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Managing multiple monthly debt bills with different due dates and payment amounts is a headache, not to mention a strain on your budget. Debt consolidation, where you combine multiple debts into a single payment, can make the process easier.

While debt consolidation could improve your finances, it’s not the right move for everyone. Here’s how this debt management strategy works, and the pros and cons of using it.

How to consolidate debt

Debt consolidation entails taking on a new loan or line of credit with a lower interest rate that’s large enough to cover the debts you want to consolidate. This enables you to pay off multiple existing loans with one new loan, leaving you with a single interest rate and monthly payment.

You can consolidate most types of debt, including credit card debt, auto loans, personal loans and medical debt. The most common methods to consolidate debt are personal loans, balance transfer credit cards and home equity loans or lines of credit (HELOCs).

Which option is best for you will depend on your finances. Most people pursuing debt consolidation seek out loans that have lower interest rates than they’re currently paying so they can save money and pay off their debts faster.

Homeowners can often secure lower interest rates by using their house as collateral with a home equity loan or HELOC. If you don’t own a home — or haven’t built up much equity — a personal loan is an option. These fixed-rate installment loans are convenient because you pay the same amount each month, which is useful for budgeting.

A balance transfer credit card that comes with a low “teaser” annual percentage rate (APR) on balances as well as purchases for a period of time — say, one or two years — can be a useful tool for debt consolidation, with a couple of caveats. You’ll need to get a credit limit high enough to cover the debts you want to consolidate, which makes this option better for people with smaller amounts of debt. The other thing to keep in mind is that you have to pay off the transferred balance before the promotional period ends, and avoid the temptation to charge new debt onto that card in the future. Ultimately, the best debt consolidation option for you will be the one that saves you the most on interest while fitting comfortably into your budget.

Regardless of the method, debt consolidation typically requires a good-to-excellent credit history, which shows the lender that you have a record of on-time payments. While borrowers with fair to poor credit may be able to get approved for some types of debt consolidation loans, the terms might not be good enough to justify moving your money.

Once you’ve researched your options for consolidating debt, look for a lender and apply for a new loan or line of credit. Use the funds from the new loan to pay off all the balances you want to consolidate. (With a balance transfer card, note that the credit card companies usually handle the transfer of the balance. Also note that there may be a deadline by which balance transfers have to be completed in order to qualify for the promotional rate.)

Then, you make a single payment every month to pay down the consolidation loan. It’s important to make on-time payments and be aware of the loan terms, especially due dates and deadlines, such as the end of a credit card’s promotional period. Debt consolidation only works if you are actually able to pay off the new loan on time.

Pro tip: Want a more in-depth explanation of how and when to consolidate debt? Read our debt consolidation guide.

Pros of debt consolidation

Depending on your financial goals, debt consolidation can have significant advantages. If you’re looking to pay off debt as quickly as possible, it could help you save money. If you need to reduce the amount you’re spending on bills each month, it could free up some money in your budget. Here’s a look at the most common benefits associated with consolidating debt.

Simplify your monthly payments

Remembering to pay all your bills on time can be challenging when you’re juggling multiple debt payments every month. Rolling all — or most — of your debts into a single payment can help you stay organized and avoid late or missed payments.

Save money on interest and pay off debt faster

The best debt consolidation loans can enable you to get out of debt faster by freeing up more cash to pay down what you owe. With a lower interest rate, more of your money will go toward the loan principal each month, enabling you to save money and pay your debts down more quickly.

Reduce monthly spending on debt

If you need to free up money to improve your monthly cash flow, debt consolidation can help with that, too. You want to replace high-interest debt with a lower-interest loan, then take the monthly savings from the reduced interest and use that to pay other bills. You may even be able to get approved for a consolidation loan that has a relatively low interest rate and a longer repayment term, further reducing your monthly spending on debt. There is a tradeoff here, though: While your monthly payment might be lower, you’re not technically “saving” money because the longer loan term means you will pay more in interest over the life of the loan.

