12.29.25 Save On Ride Share Services / Up In ARMs - The Adjustable-Rate Mortgage

Two days from now will be a busy night for Uber and Lyft. Know how to find the best deal when you need a ride. Also today, risky mortgages are becoming popular again. Get Clark’s best advice for buying or refinancing a home. Save On Ride Services: Segment 1 Ask Clark: Segment 2 Risky Home Loan Resurgence: Segment 3 Ask Clark: Segment 4 Mentioned on the show: [The Washington Post] I tested 80 Uber and Lyft rides and found a powerful way to save Axios: America's big robotaxi rollout Do I Need To Unfreeze My Credit To Shop for Car Insurance? Is Now a Good Time To Refinance Your Mortgage? Do You Get Better Hotel Prices From Third-Party Sites or by Booking Directly? How To Save on Travel With Google Flights Clark Howard's Digital Wallet Strategy 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

• 0:00Speaker 00

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• 0:31Speaker 01

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• 1:04Speaker 02

  My pleasure to welcome you here to the Clark Howard Show where our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. And this holiday week, leading up to New Year's, is our last show of 2025. Today, I want to thank each of you for listening to or watching this show. I hope that over this year, I've brought you information, something that has been valuable and actionable in your life.

• 1:44Speaker 02

  And this episode, two days from now, will be the biggest night of the year for Uber and Lyft. Oh, New Year's Eve. People know now not to drink and drive, so they get an Uber or a Lyft, usually an Uber. By the way, I should mention before I forget, some communities offer free ride programs on New Year's Eve. And that's even better than what I'm about to talk about with Uber and Lyft. But I want to talk about how you get the best deal. Also, oh boy, bit of a Debbie Downer here. There's a mortgage product that's becoming really ultra-popular right now.

• 2:28Speaker 02

  Old, bad ideas can become popular again. I'm going to give you my best advice if you're going to buy a home, a refi sometime in 26. Okay, so what are the odds that if you have the apps on your phone for Uber and Lyft, that you comparison shop per ride? One study I saw found that over 85% of people only ever click on one of them. Now, there was a study done by a newspaper reporter that found huge differences in price per ride.

• 3:13Speaker 02

  And then after doing the test the reporter did, did a more formalized test with many different people, recording what the prices were each ride for Uber and Lyft. And first thing you need to know is that not one was cheaper or automatically more expensive each time. And this fits exactly with what I've discovered. Because every ride I ever take, I look at the Uber price, I look at the Lyft price, and whichever is cheaper, that's who I'm using. You're like, yeah, duh, who wouldn't do that?

• 3:54Speaker 02

  Turns out roughly 85% of people never comparison shop. You get in the habit of using Uber most often, some people Lyft. But the advantage to your wallet over the course of time is quite large if you do that comparison shopping each time. And what the reporter found has been completely true in my experience. I never know, when I look at the prices, which one is going to be cheaper. Now, I've traveled a lot by airplane. And my go-to is public transit.

• 4:38Speaker 02

  If there's convenient, reasonably operated and safe public transit in a market, that's how I get around. That saves me the most money. But then there are a lot of situations I end up in an Uber or Lyft. Recently, I was in Philadelphia and I had to go to the airport. Had a pretty tight time from when I was going to the airport till when the flight was. First, I looked at SEPTA to see if I could take Southeast Pennsylvania Transportation Authority, SEPTA, to the airport. And it was just going to take too long. So then I was stuck doing an Uber or Lyft. And I used both of them and saw what was cheaper. That's what I'd like you to do.

• 5:22Speaker 02

  And this is so much a part of what happens in life that we become creatures of habit, that we go to any website that we've shopped at in the past, buying clothes or buying stuff or whatever. And we just automatically go to it and we're not comparison shopping with others. That's not a good recipe for your wallet. The more you comparison shop, the better. And by the way, 26 is going to bring a huge increase in the number of, for lack of a better term, are called robo taxis. And the Waymos are increasing exponentially in number of cities

• 6:05Speaker 02

  and number of Waymos operating in other cities. Tesla is terrified they're going to be left behind. And so Tesla is stepping up its effort in offering robo taxis way beyond what they did initially in the Austin, Texas metro area. And so this is going to be a year that's going to become more common that in cities with the Waymo app, that you've got a third thing to compare. But the robo taxi market is going to become so common.

