Money Management

Do you feel good about your personal finances? If so, you’re not alone. The Axios Vibes survey shows why most Americans are optimistic about money in 2024. [[{“value”:”

After the past few years of pandemic, high inflation, high interest rates, and global economic uncertainty, there is some encouraging news: The U.S. economy could be getting better in 2024. According to the Axios Vibes survey by The Harris Poll published on Jan. 17, 2024, lots of Americans are pretty happy with their personal finances.

This is a good sign that the dreaded “vibecession” is ending. For those unfamiliar, the vibecession refers to a bad economic mood caused by high prices and high interest rates. If people are feeling secure in their jobs, happy with their personal finances, and willing to keep spending and investing, the entire U.S. economy could keep growing strong in 2024 and beyond.

Let’s look at a few key findings of the Axios Vibes survey and what it might mean for the economy and for your personal finances.

1. A big majority of Americans feel “good” about their money

The Axios Vibes survey found that 63% of all Americans say that their current financial situation is “good,” and 19% said their finances are “very good.” With low unemployment and possible interest rate cuts in 2024, this could be a sign that more Americans are feeling positive about their earning power and borrowing costs.

However, not all Americans are equally happy with their personal finances. The survey found that 37% of Americans say that their personal financial situation is “poor.” These groups of Americans were more likely than the national average to say that their finances are “poor:”

42% of Republicans43% of women46% of rural residents47% of single people57% of people who rent their homes

Only 32% of people who were in relationships, and 28% of Democrats, said that their personal financial situation was “poor.”

What could explain these differences of opinion? Women face a gender pay gap, where they get paid an average of $0.82 for every dollar earned by men. Single people have to pay for rising costs of housing and groceries all by themselves, without a partner to share the costs. Renters have seen their costs of housing go up, but don’t get to earn equity from rising home prices like homeowners do.

The Axios Vibes survey analysis also found that Republicans’ and rural residents’ higher level of financial dissatisfaction with the national economy “could reflect general mistrust of institutions or national leaders.” If your political party controls the White House, you might be more likely to feel like the U.S. economy is on the right track.

2. Most Americans are optimistic about the future in 2024

Looking ahead to the rest of the not quite “new” year of 2024, many Americans are feeling optimistic about the future of their personal finances. The survey found that 63% of Americans say that their job security is “a sure thing,” 66% of Americans think that 2024 will be better than 2023, and 85% of Americans believe that they can change their personal finances for the better in 2024.

This is a heartening sign. Many people, even if they’ve been struggling with higher prices and declining savings, have the power to take control of their finances. Here are a few possible ways to change your personal finances for the better in 2024:

Apply for a new job, try for a promotion, or ask for a pay raiseUse a credit monitoring tool to help improve your credit scoreStart a side hustle to earn extra incomeUse a budgeting app to cut back on unwanted spendingGet out of credit card debt with a debt payoff plan or 0% balance transfer credit cardGet a high-yield savings account to earn a better rate of interest on your money

Unemployment is at 3.7% as of December 2023, which is back to pre-pandemic levels and close to 20-year lows. Low unemployment means that lots of people have “pricing power” to demand better wages. The Fed might cut interest rates in 2024, which could make it easier to refinance your personal loans or pay off high-interest debt.

3. The U.S. economy still has room to improve in 2024

Not everyone feels great about their personal finances, and high inflation for food and gas is a big reason. People are still feeling pain from high grocery prices — the Axios survey found that:

60% of Americans feel “triggered” by trips to the grocery store.67% of Americans think food will continue to get more expensive.More than 50% worry that gas prices (which have been declining in recent months) will start to go up again.

As Americans have depleted their savings accounts and racked up more credit card debt, there are signs that some Americans are doing what The Harris Poll’s research describes as “consuming in denial.” This means that people are continuing to spend, even though they can’t afford it. Rising credit card delinquencies could be a sign of more pain to come for Americans who don’t have enough emergency cash savings.

Bottom line: Many Americans say that they’re happy with their personal finances, even though there are worries and frustrations about high prices and the overall economy. But almost 9 out of 10 Americans agree on one important thing: They believe in their ability to make proactive, positive changes in their financial lives. No matter what happens with the economy in 2024, you have the potential to make this a great year for your savings and investment goals.

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Interest rates could fall in 2024, hurting savers. But there’s one account that could help you lock in high rates right now. Find out what it is here. [[{“value”:”

Many people believe the Federal Reserve will begin cutting interest rates in 2024, with that trend continuing into 2025. That’s great news for those who hope to borrow money because it should make loans of all types more affordable. But it’s a tough pill for savers to swallow. When loan interest rates drop, savings account interest rates usually fall, too.

We’ve enjoyed high interest rates — over 4.5% for the best high-yield savings accounts — for many months now. But if you’re worried these rates might disappear over the next year, you may want to consider a new home for your money. We’ll look at one option below.