Improve your credit score over time

When you first take out a debt consolidation loan, your credit score is likely to dip slightly, since you’re applying for a new loan. But that drop should be short-lived. As you make on-time payments on the new loan and reduce your overall debt, your credit score should improve.

Cons of debt consolidation

Like most financial moves, there are potential downsides to debt consolidation. It’s important to understand them before you pursue the strategy to ensure you’re making the best decision for your finances.

Interest rates may not be favorable

Many benefits of debt consolidation hinge on getting a lower interest rate compared to the rates on your existing debts. But that might not be possible, especially if you have fair or poor credit. For that reason, debt consolidation is a strategy best-suited for borrowers with strong credit scores. Borrowers with lower credit scores might get a loan offer that has a better APR than high-interest credit cards but is still higher than other debts, such as a car loan, you might have. This could still be helpful, if you need to simplify your bills or spread your payments out over a longer term. But in that case, you’ll have to weigh the other potential downsides of consolidation carefully to decide whether it’s still worth it.

Upfront costs are likely

Most lenders charge upfront fees on the products you might use to consolidate debt. Home equity loans or lines of credit have origination fees and closing costs that range from 1% to 5% of the total loan amount. Personal loans also have origination fees, which can be as high as 10% of the loan balance, wrapped into their APRs. Balance transfer credit cards typically charge a fee of between 3% and 5% of the amount transferred.

It could allow you to fall deeper in debt

Debt consolidation only works if you’re able to pay off the new loan on time. If you’re still accruing debt — especially high-interest debt like credit cards — taking a new loan or credit line is a risk. You could end up even further in debt and worse-off financially than before debt consolidation. If your debt consolidation loan is backed by your home equity, you could even risk losing your home.

Is debt consolidation a good idea?

Consolidation might seem like an easy way to get debt payments under control. For some borrowers, it certainly can be — especially if you get approved for a loan with a lower interest rate than your current debts and you have the discipline to pay it down and avoid accruing additional debt.

It’s important to keep in mind, though, that debt consolidation won’t magically eliminate your debt. You’ll still have to pay off the principal you owe, even though you’re getting a break on the interest. It’s a good idea to go over your finances and make sure that you understand why you accumulated your debts in the first place. If you’re spending more than you’re earning on a regular basis, taking out another loan won’t help.

Finally, if you’re struggling to make even the minimum payments on your debts or you’ve already missed several payments, debt consolidation probably can’t help you get a handle on your situation. In that case, it may be time for you to consider alternative options to get out of debt, such as a debt management plan, where you work with a credit counseling agency. With these plans, you typically pay a small monthly fee to the credit counseling agency, which develops a repayment plan that often involves combining multiple debt payments into one and getting a lower interest rate. Another option is debt relief, which often involves working with a debt settlement company that can help you renegotiate the agreements you have with creditors, ideally reducing your debt principal and eliminating penalty fees.

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Debt can be an important tool, whether you’re using it to make large purchases, pay for unexpected expenses, consolidate existing balances or even invest in the future. To understand what type of debt is best for you and your situation, though, it’s important to understand the difference between secured debt and unsecured debt, and how each can be managed over time.

What is unsecured debt?

Unsecured debt is a form of borrowing that is not secured by a specific material asset. Since this type of debt doesn’t require an asset as collateral, there’s nothing specific the lender will take from you if you default on the debt. This includes things like personal loans, student loans and credit cards. (Note that federal student loans are a unique type of debt. They are unsecured, but they do not require the same type of credit review as other loans.)

Without a collateral asset, unsecured debt is considered more risky for lenders. For this reason, it may come with higher interest rates, higher credit score requirements and lower borrowing limits than secured debt.

With that said, unsecured debt can be less risky for borrowers. While you should always plan to pay back your debt as agreed, lenders don’t have a specific asset they can seize if you fail to repay an unsecured loan. That doesn’t mean unsecured loans are without risk, of course. If you miss payments or end up defaulting on these debts, it can still wreck your credit and, in the worst cases, creditors can take legal action against you.