• 6:43Speaker 02

  And so many people who get in one, the first time they get in it, they may be really scared, or they may be really excited. And then it's by the fifth time they ride, apparently, it's totally routine.

• 6:58Speaker 03

  Did you watch the video I sent you that a Waymo went in the middle of a police standoff? You can search this online.

• 7:06Speaker 02

  No, I'm not.

• 7:06Speaker 03

  Waymo police. Yes, it is the funniest video. Literally, a guy is on the ground, alleged criminal, whatever, laying face down. And there's all these police cars, like people, you know, with guns pointed at him and stuff. And the Waymo just goes slowly and goes right past the guy, like past the police cars very slowly. And you see the guy look up like, what the heck? Like, the four people, if there are people in the Waymo, I don't know. It was, is the funniest video.

• 7:32Speaker 02

  That is funny. Right. So, opposite story.

• 7:36Speaker 03

  Yeah.

• 7:36Speaker 02

  I have a Tesla with the full self-drive. For those of you that are Tesla, it's version 14.1.2. So, an ambulance is coming the other way on a really wide thoroughfare. And the Tesla takes like a right turn to the far right lane and abruptly stops. And then, I'm looking in my rearview mirror, you know that thing, objects are closer than they appear? I see a pickup truck barreling down, about to take me apart. And so, I have to

• 8:15Speaker 03

  disengage.

• 8:15Speaker 02

  I had to disengage.

• 8:17Speaker 03

  Well, the Tesla's doing what you're supposed to do.

• 8:18Speaker 02

  The Tesla was doing what you're supposed to do, what the Waymo did not do in the video. I'm sorry that I ignored your text to me and didn't see the video.

• 8:28Speaker 03

  It's really funny.

• 8:30Speaker 02

  But the robotaxi thing is so clearly part of our future. And if you believe the futurists, and I do, Building design is going to change so much in America in the next 10 years where we're not going to need all these parking lots, parking decks, parking structures, whatever they're called, where you live, parking garages, that people will not even need to own their own vehicles because vehicles sit idle 90 some odd percent of the time and we'll be going around in robo vehicles.

• 9:05Speaker 03

  All right, we'll go to questions. This one's from Mark in Arizona. Following Clark's advice, I have frozen my credit at the three major credit bureaus. I've also heard him say that insurance companies use credit scores to approve or deny and set rates on new policies. My question is, if I'm shopping for a new car or homeowner's insurance, should I thaw my credit? For a new, sorry, new car or homeowner's, like auto or homeowner's insurance, not for a new car.

• 9:32Speaker 02

  Right. Okay. So, we've heard from the industry, do not say we monitor credit scores in the insurance industry. We monitor credit reports. I don't get the distinction because the industry has its own scoring models, but they are except in states that expressly outlaw the use of credit reports for setting insurance rates for homeowner and auto, or even selling you auto or homeowner's insurance based on your credit report, that it's become in those states, the principal price trigger for your policy. And I'm trying to remember who did the study.

• 10:14Speaker 02

  I don't remember if it was Consumer Reports or who, found that insurers may well charge more to somebody with a credit report that's not so hot than they charged somebody who's had a DUI, DWI. So now to your question. So, many states now have laws that explicitly allow insurance companies to see your credit report, even if your credit is frozen, for the purpose of establishing homeowner or auto insurance, but not everywhere. And If the insurer, let's say they deny you insurance, or they are charging you some kind of really high rate,

• 10:58Speaker 02

  they have to send you an adverse letter saying, "We relied on credit reporting information to set a rate for you, or we could not validate your credit history," or whatever it is. And that signals you that you have to thaw your credit in your state to get the best rates on auto or homeowners. Temporarily, you contact the company, say, "Your credit's now thawed. Re-run your check on me." And then your auto or homeowner's insurance rates, particularly if you've got great credit, should drop.

