Pod Insights The Clark Howard Podcast 08.04.25 Subscriptions: A Clark Smart Assignment / Tax Update for freelancers & Payment Apps About this episode In an ongoing breach of ethics to the lasting detriment of consumers, many subscription services make it virtually impossible to cancel. So there’s something you need to do before signing up for anything. Also - Clark breaks down IRS reporting requirements on payment apps -which aren’t becoming more stringent after all. If you’re a vendor, small contractor or do business via payment app, know what will trigger a 1099. Click To Cancel? We Wish: Segment 1 Ask Clark: Segment 2 Payment Apps & 1099s: Segment 3 Ask Clark: Segment 4 Mentioned on the show: One Tech Tip: 'Click-to-cancel' is over, but there are other ways to unsubscribe Cash Envelope System: How It Works Budgeting & Saving Archives - Clark Howard How To Take Your Score from ‘Good’ To ‘Exceptional’ Credit Karma Review: Free Credit Score and More at Your Fingertips Two tax reporting changes on tap for businesses, freelancers and payment apps like Venmo How to Start Investing: 10 Steps for Beginners Clark.com resources Episode transcripts Community. Clark.com / Ask Clark Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript 0:00 Speaker 00 They're running a cover two defense. But you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go to restaurants. Or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats. Order now. Terms apply. Product availability varies by region. See app for details.
0:30 Speaker 01 This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.
1:05 Speaker 02 It's great to have you here on the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you so you can make better financial decisions in your life. I hope you started out this week by reading our daily newsletter from the team at Clark.com. We've recently made additions to it like daily stats that I really enjoy seeing in my inbox. To subscribe so easy, just go to Clark.com/newsletter. And you know what? This is important about what I'm going to talk about straight ahead. We make it really easy to sign up.
1:47 Speaker 02 Do you know we make it as equally easy if you say, I don't like this thing, to unsubscribe? As simple to cancel as it is to sign up. Because I'm going to talk about that straight ahead. And later. I've got a homework assignment for you. Some good news for you on tax reporting changes. Good stuff. Okay. So I was all excited last, I think it's last year, when it was initially announced, we were going to have a new rule going into effect this summer that would require that companies could no longer play you like a fiddle
2:31 Speaker 02 when they'd have a trial period, or you sign up for something, and then you want to quit later, whatever it is, a gym membership, or a video streaming service, whatever it is, that however you were able to sign up, you would also be able to quit the same way. Well, let me tell you. Companies, large and small, went berserk, lawyered up, and just before the new rules on canceling were going into effect, a three judge panel at an appellate court said, nope, nope, this interferes too much with business.
3:16 Speaker 02 So businesses are still going to be able to lure you in with an easy sign up for something, and make it as difficult for you to cancel it as possible. Let me tell you some of the industries that are the worst offenders of this. For years and years and years and years, it's been the home security industry. Makes it really easy for you to sign up, makes it nearly impossible for you to quit. They will have rules in those long-term home security contracts that require on a set day... After so many years in a contract, you must send them a letter by registered mail.
4:01 Speaker 02 Nobody even knows what registered mail is. But you have to send a registered letter saying you want to cancel, or else it does what's known as an automatic rollover for another three, four, or five years. Gym memberships do all kinds of funky stuff like that. And don't get me started with the streaming services. They make it so easy for you to sign up for a six-month thing at so many cents a month, or just a few dollars a month. And then at that six months, bam! Suddenly, you're paying a huge amount of money, and you can't even figure out how to cancel the stupid thing.
4:41 Speaker 02 You know, this is a true lack of business ethics. It is people afraid that the product or service they're offering, "Well, I wouldn't in my right mind keep doing it, so why would they?" So you put up roadblocks to make it as difficult as possible. So anytime you sign up for any subscription of any kind, I want you, before you click, to sign up for it. I want you to know, how do you get out of it first? When you don't want to be in it anymore, how do you do it? Because it's a lot easier for you to get into it
5:25 Speaker 02 than it is to get out of it. And I'm sure the judges, in their infinite wisdom, thought they were doing the right thing, but it sure is a terrible thing for the American people.
5:38 Speaker 03 Whenever I sign up for a subscription, I'll put it on my calendar. Like, a week before it's going to renew, I put that on my calendar, so I know to cancel, if I want to cancel it.
5:47 Speaker 02 Have you ever had one that was just like crazy hard to get out of?
5:51 Speaker 03 Oh, yeah. I mean, just to find it. I mean, I just had that recently and I was looking through the website. It's always so hard. Half the time I end up just searching, you know, or it'll be at the bottom of the FAQs. How do I cancel? It's just, it's annoying. Okay. Here we go with some questions. This one came in from Kathy in Georgia. My salary is variable and this year it's significantly down.