What is secured debt?

Secured debt is a form of borrowing where a collateral asset is used to secure the debt. This category commonly includes loans intended for large, specific purchases, like buying a house or car. Since these loans pose less risk for lenders, they tend to have less strict eligibility criteria, lower interest rates and higher borrowing limits on average.

If the borrower defaults on this type of loan, the lender can assume ownership or control of that asset and use it to recoup lost funds. (This is called foreclosure or repossession, depending on the loan type.)

Whether it’s your home, car or even savings account that’s used as collateral, the fact that the lender can seize the asset if you don’t repay is what distinguishes this type of debt. But it’s not the only risk for borrowers. Defaulting on a secured loan will still damage your credit, leaving you both without the property and in a worse position financially.

Examples of each type of debt

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Examples of Secured Debt	Examples of Unsecured Debt
Home mortgage	Personal loan
Auto loan	Student loan
Home equity loan	Credit card
Secured credit card	In-store financing
RV, boat or ATV loan	Medical bills

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The better your credit history and score, the more likely you are to get approved for unsecured credit products. If you have a limited credit history or even poor credit, you may be forced to opt for secured credit cards or loans secured with a collateral asset until you demonstrate to lenders that you’re not a risky borrower.

Why it matters if your debt is secured or unsecured

When it comes to repayment, the type of loan you have dictates your options to manage the debt. With secured debt, such as an auto loan or home mortgage, you have the option of refinancing over time. Refinancing could help you lower your interest rate, reduce your monthly payments, pull equity out of the asset in the form of cash, remove a co-borrower and more. Since this debt is secured by a material asset, there’s typically no shortage of lenders that may be willing to refinance the debt. You can also refinance some kinds of unsecured debt, like a personal loan or private student loan. This can be a smart move if your finances have improved since you took the loan out and you can now qualify for better terms.

With unsecured debt, debt consolidation is a common strategy used to get debt free faster. With this method, you take out a new loan that can then be used to pay off one or more existing debts. While you can consolidate some secured debts, the move is commonly used for unsecured debt.

If you’re struggling to make payments, debt relief is an option for unsecured debt — but not for secured debts. With debt relief, you can work with a company to create a debt repayment plan, reduce your interest rates or, in some cases, settle your debts for less than you owe.

The bottom line

Both secured and unsecured debt can be smart options, depending on whether you’re looking to make a big purchase, consolidate existing credit card debt or build your credit score with a credit card. Secured debt may be the better option if you have a limited credit history or are making a very large purchase, but comes with risks since the debt is secured by collateral. Unsecured debt is more flexible and doesn’t risk your assets, but may have higher interest rates and stricter requirements for approval.

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After hiking rates at a rapid pace in its battle against inflation, the Federal Reserve is signaling it will walk those rates back down at a more measured pace. Following a larger-than-normal cut of 0.5 percentage points in September, the central bank’s rate-setting committee dropped its benchmark rate by another 0.25 percentage point last week.

The Fed’s benchmark federal funds rate influences the cost of borrowing for individuals and businesses. In theory, with the two cuts already in place and Wall Street assigning a 65% probability of another 0.25 percentage point cut in December, it should get cheaper for individuals and businesses to borrow money. On the flip side, banks will be less willing to pay generous interest rates on your deposits as the federal funds rate comes down.

But in most cases, it’s not a straight pass-through, and it can take a while before consumers actually feel the effects of the Fed’s rate adjustments to filter through to credit cards, savings accounts, mortgages and other products.

Here’s what borrowers and savers can expect to happen to rates over the coming months — and why the impact of Fed actions on the interest rates of everyday financial products isn’t always easy to see.

Savings accounts and certificates of deposit

People who locked in CD rates above 6% can pat themselves on the back, because the days of those kinds of returns are in the past. But the good news is it’s still possible to find banks and credit unions offering yields at or close to 5% on CDs, and rates of 4% or higher on savings accounts, even as the average savings account rate is an unimpressive 0.45%, according to the FDIC.

Still, “most of them are going to continue to pull rates down a little bit more, if they haven’t already,” says Bryan Johnson, chief financial officer at CD Valet, an online marketplace for CD accounts.

While the interest rates banks and credit unions offer on products like savings accounts and CDs are influenced by the fed funds rate, those banks’ funding needs also factor into the equation, says David Goeden, head of retail and online banking at LendingClub. How much competition there is for your cash also plays a role, since banks are more likely to sweeten their terms if they’re concerned about getting new customers and keeping existing ones from walking their dollars out the door.

Finance experts say you can still find places where you can get good returns on your money — if you’re willing to do the legwork of comparison-shopping.

“Customers need to shop around,” Goeden says. “Look at companies that consistently have higher rates,” he advises. Putting your money in a bank or credit union that consistently offers decent rates can be smarter than moving your money constantly to rate-chase the highest returns, since the highest rates tend to come with strings attached, like high minimum balances or, in the case of CDs, oddball terms that can be difficult to keep track of.

Credit cards

Virtually all credit cards today have variable interest rates, typically tied to the prime rate. (As a rule of thumb, the prime rate is calculated by adding three percentage points to the fed funds rate.) So when the Fed changes rates, that change will typically be reflected by your credit card rates within a statement cycle or two.

The Fed’s recent rate-hiking cycle has brought credit card annual percentage rates (APRs) to record highs. Fed data shows that the average APR was 21.8% at the end of August, when the effective fed funds rate was 5.3%. By comparison, in February 2022, when the effective fed funds rate was below 0.1%, the average credit card APR was 14.6%.

“Anything that’s a variable-rate product that’s tied to prime should come down first,” says Michele Raneri, vice president and head of US research and consulting at credit bureau TransUnion. “Fixed-rate loans and other products might be next,” Raneri says, but she adds that other factors besides just the fed funds rate feed into what lenders charge, with borrowers’ credit histories a key variable. While credit card APRs are generally the prime rate plus a set margin — which hit an all-time high of just over 14% last year — issuers charge higher interest rates to customers with fair or poor credit who they determine to be at a greater risk of falling behind on their payments. Credit card delinquency rates have been creeping up, albeit from a low level.

“At the intersection of rates and credit, what’s important is credit quality for individuals,” Raneri says. In other words, if you’re hoping to get a better interest rate on your next credit card, make sure your credit score is as high as you can get it.

Auto loans

Rates on car loans, along with other types of fixed-rate installment loans, remain in somewhat of a holding pattern, according to Raneri. “We’re seeing a lot of interest rates stay static,” she says. “I don’t know that we’re seeing big changes, [because] it’s not just about the fed rate, it’s also about the prime rate and Treasury bills,” she says.

As rates hold steady, lenders today want to see top-tier credit scores. “We’ve seen lenders are expecting better credit quality” when making car loans, Raneri says. “Super-prime originations grew in the double digits year over year,” while originations for other credit tiers were flat or on the decline.

If you’re waiting on the sidelines for car loans to come down before purchasing a vehicle, this waiting period can be a good opportunity to boost your credit score, so you’ll be able to get the most favorable terms when rates do tick down, Raneri says.

“You’re only going to get a better interest rate if you have a good credit score. Having a little more time to do that might not be a bad thing.”

Mortgages

The long-term nature of mortgage loans makes them less directly affected by Fed policy actions, a dynamic that can result in sometimes-confusing market signals. For a 30-year mortgage, the average fixed rate peaked at 7.78% last November, according to Fannie Mae data. Since then, it has moderated a bit, dropping to just over 6% back in September the week after the Fed lowered rates for the first time since 2020.

You would be in good company if you assumed that rates would drop further when the Fed lowered interest rates again. Instead, rates have climbed to 6.79% since that September trough. Unfortunately for frustrated buyers, investors had already priced in the Fed’s 0.5 percentage point move in September. When subsequent data showed an economy that was healthier than expected, investors tempered their expectations for more cuts, sending mortgage rates back up.