• 11:37Speaker 03

  Okay.

• 11:38Speaker 02

  That was a long explanation. You know, that was a bad job of me. I should have been able to say that more concisely.

• 11:44Speaker 03

  I think you are all set. All right, Fred in Wisconsin says, "My girlfriend and I are planning to get married after 10 years of dating." Congratulations to Fred. There's one issue, though. She has close to a quarter million dollars in debt, student loans and a car loan. I only have less than $300,000 in debt from my mortgage. I want to get a prenup to keep our finances completely separate in case of divorce. I think now's the best time to discuss and solidify this sticky issue while we're in love. Hopefully, we'll never need it. What's your advice on where to get a prenup? Does it hold in a state like Wisconsin? And is it worth it to hire a lawyer or use a website? Thanks, Clark, for all the advice I got from you for the last 15 years at least.

• 12:27Speaker 02

  Thank you. And Wayback Machine, I don't remember if Wisconsin's a community property state, which would come to the heart of what you're asking there in terms of the responsibility on the debt. A prenup, if it is a community property state, which Krista will let me know in a second, a prenup would not help. In regards to the student loan debt that would come into the marriage, it becomes in a community property state, the debt of one becomes the debt of both. And you're treated as if you were one person. So that's number one. Number two, if you're worried about issues like that,

• 13:11Speaker 02

  what you do is you consult a lawyer. You don't consult me. I am not a lawyer. You go to a lawyer and say, here's what I'm worried about. How do I protect myself? How do we protect each other? And everything you do about protecting is about protecting each other.

• 13:29Speaker 03

  Here's what I found. Wisconsin is a community property state, though it calls its system marital property, meaning assets and debts acquired during marriage are generally owned equally 50/50 by both spouses and divided that way in divorce, with exceptions for gifts, inheritances, and premarital property kept separate. Wisconsin adopted this system in 1986.

• 13:52Speaker 02

  So what's interesting about what you just read, it said property acquired. It didn't say debts acquired before. So absolutely, in your situation, if this is a real worry, where you got this quarter million dollars hanging out there that you fear, you do consult an attorney prior to marriage. And you got to be very careful how you navigate the conversation with your intended and going to see a lawyer. It's something that could cause real hurt not addressed properly.

• 14:28Speaker 03

  Eric in Georgia says, "Since retailers and restaurant owners are now starting to add standard percent fees to cover profits, living expenses, fair wages, et cetera, shouldn't this be treated like junk fees and get lawmakers to require this to be clearly added to the price of everything on the menu and shelf label? We already have the same issue with hotels and resorts and airlines trying to hide their costs."

• 14:50Speaker 02

  Right. The junk fee thing is just maddening, that if there's a cost to a business, make it in the price of the item. Don't add it as a surprise junk fee at the end when you're being given a bill or at a restaurant being given the check. For your meal, whatever. I believe in free market. I believe that people should be able to charge what they want. But I also believe that for free markets to work well, you have to have disclosure, clear price disclosure before somebody makes a decision. So Eric,

• 15:29Speaker 02

  I'm a big believer in full disclosure, and we should have it with airlines. We should have it most especially with medical. You know, if we want Americans that are responsible for more and more of deductibles and copays and all that, if we want Americans to be smarter consumers in buying healthcare, we have to have clear disclosure upfront of prices. And we don't have that now. And the medical industry, particularly the hospitals, fight any, any remote idea of having price disclosure as like the worst possible thing they should

• 16:14Speaker 02

  ever have to do. It's just crazy. So yeah, I'm with you. Let the free market set the price, but let the customer know ahead of time what that price is really going to be. Coming up ahead, speaking of something the free market is bringing us right now, something in the mortgage market that is being sold like snake oil salespeople. I need to warn you about what's going on, who it's appropriate for, and who it's not, if you're a homeowner or a potential home buyer.

• 16:51Speaker 00

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• 17:23Speaker 04

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• 18:23Speaker 02

  Something's roared back in the mortgage market that had gone dormant for about the last, oh, dozen or so years. And that is ARMs, adjustable rate mortgages. They're being pushed on people doing refis. They're being pushed on people buying a home. And an ARM in its most common form has a rate that's fixed for the next 60 months. You take out the refi, you take out a mortgage, buy in a place. And so for five years, you know what your rate's gonna be.

• 19:03Speaker 02

  And the rates will be lower on that ARM, that ARM, than they'll be on a traditional long-term fixed rate mortgage. So people trying to stretch or deal with the cost of living are... What a bad pun. Mortgage-ing the future by going into an ARM.

• 19:26Speaker 02

  With the hope that sometime in the next five years, rates are going to be lower enough that you can then refi into a fixed rate mortgage. Okay, so let's say you take out the arm on this refi or this buying a home. And you hit five years and the rates have not gotten better. Or you haven't been able to qualify for a refi because you don't have enough equity in the property, which is the most common problem. And then what happens at five years is it resets in most cases into a one-year adjustable rate.

• 20:07Speaker 02

  And every year, the rate could go up or down, more often up than down, depending on how the index is set for year six and forward. It's taking on a really high level of potential risk. Now, if you have substantial equity in your home and your intention, not certainty, but your intention is to stay a shorter period of time rather than a longer period of time. And you can get a meaningfully lower payment and interest rate by going from your fixed rate into an adjustable rate. That was if, if, if.

• 20:52Speaker 02

  Then doing an arm can make sense. But what's been happening and the big uptake in arms lately has been all about the stretch. People that are trying to stretch into that home. And so you're buying a home minimal down payment. You're taking out the arm and you're worrying about the details later. And the problem with that is later happens. And if you put in a low down payment, you're not going to be able to refi because when you refi, you've got to have meaningful equity. Home values are not going to go up for years to come.

• 21:36Speaker 02

  Maybe for a long, long, long time like they did for a short period of years where the values were ratcheting up year by year. The market overshot, which is why roughly half of housing market survey in the United States have declining home prices now instead of rising. The market is wheezing from the price points. And that's why you can't count on getting in having rising prices of homes covering you with more flexibility. So when should you take out an arm? If you're a new home buyer or new to you home buyer and you're doing a low down payment?

• 22:20Speaker 02

  I can't come up with a circumstance. I wouldn't do it, even if it means you have to pass for now on buying a home. Krista?

• 22:30Speaker 03

  Let's go to questions. This first one is from Sona in Colorado. I've been using Google flights to search for fares for a flight to New Zealand in March. The site sometimes has some relatively reasonable fares, but it shows booking options of random sites to book through. Are these sites legit and safe to use? Thank you for all you and your team do. And we had a question recently about

• 22:52Speaker 02

  Last week we had about hotel booking sites.

• 22:54Speaker 03

  And I have this question too, because I've been looking for something on Google flights. And these sites seem so UFO.

• 23:00Speaker 02

  And you don't use them. The stakes are even higher with your flight than with your hotel. Don't do it.

• 23:06Speaker 03

  All right.

• 23:07Speaker 02

  There's way too many problems with these UFO sites. The words you use was legit and safe to use. Even the ones that are legit are not necessarily safe to use because any problem, the airline starts the finger pointing.

• 23:25Speaker 03

  And good luck talking to someone at Google if you have an issue.

