caveat, but even if it's smaller expenses like meals while you're traveling or cab rides, things like that, not necessarily the flights and the hotels, but also weddings. If you're the best man or the maid of honor, and you're planning that bachelor or bachelorette party, front the cost for stuff, and then get all the other attendees to pay you back in cash. And you can use somebody else's wedding to earn your sign-up bonus.

A couple quick things to keep in mind if you're currently shopping around for a new credit card that earns a sign-up bonus. If you have credit card debt right now in this moment, especially now interest rates have gone up again, credit card debt is incredibly expensive and what you pay in interest is going to wipe out the value of the rewards that you earn. So, this might not be the right time to focus on hitting that high spending minimum to earn that bonus. It might be a better time, I should say, to use that extra money that you would've put toward that spending minimum and apply it towards your credit card debt, pay that debt down. And once you become debt-free, then you can start focusing on rewards cards.

Erin Hurd: That's a great point, Sara. If you do decide that a new card is for you and you're going after a new sign-up bonus, please do not leave the spending to the last minute, and make sure you keep track of it. If you return something and you get a refund back on that credit card, the amount that's refunded is not going to count towards that bonus minimum. So, make sure that you're keeping track so that you can hit that goal and earn the bonus.

Sara Rathner: Yeah, so you can't buy a bunch of stuff and then send it back. That's not going to work guys.

Sean Pyles: No. Well, now let's turn to the utilization aspect of Xeaiver's question because that was really the crux of what they're wondering about. Let's start by explaining what utilization means and some guidelines around it, and talk about how to keep utilization low so that folks don't take a big hit to their credit score.

Erin Hurd: Sure. So, utilization is actually one of the biggest factors that make up your credit score. And what that means is it's looking at how much credit you're using, compared to how much credit you have available to you. Now, if that ratio is too high, it can actually hurt your credit score and that's because high balances can be a sign of financial stress to a bank.

Sean Pyles: Right. In general, NerdWallet recommends that folks shouldn't use more than 30% of their available credit, but less is even better. So that means that if you have a $10,000 credit limit, you don't want to have a balance greater than $3,000 at any given time. So that way, you can stay under the 30% threshold, although it's worth noting that under 10% is even better for your credit scores.

And one interesting thing about utilization is that I find this is the cause of the greatest swings in my score from one week to the next. I can see a difference of sometimes five, maybe even 10 points, based on how much I've spent in the previous week. Once I pay off my bill, it shoots right back up, but utilization is really a sensitive part of your credit score.

Erin Hurd: That's right. But it's really important that everyone understands that it is a temporary change to your credit score, meaning that if you have a high balance and the statement closes with the high balance and that's what gets reported to the credit bureau, once you pay off that balance and the next cycle it's reported less to the credit bureau, it's going to bring your score back up. So, it should just be a temporary ding on your score. So it's nothing to get too worried about.

Sara Rathner: And this is assuming you do pay your balance off in full because if you bring up a large balance in the course of a billing cycle and only pay part of that back and then continue to have high balances from month to month, the temporary issue can become a longer-term issue.

Sean Pyles: To your credit score and the amount of debt that you're paying off, which again, would make any sort of sign-up bonus not really worth it.

Sara Rathner: Exactly.

Sean Pyles: But I do want to zoom out a little bit here and talk about credit scores and utilization, because I think that while it's great for folks to check their credit scores regularly, I think weekly is a really good cadence. Some people can get a little bit too hung up on what exactly their score is, and unless someone is applying for a mortgage or a credit card in the coming week or months, the current state of their credit score might not be that big of a deal as long as they're doing all the right things, paying off their balances, keeping utilization low, that sort of thing. And if people are worried about utilization, they could potentially ask for a higher credit limit, but a little bit of fluctuation based on your spending isn't going to be the end of the world when it comes to your personal finances.

Sara Rathner: So, let's talk about a couple ways you can keep your credit utilization low. Obviously one is spend less. Charge less to your credit card every month and keep that 30% threshold in mind. And right off of that, just over the course of the months that you're managing your card, you're going to notice that you probably won't have too many impacts to your credit based on your utilization.

The other one involves a little bit more strategy, though, and that is you can pay your credit card bill multiple times a month. You don't have to wait until the due date to pay your bill. And if you make multiple smaller payments throughout the month, then you are keeping your balance low over time because you're not letting it accumulate to that large balance at the end of the month.

Sean Pyles: Yeah. And as much as I just said about not worrying about your credit scores too much, I will admit that I do both of those things simultaneously. I actually pay off my credit card balance multiple times a week because I don't like my utilization to get too high and it also helps me keep my own personal spending in check. This is a holdover from years ago when I had some credit card debt. I didn't really know much about managing my credit score and I put myself on this regimen of paying off every charge once I made it. So that way, I could keep my finances under control. I'm fortunate enough to have the ability to pay off all of my spending; not everyone can do that. But that way, I do generally see my utilization stay pretty low, under 10%. And it does cause me to second-guess some of my more discretionary impulses when it comes to spending.

Erin Hurd: So, to answer Xeaiver's question about the spending they'll have to do to hit the bonus and how that will affect their utilization. So yes, if the amount they need to spend on their new card to qualify for the bonus is more than 30% of their credit limit and they charge all of that at one time in one month, it could negatively affect their credit score, but it will only be temporary. Once they pay that card down, their score will rebound.

Sean Pyles: Well Erin, thank you so much for sharing your insight with us today. Do you have any final thoughts for our listener or anyone else who's working hard to earn a sign-up bonus while keeping their credit score in a good place?

Erin Hurd: Yeah, thanks Sean. I'll just say it's really important to always have a plan when you're opening up a new credit card. A plan for how you're going to earn that bonus, a plan for how you're going to pay the card off. Because really, if you're carrying a balance on a card that you're hoping to earn a sign-up bonus, that's a really bad idea because anytime you carry a balance on a credit card — meaning you don't pay the entire bill in full by the due date — you're going to pay interest on that balance. And those interest fees will really eat up some of the value of the sign-up bonus that you're going to earn.

Some people don't realize that the credit cards that earn the most attractive sign-up bonuses also tend to have some of the highest interest rates. Some of those popular cards are around 20% interest rate or higher. So, just make sure you have a plan to spend enough to earn that and enjoy that bonus, and make sure you have a plan to pay it off, and especially in regards to utilization, so that your credit score doesn't swing too wildly.

Sean Pyles: And with that, let's get on to our takeaway tips. First up, be strategic with your sign-up bonus ambitions. Choose a card that offers points you'll actually use and know how to meet the spending requirements without overspending.

Sara Rathner: Next, mind your utilization. If you have a balance around 30% of your total credit line, pay it down so that it doesn't hurt your credit score, even temporarily.

Sean Pyles: And finally, enjoy the bonus you earned. Plan an amazing trip or put that cash-back bonus to good use.

Sara Rathner: And that's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected].

Sean Pyles: This week's episode was produced by Liz Weston and myself. We also had production and audio editing help from Rosalie Murphy. Our money question segment audio was edited by Kayleigh Monahan.

Sara Rathner: And visit nerdwallet.com/podcast for more information on this episode; and remember to follow, rate and review us wherever you're getting this podcast.

Sean Pyles: And here is our brief disclaimer, thoughtfully crafted by NerdWallet's legal team: Your questions are answered by knowledgeable and talented finance writers. We are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances.