What the experts say

Sneaky credit card fees; Better odds for early retirement; Dealing with gift taxes

Sneaky credit card fees

Beware of hidden credit and debit card charges, said Blake Ellis in CNN.com. A recent study found that so-called “gray charges” can add up to hundreds of dollars a year. The most common of these arise when cardholders sign up for free product trials, but forget to cancel the service and end up getting charged the full price or an ongoing subscription fee. “While they may be aggravating and expensive, these fees aren’t necessarily fraudulent or illegal.” But to avoid incurring such gray charges, “be sure to read agreements and terms and conditions carefully” before making any purchases. And if you still find unexplained sums on your statement, “contact the merchant or credit card issuer to challenge the charge.”

Better odds for early retirement

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Early retirement is “achievable if you save diligently,” said Joe Udo in USNews.com. Start by backing off on small, daily buys. The average American spends $1,000 each year on coffee, for instance—just “a few bucks each time, but those little purchases add up.” And think about whether you really need that “ridiculously expensive” cable TV. Getting DVDs through the library, or signing up for Netflix, can save you hundreds of dollars per year. With those savings, make some prudent investments. Purchasing Series I savings bonds is “one of the safest ways to invest your money,” and while the stock market “might be intimidating to new investors,” investing in stocks and index funds will help you build a strong nest egg over the years.

Dealing with gift taxes

If you’re in a giving mood, learn the basics of gift taxes, said Farnoosh Torabi in Yahoo.com. The IRS caps how much someone can give before incurring a tax. In 2013, that amount is $14,000 per donor per recipient. “As long as your gift is at or below that threshold, you don’t have to worry about filing a gift tax return.” And contrary to popular belief, “recipients never need to pay income tax on the gifts.” If you give more than $14,000, prepare to fill out some paperwork, describing how much you gave away beyond the exemption. The good news is “this doesn’t mean you’ll owe any money”—at least not right away. The federal gift tax, currently 40 percent, doesn’t kick in unless you give away more than $5.25 million in your lifetime.

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