6:12 Speaker 02 I'm sorry about that.
6:13 Speaker 03 My spouse and I are spending more money than we earn. Every month I'm transferring savings into our checking to cover the overage. Because using cash is troublesome, what is the best way to get prepaid debit cards and load them up to use? I don't want to use our bank debit card because we both might not be aware of what the other is spending and we risk fees for overdrawing our account. Are there any pitfalls to consider before going this route? I'm at my wits end because just saying we need to spend less is not working. I already use a budgeting app, but I'm not crazy about it. Help.
6:44 Speaker 02 So Kathy, I'm really sorry. I'm sorry about the decline in income. I'm sorry that things feel out of control right now. So you said using cash is troublesome? I will tell you, historically, I've found that when couples face the situation you're in, that actually cash has historically been the best way to get spending under control. Because what you do is you allocate to each of you an amount of cash every week or every pay period or once a month or whatever. And you each individually and collectively, you have to live within that cash you've taken out.
7:28 Speaker 02 I've seen it work miraculously. There's something about pulling out plastic that doesn't feel the same with spending. And it, and it feels psychologically almost like a bottomless pit of money, where obviously there's not a bottomless pit of money. So that's why I would ask you, Kathy, to rethink this thing of not wanting to do cash. I'd much rather you and your spouse sit down, you agree that this is how much money you're going to pull out and that you You'll probably see, like so many people do, that as the amount of cash dwindles,
8:11 Speaker 02 you think, "Do I really need this? Do I really need that?" And stick to the needs more than the wants. Please try it. If that's falling on deaf ears, and you need to do it the way you talked about with some form of card, what I would recommend is you set up a separate account with an online bank. You transfer money to it. Each period that you're going to transfer money, do not set up overdraft like you talked about with the fees with that. When that card no longer will tap because you're out of money, then you know you're out of money to spend in that time period till you replenish it with additional
8:56 Speaker 02 money on whatever schedule the two of you agree upon.
9:00 Speaker 03 You can also set daily limits. And I don't know if you can set weekly limits on debit cards, but I know daily limits of how much you can spend for each debit card.
9:07 Speaker 02 I know it sounds like I'm as analog as could be, because I don't actually use cash regularly. But I've found that for people who were trying to get control of spending, that going back to the analog era, the cash era, does make a huge difference.
9:27 Speaker 03 Some places won't take cash now, though.
9:29 Speaker 02 That is true.
9:30 Speaker 03 Julian Rhode Island says, "I just started listening to your podcast, and I appreciate all your tips. My credit score is currently 730, but I'm wondering how I can raise my score. I have two major credit cards and two store cards that are active but with no balance. As much as I want to close them, I took your advice and kept them open so it doesn't adversely affect my score. I did take out a bank loan for $12,000 for three years to consolidate the high interest debt from my credit cards, and I paid bi-weekly on that. My car is paid off, and besides normal bills and rent, I have no other debt. Thank you for any advice you can give me."
10:03 Speaker 02 So first of all, Great. I'm happy with everything you said. And you want to get that score up, Julie. So you're not alone. We have a briefing at Clark.com. How to take your score from good, which yours is, to exceptional. And I think it would be good for you to go read that briefing to try to figure that out. But I also love for you to sign up for a Credit Karma account. If you sign up for Credit Karma, it has a number of tools that will walk you through. What are the things you can do in your exact situation? Where your score is now?
10:47 Speaker 02 To raise it up to where you want it to be? Which is, you go from where you've got a really good score now at 730. Outstanding, depending on the lender, would be considered to be golden. Is 760 or 780, depending on their underwriting standards. And by the way, credit scores move around more than you might imagine, even in the same week. But it's the trend that you want to make your friend going up. So I'd say you read, to get the waterfront view. Read my briefing that we've got at Clark.com. But also set up that Credit Karma. If you have your credit frozen, you'll have to temporarily thaw it to set up the Credit Karma dashboard.
11:32 Speaker 02 Then let it go back to frozen. And you'll be able to see what you need to do, step by step, to get that score where you want it.
11:42 Speaker 03 This is from Janet in Illinois. I bought a mini fridge on Amazon. I recently received a notice that it was on recall for causing fires. The notice said to send a picture of the fridge with recalled written on it. And I would get a new refrigerator. I did so. I was then notified it would take a minimum of five weeks to get a new one. And it would be a random color. When I told the company this was unacceptable, I was told it was the only option.
12:06 Speaker 02 Oh, come on.