The long length of most mortgages means that mortgage rate movements are closely correlated with movements of the 10-year Treasury note than the federal funds rate. David Berson, chief U.S. economist at investment firm Cumberland Advisors, explained to Money that investors are putting more weight on expectations about future inflation and economic activity than Fed activity. Those assumptions are keeping mortgage rates elevated.

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Cash App users may be able to claim up to $2,500 in a class action settlement related to data breaches, but the Nov. 18 submission deadline is fast approaching.

The payments app and its parent company Block recently agreed to a proposed $15 million settlement to resolve a lawsuit that pertained to unauthorized individuals accessing account data.

However, the class action settlement only includes people who satisfy certain eligibility rules, and the requirements for qualifying are more cumbersome than those of some other recent class action cases like the 2023 Facebook privacy settlement.

Cash App is best-known as a platform for peer-to-peer payments. The app also offers a debit card and investing services. The company continues to deny wrongdoing in the case, but acknowledges there was a “data security event” in December 2021.

According to the lawsuit, 8.2 million customers had their information exposed including names, brokerage account numbers and investing activity — including portfolio values.

Cash App says that a former employee downloaded reports that contained customer information. “While this employee had regular access to these reports as part of their past job responsibilities, in this instance these reports were accessed without permission after their employment ended,” Cash App said in an SEC filing in 2022.

In another alleged incident that was disclosed in September 2023, an individual got unauthorized access to accounts “using recycled phone numbers that were linked to the account,” according to the settlement website. (This refers to phone numbers that have been reassigned after the previous user ended service or changed numbers.)

Who is eligible for the Cash App settlement?

Customers who were affected by the breach can qualify for compensation if they can show they suffered losses.

The first condition is that you either are or were a customer of Cash App or Cash App Investing, or an affiliated company.

The second condition is more complicated:

• You may qualify if your account or personal information was “accessed or obtained without your authorization.”
• Alternatively, you may qualify if you “had unauthorized or fraudulent withdrawals or transfers of funds to or from, or a deficiency in the resolution of an error in a Cash App account or any linked financial account” during the period from Aug. 23, 2018 to Aug. 20, 2024.

The next question is whether you can document any related losses. These could include “out-of-pocket losses” like costs for credit monitoring or identity theft insurance purchased by the Cash App user, fees for initiating a credit freeze or overdraft fees.

Cash app users could also be compensated for up to three hours of lost time and they can get compensated if their accounts were compromised and funds were stolen.

Given these rules, it’s unclear how many people will ultimately get paid out from the settlement.

The claims administration firm and attorneys representing the settlement class did not respond to Money’s requests for information about the number of claims and the expected average payout.

How to apply for the Cash App settlement

If you satisfy the eligibility requirements, you can apply for your piece of the settlement by submitting a claim online.

The website asks users to submit a notice ID and a confirmation code if they received a personalized notice about the settlement in the mail or by email.

There’s also an option for people who weren’t contacted to submit a claim and make the case that they’re eligible.

You’ll be asked if there were unauthorized withdrawals from your Cash App account or linked accounts. You should submit supporting documentation like communications with Cash App, receipts documenting losses or police reports.

The deadline to submit a claim is Nov. 18, 2024 and the final approval hearing is set for Dec. 16. However, a note on the settlement website explains that hearing date will be extended to Jan. 13 pending court approval. After a class-action settlement is approved, it can take months or even years for everyone to be paid. Appeals are common and the proceedings that follow take time to resolve.

How much is the Cash App settlement?

The settlement provides compensation of up $2,500 for out-of-pocket losses and people who are eligible can submit a claim for up to three hours of lost time at a rate of $25 per hour.

Victims of transaction losses like unauthorized withdrawals can also submit claims to seek reimbursement for the amount lost.

The settlement agreement is yet to be finalized and exact payment amounts will depend on how many people submit claims. If there isn’t enough money to pay out all the claims in full, the settlement will be proportionally distributed.