• 23:28Speaker 02

  You're right. Well, Google's not going to help you. But, but you use, even with third party sites that are well-known and recognized names. Expedia. Using them for booking a flight as has been a clear pattern for years and years and years. When there's a flight cancel, a miss connect, whatever, you know, the airline says, call Expedia, you booked with them. And Expedia is like pound sand. They don't do anything meaningful to help people. That's the problem with the third-party sites. This has also come up with something that's completely legitimate. And that's the booking engines of the big travel

• 24:09Speaker 02

  credit cards, that they push you to use them because you'll get some kind of higher reward points with the card if you go through their engine. Just know that if you do have a flight problem, and you book through one of these credit card portals, you're more on your own than you might like. And so, yeah, when I'm doing a Google flight search, and it shows the weirdo UFO sites to book with, I then eliminate those, and then I only get what I call real fares popping up.

• 24:50Speaker 02

  By the way, for anybody who really covets flying in the front of the plane, there are dozens, maybe hundreds of sites now, that say they're going to get you business class for a fraction of a business class fare. And what they're doing is they're points brokers. They are buying people's points from them, and then booking you in the seats with their points, usually having to pretend they're the individual who they bought the points from. That comes with an even higher level of risk.

• 25:25Speaker 03

  Chelsea in Minnesota says, Clark, I know in general you discourage people from buying car dealership extended warranties. I've also heard you sing praises of CarMax. How do you feel about the CarMax extended warranty? Max Care, we've been saving for a new car for a while, and typically drive our cars into the ground at 150,000 miles or more, and own them for a decade or more. Max Care covers repairs to out to 150,000 miles or for 60 months, whichever comes first. Considering we only drive 10,000 miles a year, the five years would come first unless we bought a car that already has over 100,000 miles on it. Is it worth the extra $2,000?

• 26:04Speaker 02

  So, CarMax. Sells these and you hear me talk so badly about the third-party warranties. To my knowledge, we have never heard a complaint from someone who bought the CarMax branded warranty.

• 26:19Speaker 03

  I've never seen one come through myself.

• 26:21Speaker 02

  Yeah.

• 26:21Speaker 03

  We could ask our offer our team.

• 26:23Speaker 02

  But that's never come on my radar. And it's possible, I'm not saying it is, but it's possible that the CarMax one doesn't have the problems of all these third-party warranties that we hear endless complaints about. The idea is that if CarMax is actually standing behind the warranty, like a manufacturer of a brand would, then it would make it safer than the junky ones that are sold, the independent ones that are sold at traditional car dealers.

• 27:02Speaker 03

  Greg in California says, I know Clark promotes digital wallets. When I put my credit card information into the wallet on Google Pay, the numbers pop up online with my computer when I'm about to make a purchase. Are our online numbers as safe as the ones they transmit when using our phones? Sorry if you already cover this, I enjoy the daily emails.

• 27:21Speaker 02

  Well, thank you for that. We work very hard on our emails and I'm really proud of the newsletter product we put out every day. Our newsletters are free, easy to subscribe to if you find them not useful in your life, easy to unsubscribe to as well. And to your question, you must be using the Chrome browser or a Chromebook that what you've stored in Google Pay is showing up there. The way they transmit the credit card numbers on the pop-up that you see there usually

• 27:58Speaker 02

  is going to be the same safety as I've read and understand as you have using Google Pay if you're on an Android. So it doesn't freak me out if you use that pop-up.

• 28:15Speaker 02

  To send a transmission of a payment through the Google Pay essentially application through the Chrome browser or the Chromebook. And I'm looking forward to hearing from somebody in security for technology who will tell me why it's not as secure, but as best I know, the same level of security is available that way as it is on an Android phone. And while we're on this, Google Pay and Apple Pay are such great tools for you to pay things because it is a more secure way for you to pay than handing over your physical

• 29:00Speaker 02

  card anywhere or typing in a number on a website to buy something. Using the Pay apps is a more secure way to protect yourself. And thank you so much for joining us today. And you know what this is? This is my signing off for the year. You won't hear me again or see me again for an entire year, which is only three days away. Hope the rest of your 25 is great. Your New Year's Eve is fantastic and that 2026 turns out to be the greatest year of your life. See you next year.

• 29:45Speaker 05

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