Money Management

Costco’s membership ranks have grown. Should you join as well? Read on to find out. [[{“value”:”

In the grand scheme of the personal finance decisions you’ll have to make in your lifetime, joining Costco will probably end up being a pretty low stakes bet. Right now, the cost of a basic membership at Costco is just $60 a year. For an Executive membership that gives you 2% cash back on your purchases, you’re looking at $120 a year. Compare that to, say, a home or car purchase, and it’s peanuts.

Now, you may be interested to know Costco ended its last fiscal quarter with 73.4 million paid household members, up 7.8% from last year. So clearly, consumers are increasingly starting to see the value of a Costco membership.

But is joining Costco the right move for you? It depends on your situation, so ask yourself these questions to figure it out.

1. How close do I live to a Costco?

Shopping at Costco is something everyone should get to experience at least once. Not only might you be amazed by the store’s size and inventory, but going there is just plain fun. You get to sample free food, explore new products, and marvel at cheesecakes that are large enough to feed you and your 27 closest friends.

But if you don’t happen to live anywhere near a Costco warehouse club store, then you may end up throwing your money away on a membership. Sure, you could tell yourself you’ll go on occasion to stock up on household essentials and non-perishables. But if you don’t think it’s feasible to get to Costco on at least a monthly basis, then it’s probably not worth getting a membership.

2. Do I prefer to do most of my grocery shopping online?

As a Costco member, you can order your groceries — both shelf-stable and perishable — online if you’re someone who doesn’t like to do their food shopping in person. But a lot of the savings you’ll reap as a Costco member will come in the form of buying bulk groceries in person.

Costco’s online prices for non-perishables tend to be higher than the prices you’ll pay at the store. And ordering same-day fresh grocery delivery will also cost you extra. These habits will erode the savings a membership offers, so if you don’t really plan to hit the store ever, it may not be worth it to join.

3. Will I be able to use the peripheral benefits a membership offers?

When you join Costco, you don’t just get access to bulk discounts on food and toilet paper. You can also benefit from the many other services Costco offers, from unique travel packages to optical services to tires for your car.

Before you join Costco, see what additional benefits you’ll get with a membership and determine whether you’re likely to use them. If you don’t see yourself partaking, then there may not be a sense in signing up.

If you’re not sure about getting a Costco membership, remember this. If you end up dissatisfied with yours, you can cancel and get a refund at any time. So this really is a low-risk proposition. As such, you may want to join Costco, give it a month or two, and see how things go. You can always cancel and get your credit card refunded if your membership doesn’t work out.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Most Americans overpay Uncle Sam and receive a tax refund as a result. Keep reading for a few wise moves to make with yours. [[{“value”:”

According to the IRS, as of Feb. 16, the average tax refund so far is $3,207. This is a bit higher than it was at this point last year, and that amount of money could do some serious good for your finances.

RELATED: Best Tax Software

Here are a few ideas for what to do with your tax refund this year.

1. Earn interest on it

There’s never been a better time to earn a general and risk-free return on your tax refund, especially if you intend to use it for an emergency fund (more on that below). So why not use it to open a brand-new high-yield savings account?

You can find annual percentage yields (APYs) topping 5% right now, thanks to a persistently high federal funds rate. When the Federal Reserve hikes rates for banks to borrow money from each other, consumers are impacted with higher interest rates on loans and credit cards (bad), but also higher rates on deposit accounts (good).

Want to lock your money up for a while — and pause that APY in the process? Consider a certificate of deposit (CD). The 5% APY on your savings account is subject to change anytime, but if you open a 1-year CD at 5%, you’ll earn that 5% for a year. A 5% APY on the average refund of $3,207 comes to about $160 in a year, which isn’t bad.

2. Pay down debt

If you’ve got some stubborn high-interest debt, like that on a credit card, consider using your tax refund to chip away at it. I’d recommend this move over putting the money in the bank, if you have this kind of debt, because the return on investment is stellar. Think about it — if you pay off debt that’s charging interest at a rate of 20% or higher, you’re money ahead of putting it into a savings account paying 5%.

You’ll save more money on interest costs if you apply your tax refund to your highest-interest debt, but it might feel really great to knock out a few smaller balances in their entirety. So consider which move is right for you.

3. Start investing

Want to grow your tax refund even more than you can with a savings account or CD? Consider investing it in a brokerage account, be it taxable or retirement (like an IRA). Just note that investing is best done for the long term — think five years or longer.

The S&P 500 has generated an average 10% annual return over the last 50 years, but in individual years, the market’s value swings wildly. So if you’re comfortable buying stocks (or perhaps ETFs — that way, you can invest in the market overall) and riding out the small and large swings for years, investing can be a wise move.

If you received the current average refund of $3,207 and managed to earn a more conservative 8% return, your tax refund could turn into more than $6,900 over the course of 10 years. Leave it alone for 20 years, and you could be sitting on almost $15,000.

4. Pad your emergency fund

This is another smart and safe move for your tax refund. You could add that money to your emergency fund — or even start an emergency fund for the first time. Having cash at the ready for a surprise bill or unplanned expense is a wonderful thing, especially if you’ve had to resort to putting those extra costs on a credit card in the past.

Keep your emergency fund in a high-yield savings account to keep things simple. Over time, aim to build your savings to a level where you can cover three to six months’ worth of bills.

5. Splurge a little

I’m not made of stone, and I won’t insist that you do something financially responsible with every dollar of tax refund you receive. So take a portion of it (maybe 10%?) and have some fun. Depending on how much you’re getting back, that 10% could represent a nice meal, a night in a hotel, or even a sweet new piece of personal tech.