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As millions of Americans prepare to travel this holiday season, new federal rules will make it easier to get your money back for flight cancellations, delays and several other travel headaches.

The U.S. Department of Transportation first proposed the automatic refund rules in April, and they began rolling out last week. These enhanced consumer protections were largely born out of deep frustrations — heightened during the pandemic — over a lack of recourse when passengers run into issues with their airline. The rules apply to all significant flight changes, even ones caused by issues beyond the airline’s control, like weather.

“Passengers deserve to get their money back when an airline owes them — without headaches or haggling,” Transportation Secretary Pete Buttigieg recently tweeted. “Airlines are required to provide prompt cash refunds without passengers having to ask.”

Here’s when an airline owes you an automatic refund

In a recent speech at the National Consumers League, Buttigieg said that air travel represents a “civilizational achievement” but oftentimes the actual experience of flying these days is “maddening.”

He said the new rules are meant to ease the stress of taking to the skies, stating that he believes they are some of the most “significant enhancements to empower airline passengers” in the Transportation Department’s history.

The official regulations outline clear instances when passengers are owed automatic refunds for the ticket, including:

1. When an airline cancels your flight and doesn’t offer alternative transportation
2. When your flight itinerary is significantly changed and the carrier doesn’t offer alternative transportation
3. When the alternative transportation option(s) for a canceled or delayed flight significantly changes your original itinerary
4. When an airline offers travel credits or vouchers for significantly delayed or canceled flights instead of a comparable alternative itinerary
5. When your flight is significantly delayed or canceled and you do not respond to the airline’s offer for alternative transportation, travel offers or vouchers for a delayed or canceled flight; a lack of response is to be seen as a rejection of the alternatives to a refund

The DOT rules now define “significant” delays as three hours or more for domestic flights and six hours for international flights.

If, for example, your domestic flight was canceled for any reason — including strikes or bad weather — and the airline offered to rebook you on a new flight that was four hours later, you’d be entitled to an automatic refund assuming you refused the alternative flight. That part is key: The refunds are only available if you don’t accept the changed route.

Other itinerary changes such as additional layovers, different departure or arrival airports and downgrades on seat class (i.e. first class to coach) are also considered “significant changes” to your itinerary.

You shouldn’t be required to take any action to receive a cash refund if you do not accept the alternative route, voucher or credits. Even if you do not respond, the airline should assume you are declining the alternative options and provide a prompt cash refund.

Partial refunds

Automatic refunds for baggage fees are now required as well if your luggage arrives 12 hours later than your arrival time for domestic flights. For international flights, the time frame ranges from 15 to 30 hours from arrival time.

Similarly, charges for other “ancillary services” that were not provided during the flight must be automatically refunded. Such services include carry-on bags, in-flight food, snacks, beverages, Wi-Fi, seat upgrades, lounge access, blankets and pillows.

Before offering any travel vouchers or credits, airlines are required to inform you of the automatic cash refund option. And all cash refunds are supposed to be “prompt,” defined as within seven business days for purchases made with a credit card or 20 calendar days for all other purchase methods.

Beginning in 2025, additional rules will go into effect regarding “serious communicable diseases.” If a licensed medical professional advises you not to travel due to an illness, the airline must provide a travel credit or voucher valid for at least five years. In this instance, cash refunds are not required, and the airline may request a written statement or documentation to confirm.

If the airline is not complying with the new rules, or you have other issues with the airline such as discrimination, you can use this form to submit a formal complaint to the DOT.

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Gold is booming. As of November 2024, gold’s price is over $2,600 per ounce, up nearly 500% from 20 years ago. With such impressive growth, it’s no surprise that 85% of professional investors now own gold, up from just 69% in 2018, according to the World Gold Council.

But what about retail investors? Investing in gold can be appealing, but it can also be overwhelming. Many new investors make some serious — and costly — mistakes as they begin to put their money into precious metals.

To better understand how to avoid them, here are some of those most common missteps new gold investors make.