12:06 Speaker 03 I asked for my money back and was refused. Do I have any recourse at all? I use this product on my job where I keep cold sodas for people with autism as a reward for having a good day. They find this more than a little inconvenient. And I am disgusted that their poor workmanship is now my problem. I love the show and thanks for all you do.
12:27 Speaker 02 First of all, I love how you're using this Janet. This is really awesome. It's absolutely terrible that you're being treated this way on this recall. And you said you bought it on Amazon, but obviously it was a third-party seller. I want you to work hard with Amazon Customer No Service. Well, they, I mean, they are Customer No Service now. Amazon used to be-
12:54 Speaker 03 It just doesn't sound very encouraging. Like, I want you to work with Customer No Service.
12:58 Speaker 02 Well, you gotta push them. You gotta push them. Because this is not acceptable. This is a fire risk. So you're left with the choice, do you have a refrigerator for these kids, or you don't? And getting a refund on it is what Amazon should be doing. Amazon loves to play this game. Sorry I pick on Amazon so much, but they're not who they used to be.
13:21 Speaker 03 It's fine.
13:21 Speaker 02 So, Amazon likes to be, "We're Amazon. We're here for you. We do this for you." And then you have a problem and they say, "Oh, no, that's a third-party seller. Oh, no, that's not us. Come on. Come on. Step up to the plate. Take care of these autistic children right now, Amazon. I want you to do the right thing." What do you think? Think we'll hear from somebody from Amazon wants to get a refrigerator to these kids?
13:48 Speaker 03 Fingers crossed, for sure.
13:50 Speaker 02 All right, I'll tell you what. Janet, I love what you're doing here. If Amazon Customer No Service doesn't take care of those kids, I will get a new refrigerator for these kids.
14:03 Speaker 03 Oh, I love it.
14:04 Speaker 02 I will, because this kind of thing just annoys me no end. You got a fire risk there. You have such a key reason you're using this refrigerator, and they're telling you, "Take it or leave it. This is how it's gonna work." I don't like that. So, let us know.
14:22 Speaker 03 We'll see. It's for the kids.
14:24 Speaker 02 Yeah, it's for the kids. We'll see whether I am buying a new refrigerator or not. So you get to work with the Amazon Customer No Service. Coming up ahead, we had a flurry of activity early this year and late last year from people who were just so upset about new IRS reporting requirements when you use payment apps. I want to talk to you about how that's going to work from here forward.
14:56 Speaker 00 They're running a cover two defense, but you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go-to restaurants or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats. Order now. Terms apply. Product availability varies by region. See app for details.
15:26 Speaker 01 This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.
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16:26 Speaker 05 Your sausage McMuffin with egg didn't change. Your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just $5. Only at McDonald's for a limited time.
16:38 Speaker 06 Price and participation may vary. Promotion pricing may be lower than meal pricing.
16:41 Speaker 02 I want to give you an update on what's going on with all those crazy tax forms that people were freaking out about, that people were going to receive a form of a 1099, who received money from others in excess of $600 over the course of a year from Venmo, PayPal, Cash App, Big Bad Zelle, any of those, that this was an accounting nightmare. And at the last minute, the last couple of tax years, the IRS delayed, suspended the
17:20 Speaker 02 new requirements. And this was a requirement that Congress had passed a few years ago. And then this year, they were like, oops, and a new provision was passed that all it did was roll back things to the way they used to be, which is you will receive a version of a 1099 if you on the payment platforms receive more than 20 grand in a year. You're just automatically assumed at that point to be engaged in some kind of business activity. There's also another threshold you could hit even at a lower amount than 20,000, and
18:02 Speaker 02 that's if you have 200 or more transactions a year. A lot of us who are landlords, I'm a landlord, receive rent now from our tenants through one of the payment apps. So depending on how much the rent is, odds are very likely, what rents are in most of the country, you're going to blow past that $20,000 limit. That is not a problem for you as a landlord when you'll get that 1099, because all you're going to do, you're already required to report
18:42 Speaker 02 that income on your rents, royalties, whatever part of your tax return, and you'll reflect that 1099 there, and then you'll back it out versus your expenses and all the other stuff. It will be no significant, meaningful change for you. The whole purpose of this...
19:02 Speaker 02 That Congress has been fumbling over for years is there are a lot of people running a side business that maybe they used to do in cash, but because so few people carry cash anymore, à la conversation we just had earlier, that people are now with the apps paying for stuff. And so you, running a little side thing, you know, may have been just pocketing that money and not reporting the income from your little side gig. That's why Congress put these requirements in place to be able to capture more tax revenue. Well, it turned out it was very intrusive.