Remember, it’s not “free money” — so plan accordingly

Getting a big tax refund doesn’t mean you’re getting “free money.” Instead, it represents repayment of an interest-free loan you gave Uncle Sam. As such, it’s a wise idea to use at least some of it to improve your personal finances. After all, that cash might have saved you from debt or other hardship had you received it as part of your paychecks throughout 2023.

In fact, it’s worth working with your employer’s human resources department to change your withholding and receive more of your money during the year. You’ll just need to update your W-4 form. Think about how much good a bit of extra money in your paychecks could do, and make the income tax move that’s right for you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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CDs and savings accounts both have great APYs right now. But one may be more lucrative than the other. Read on to learn which is right for your money. [[{“value”:”

It’s an age-old debate, and one that has gotten more interesting with the rise of interest rates on all savings products: Which is better, a high-yield savings account or a certificate of deposit (CD)?

To be sure, many savings accounts and CDs both have very, very competitive rates (currently higher than 5% APY). No matter which one you choose, you’re going to be earning a good amount of interest. But for most people, one or the other will better serve their financial goals. With that in mind, let’s take a look at when you should open a CD and when you should stash your cash in a savings account.

CDs: Better for your long-term savings

If you have savings you’re not going to use in the near term, a CD might be the better choice for you.

Of course, this hinges on what we mean by “near term.” I’d say, if you’re saving for a date that’s at least three to six months away, you’re probably better served by a CD. This is especially true if you’re saving for a goal that’s one year or longer away, as rates on savings accounts will likely be lower by that point.

Keep in mind that CDs have the ability to lock in an annual percentage yield (APY) for the length of your term. This guarantees that you’ll earn a specific amount of interest, no matter how rates swing in the overall market. Savings accounts, on the other hand, can’t lock in rates for any amount of time. So, while savings accounts may have comparable APYs to CDs, your bank has the right to drop your rate at any time.

Of course, to freeze these CD rates, you have to agree to lock your money up for the length of your term. This could come back to haunt you. For example, if you need your savings sooner than you expected, you’d have to swallow an early withdrawal penalty to access it. For this reason, it’s wise to leave some money in a savings account, just in case you need it fast.

Savings account: Better for short-term savings

Unlike CDs, savings accounts don’t have early withdrawal penalties. This gives you greater access and more flexibility with your funds. Some high-yield savings accounts have limits on how much you can withdraw per month (per old Regulation D rules). But the penalty for exceeding these limits is usually far less than the withdrawal penalties on CDs. All in all, this makes them a better place to store money you plan on using in the near term, as well as your emergency fund.

The downside of easier withdrawals is that you may be more tempted to spend your savings. While a CD discourages you with its penalties, a savings account may not discourage you enough. As long as you’re disciplined with your money, this shouldn’t pose a problem. Otherwise, you might want to check out some short-term or no-penalty CDs, to keep your hands off your own cash.

All in all, both CDs and savings accounts are both great opportunities right now. That said, CDs have a slight advantage in that they can freeze your rate for the length of your term, while even the best savings accounts may not earn high interest for much longer. Decide which is better for your savings, then take a look at our list of bank reviews to discover the best offers for both.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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Some of Costco’s prices could soon get cheaper. Read on to learn more. [[{“value”:”

One of things that makes Costco unique is its commitment to great value and low prices. Costco’s revenue is heavily dependent on membership club fees. And the reason is so that Costco can use those fees to offer its customers the lowest prices in town.

Costco has maintained the position in the past that if it can’t offer a competitive price on a given item, it just won’t carry that item at all. It’s that simple.

Meanwhile, on a recent earnings call, Costco CFO Richard Galanti was quick to point out that the company is looking to reduce prices for members where it can. And some of those reductions might benefit your personal finances.

There could be additional savings coming your way

Costco is clearly committed to offering low prices on everyday products. But Galanti recently called out the following items whose prices may have recently gone down or will be going down in the near future:

Reading glasses will go from $18.99 to $16.99Kirkland batteries (a 48-count) will go from $17.99 to $15.99Pellegrino (a 24-count) will go from $16.99 to $14.99

Galanti also said that members can expect savings on:

Frozen fruit Lawn and gardening productsSporting goods

The latter might serve as a lifeline for parents who are buckling under the weight of expensive youth sports. And since many consumers will no doubt be gearing up to tackle their landscaping projects for spring, it’s good to see that there may be discounts on gardening tools and products.

It always pays to compare prices

If Costco continues to do well and inflation continues to moderate, members could see additional price breaks in the coming months. But even if Costco doesn’t broadly lower its prices, in many cases, you’re likely to find that it still has the most competitive price compared to your other retail options.

However, that’s not an assumption you should run with. One of the biggest mistakes Costco members make is figuring that Costco’s price on a given item is the cheapest from the start.

If you’re buying something like milk, which isn’t a huge financial outlay, then in that case, yes, it is OK to just accept Costco’s price and run with it. What’s the most you might possibly save elsewhere? $1? $0.80?

But for bigger-ticket purchases, always compare prices across different retailers to see whose price is the lowest. Also, make sure to track prices at Costco even after you’ve brought your purchases home.

Costco rotates its sale items every few weeks. But it also offers price adjustment for up to 30 days after you buy something.

So let’s say you purchase cereal in bulk for $14.99, and two weeks later, that same item is available for $12.99. All you have to do is go to customer service and request a price adjustment. You don’t even need to have the item with you, as your purchase can be verified using your membership number.

All told, it’s encouraging to see Costco cutting prices. But always pay attention to what you’re paying — at Costco and in general.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Gala. The Motley Fool has a disclosure policy.

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