1. Not considering storage costs

When you buy gold, you have to consider how to store it. If you’re buying physical coins or bars for yourself and want to handle storage yourself, you may need to think about purchasing a secure safe or renting a safe deposit box at a local bank or credit union. Additionally, you may consider purchasing insurance coverage for your physical assets.

If you’re investing in gold through a precious metal individual retirement account (IRA), you can’t keep your gold at home per IRS regulations. Instead, for gold IRAs, you must use an approved depository, which is often recommended by the IRA provider.

How much storage costs depends on the company, the value of your holdings and whether or not you opt for segregated storage. Assuming you have less than $100,000 in gold, you can expect to pay anywhere from $4 to $50 per month.

2. Not researching gold dealers before buying

Gold providers vary significantly in terms of price, reliability and customer service. But the best gold dealers are known for their dependability and trustworthiness.

Although gold prices are consistent industry-wide, you don’t only pay the current per-troy ounce rate. You also have to pay the gold provider’s premium. Rates vary by company; depending on the gold provider, you can expect to pay anywhere from 2% to 8% over the spot price — or the current market price — of gold.

Additionally, the industry has had issues in the past with unscrupulous companies. The Federal Trade Commission and the Commodity Futures Trading Commission (CFTC) has announced lawsuits and actions against some gold companies who provided unlawful investment advice or made fraudulent misrepresentations.

You can find information about a company’s reputation by looking it up on TrustPilot, or you can contact the CFTC or the National Futures Association to check the company’s registration status, background and disciplinary history.

3. Trying to time the market

The old adage, “Time in the market beats timing the market,” isn’t just applicable to stocks. With any type of investing, the goal is to buy low and sell high. However, new investors frequently end up losing money because they try to time the market, or they put off buying gold in anticipation of price dips and sell too soon because of concerns around market changes. Those can be costly mistakes.

Gold, like other assets, experiences price fluctuations on a regular basis. Its price ebbs and flows along with economic changes and demand. However, over the long term, such as a period of 10 years or more, gold has delivered impressive returns. Plan on buying and holding your gold for several years (or decades) to maximize your chances of success.

4. Buying novelty gold coins or gold bars

As a new investor, you may be surprised by the vast number of choices for gold coins, rounds, bars and ingots are available for sale. Besides established options, you’ll see special commemorative or novelty pieces, too. For example, you can buy licensed coins, such as Snoopy coins or Marvel Iron Man coins.

These coins tend to cost significantly more per ounce, and their value can drop if demand slows down or collectors move on to another trend. Additionally, these forms of gold aren’t IRS-approved for use in a gold IRA. IRA-eligible coins must meet certain purity standards and must come from approved mints, so only select coins and bars fit that criteria. For example, some approved options include American Gold Eagle coins and Canadian Maple Leaf coins.

5. Not diversifying their portfolios

Gold investors sometimes put all of their money into one coin or investment choice. But, whether you’re investing in the stock market or precious metals, diversification is critical.

Instead of investing in one coin or bar, you can invest in different types of gold asset classes. For example:

• Physical gold: Investing in physical coins, bars or even gold beans can be a good way to invest in precious metals if you prefer to have tangible ownership.

• Gold exchange-traded funds (ETFs): For those who don’t want to worry about storing and managing their own gold holdings, an ETF can be a good alternative. Gold ETFs are tied to the per- troy ounce price of gold or hold baskets of stocks of gold mining companies. These ETFs provide exposure to the gold market without committing to owning physical coins. ETFs also tend to be more liquid, since you can buy and sell shares on the market.

• Gold mining stocks: Another way to invest in the gold industry is to invest in gold mining stocks. With these investments, you can benefit from gold’s performance without having to own the underlying physical asset.

Investing in gold

Investing in gold can be a useful way to diversify your portfolio and to protect your finances against market changes. However, it’s important to do your homework: Research gold dealers and compare pricing and storage fees before making a purchase, and choose your gold coins or bars carefully to ensure they’re appropriate for your investing goals.

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