19:46 Speaker 02 People obviously hated it. I can tell you from the responses we got the last couple of years, people really did hate this, do hate this. And so that's why Congress said, we give up and went back to the old system. So again, 200 transactions with one of the payment apps, more than $20,000 in a year. Either of those triggers the 1099. Now, the other thing is that if you're doing work for a company, the requirement that they issue you a 1099
20:26 Speaker 02 has been $600 in earnings in a year for as long as I can remember. That's now $2,000. So a lot of people do just a little bit of work somewhere will no longer receive a 1099. The 2,000 is base. As inflation happens over the years, that will automatically reset each year. So there'll be less of a blizzard of paperwork for a lot of us.
20:57 Speaker 03 All right, we'll go to questions. Tyler in New Jersey wrote this one. I am a college student who has used your advice to finally start saving for my future. Finally, that's what he was in college.
21:07 Speaker 02 College student.
21:08 Speaker 03 My question is, what are your thoughts on Charles Schwab's futures trading accounts and their Thinkorswim AI? Is it the next big thing or a waste of money? P.S. My accounting professor is in love with your podcast. It will mean a lot if you could shout out Mr. Ledgerwood from Embry-Riddle.
21:25 Speaker 02 Embry-Riddle. We went to look at Embry-Riddle for my son when he was trying to decide what flight school he was going to go to. It's a cool campus.
21:38 Speaker 03 Well, Mr. Ledgerwood is a cool professor. So, thank you for listening.
21:42 Speaker 02 Cool professor, Mr. Ledgerwood. This is for your student Tyler. Tyler is from the tri-state area, just like you in New Jersey. So, all right, what Schwab doing here? They're trying to be cool and hip towards younger investors like you have with Robinhood and Fidelity's been really into this as well. So, futures trading is something that I don't recommend for a mainstream investor. It's, futures trading is a very, very high-risk, potential-high-reward thing that most of what we've heard from listeners and viewers
22:27 Speaker 02 is when they got burned in it and using AI for investing. So, this is, I am as opposite this kind of thing going on at Robinhood and Fidelity and now at Schwab because I believe, Tyler, first of all, you said you're finally taking advice? Let me tell you something. If you're in college and you're already thinking of how to invest, that's the biggest part of the game. So, my deal is something that Chuck Schwab himself talked about, gosh, decades ago. You always start with the core.
23:07 Speaker 02 The core is that your initial investing and what you should be doing is plain vanilla Dullesville. That you want to set up, soon as you're working, your own Roth IRA. You want to do the money in that as dull as you can, likely just doing a target retirement fund, your twenties, if you're in college, 2070, 2075, something like that. I know that's a ways away. And building that money for the long term. And just, that's where you start. And then if you want, on the side, to do some pretty active kind of trading, fine.
23:51 Speaker 02 Know that if you do it in a traditional investment account, and you're doing holdings of less than a year, the tax treatment on that is extremely mean spirited and unfavorable.
24:04 Speaker 03 George in Arizona says, "Today I logged into my Chase account with a new computer. After the usual username, password, and text code, I was forced to call an automated line. On the call, I had to enter my full credit card number, enter my full social security number, and speak my full name and address into the phone. This felt excessive and invasive, almost like a scam. Is this becoming standard practice among banks?"
24:27 Speaker 02 George, my experience from, my own experience with Chase, and what I'm hearing from others, they are more aggressive about security than is typical in the banking industry. They're by far the largest bank. They truly don't know their customers. And so they are putting so many roadblocks in. The second you, let's say you get a new cellphone, and you used to sign in from the old cellphone. Or you get a new computer, and it's different than the one you were signing in before. They put you through so much verification, often you'll have to not even go through automation, you'll have to talk to a human.
25:10 Speaker 02 And one thing I do recommend, if you trip the security tripwires at Chase, that you don't enter all that information in automated system, wait to talk to a representative. They may be able to verify you without as much specific and invasive information as you were asked for by the automated system at Chase.
25:35 Speaker 03 Caution to people, though, you got to double check that you've gone to the right website.
25:40 Speaker 02 Right.
25:40 Speaker 03 Because people will absolutely spoof this. It sounds like George got a, he said the text. So I assume someone sent, so Chase must have sent a text to his phone number, which, you know, the crook, if it was a crook, they wouldn't have his phone number.
25:53 Speaker 02 Right.
25:53 Speaker 03 So that probably triggered the fact that this was a legitimate call that George had to make. I don't know, just scary for sure to think of giving that information on a phone line.
26:04 Speaker 02 But you know, on your Chase statement, if you have paper statements on an online statement, on the back of a Chase credit card, it will have the number you call for customer no service. And by the way, every company today baseline is customer no service. You got to work up from there. But the Chase, you just talked about us not trusting who you're reaching and they're not trusting you. This goes back to a core principle of the financial services industry that was longstanding. And that is it was the know thy customer rule. Well, today, we don't deal with local people at a local bank that they know you, they know your kids, you know them.
26:49 Speaker 02 It's so impersonal now. And that's why these verifications are so important to make sure that you are who you say you are. But as Krista points out, so important, what you said, that you're not being spoofed. And scam by crooks.
27:07 Speaker 03 Right, because it sounds like Chase sent a specific number of verification line like, and so it might not have been, I'm sure it wasn't the traditional number that you could find online or on your card.
27:18 Speaker 02 But if you called your card.
27:20 Speaker 03 Right, just to ask, do you do this process? Is this what's happening to me?
27:23 Speaker 02 I guess. They would, they would transfer you to that department.
27:26 Speaker 03 I don't know, maybe. Well, I'm paranoid because of my job.
27:29 Speaker 02 Because of everything we hear, we hear, all right, we are basically the most paranoid people ever when it comes to the financial services industry, because we have heard every scam there is out there, and we see over and over again where the banks and the brokerages, they just wash their hands of it, say, yeah, yeah, yeah, that's your problem, not ours.
27:54 Speaker 03 Okay, T. in the District of Columbia says, I'm a 57-year-old, single woman and a newly-retired federal employee. I have a decent annuity and a modest nest egg, but I am by no means rich. I have no debt, but I'm living in DC. I also have no car or house. I'm considering purchasing a room on a cruise ship, which would effectively be a 15-year lease. I realize this company is a startup and could be a bit of a gamble. As someone who has worked very hard, but not indulged in much international travel, I would love to take this chance to see the world, around the world, to big ports and small ports in three and a half years. I have done quite a bit of research, but I'm
28:36 Speaker 03 interested in hearing your thoughts. I don't have unlimited funds, and this purchase would take about half of my retirement savings.
28:42 Speaker 02 Oh, my goodness.
28:43 Speaker 03 To purchase the package, which is all-inclusive, and would allow me to save or reinvest part of my monthly annuity payment for the 15 years aboard the ship. Thank you for your show. I've discovered you on YouTube in the last six months, as I have studied retiring.
28:57 Speaker 02 Well, T., congratulations on being retired at such a wonderful young age, 57. I mean, a lot of people don't even know when they're ever going to be able to retire. So I don't want you to end up saying, oh, man, I'm having to go back to work because. I want to tell you that this has been a trouble prone area where people buy, or in your case, lease a multi-year cabin on a ship. That a lot of these have had a lot of trouble launching, staying underway, keeping it going. The economics have been very challenging for them.
29:39 Speaker 02 And then brutal for people who pay a lot of money upfront. And then the thing goes, uh, it doesn't happen. I'm not comfortable with you taking so much of your money. And as you put it, you called it a bit of a gamble. I'd say it's a bigger than bit of a gamble. Besides, if you book cruise cabins and you book them when they're on sale, like at Cruise Compete or at various websites where you can find really affordable cabins, you can effectively, as many other Americans are doing,
30:19 Speaker 02 live on ships or even one particular ship for an extended period of time. You'll be able to see, is this a life that works for you? You'll be amazed how affordable it will be, especially if you're willing to live in an inside cabin. It is crazy cheap for you to live week after week, month after month on a ship where you get your housing, you get your meals, you get to see so many things. I don't like the idea of you effectively entering this 15-year lease because there's just too many potential risks involved with it for you.
31:03 Speaker 02 I, I don't want you to have worked so hard for so long to put what you've worked so hard to save for your future at risk like this. So I'm sorry.
31:16 Speaker 02 I hope you have an absolutely great, great day. I want to thank you for joining us and know all week long, we have one-on-one free advice for you available from our Team Clark Consumer Action Center. If you go to Clark.com/CAC, you'll see how to get that. And I want to tell you, our goal is to provide you knowledge, information, empowerment, every way we can think of, everywhere you want to be reached, whether it's social media, our websites, the markets that I'm on TV and radio, wherever it is that we can serve you
31:59 Speaker 02 to give you the knowledge, the confidence, so you can make good decisions with your wallet, so you can save more, spend less, and avoid getting ripped off. And we'll be at your service on Wednesday.
32:19 Speaker 00 They're running a Cover 2 defense. But you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go-to restaurants. Or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats. Order now. Terms apply. Product availability varies by region. See app for details.
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