Lock in your rate now, and keep it for years

Certificates of deposit (CDs) are another type of savings vehicle many banks and credit unions offer their customers. Unlike savings accounts, which have fluctuating interest rates, CDs lock in your interest rate for the entire term. This could be anywhere from a couple of weeks to five years or more, depending on the CD you choose.

CDs are especially popular in falling rate environments, like the one experts are projecting to begin in 2024. Opening a CD now enables you to secure a high rate that you could hold onto for years. You could earn a lot more this way than you could by leaving your money in a high-yield savings account over the same time frame.

But CDs have their own drawbacks. The biggest is that once you put your money there, you’re generally not supposed to touch it until the CD term ends. If you withdraw your money early, you’ll likely pay a penalty equivalent to several months of lost interest. And you can’t take just a little money out either — it’s all or nothing. For this reason, a CD isn’t a good choice for your emergency fund or cash you plan to use before the CD term is up.

If you want to take advantage of higher yields without limiting your access to your cash too much, you could try a CD ladder. This is where you divide your cash between several CDs of different lengths. For example, you might put $1,000 each in a one-, two-, three-, four-, and five-year CD. When the one-year CD term is up, you could either spend the money or roll it into a new five-year CD. You do the same next year with the two-year CD, and so on.

How to find the best CD for you

Finding the best CD interest rate is many people’s primary concern for obvious reasons. Generally, long-term CDs offer better rates than short-term CDs do, but a lot depends on the institution. Some banks offer competitive rates for specific terms and poor rates for others. Think about the CD term(s) you’re interested in and look for the banks that offer the highest rate for that term.

You’ll also need to pay attention to the minimum deposit requirements. Some are fairly low — $500 or less — while others might require that you set aside $1,000 or more. If you don’t have that kind of cash, you can rule that CD out.

Finally, you’ll want to pay attention to any special rules the CD has. No-penalty CDs, for example, allow you to take your money out without a penalty at any point. However, these are rare. There are also step-up and bump-up CDs that either automatically increase your rate at specific intervals or increase them upon your request. However, rates on these CDs only increase if the bank’s current offers are higher than the rate available when you first opened the account. That may not be the case over the next few years.

Compare offers from a few banks before deciding which you’d like to work with. If you have any questions about the CDs, contact the bank for clarification. You’re locking yourself into this account, possibly for years, so you don’t want any misunderstandings.

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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 a disclosure policy.

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High-yield CDs can be excellent places to grow your savings. Here’s how to maximize one. [[{“value”:”

A CD, or certificate of deposit, is sort of like a savings account with a timed vault. You put money into it, let it mature, and when the time limit is up, you get your money back, ideally with a lot of interest on top.

When rates are high — like they are now — CDs can be an excellent way to make your money grow. Here are a few tips to help you make the most of a CD.

1. Don’t jump on the first CD you see

Lots of great banks and credit unions have raised their CD APYs (annual percentage yield) in response to national rates increasing. Many banks and credit unions…have not.

The very best CD rates are around 5% (and higher). However, the national average rate on a 6-month CD is 1.49%.

That isn’t even enough to outpace inflation, let alone make a profit. (And an “average” means many places have rates much lower.) While it may be more convenient to open a CD with your current bank, it could also cost you a lot of money if you aren’t comparing rates first.

2. Compare rates from a variety of sources

When you’re looking around for the best rate, make sure you’re considering a variety of financial institutions. Big national brick-and-mortar banks are great for lots of things, but they don’t often have the best rates.

Some of the best CD rates I’ve seen come from online-only banks with no physical branches. It’s convenient — you can open an account online — and perfectly safe as long as you choose a reputable bank.

And don’t forget your local credit union. Unlike banks, credit union profits go to members in the form of better rates and lower fees.

3. Choose the best term to maximize rates

All CDs have a maturity term that tells you how long you need to wait before you can get your money back. Since pulling out your money early comes with hefty penalty fees, make sure you choose a term you can handle.

Generally, shorter-term CDs have higher rates, while longer-term CDs have lower rates. (It’s a lower risk for everyone if they can react to changes in the market.) Most banks offer the best rates for 6-month and 12-month CDs.

But don’t just assume. Most banks offer rate charts that show the APY you can earn for each maturity term. Don’t forget to look for promotional terms, too.

4. Deposit as much as you can…

Most — though not all — high-yield CDs will have a minimum deposit requirement. On the low end, this could be $100 to $500. At the high end, you’ll need at least five figures.

Typically, the more you can deposit, the better the rate you’ll get. And, as always, the more money you deposit, the more money you can earn on interest.

5. …but not more than you can do without

One thing to watch out for is over-investing in a CD. Remember, there can be extremely steep penalties for taking money from your CD early. You could lose up to half of your interest income.

Any money you need constant access to should be kept in a high-yield savings account. You may not even lose out on much interest income. The best high-yield savings accounts offer APYs that are pretty comparable to the top CDs.

6. Roll over your earnings into a new CD

When your CD matures, it will automatically be rolled over into a new CD with the same maturity period. (If you have a 6-month CD, it’ll roll over into another 6-month CD. If it’s a 4-year CD, it’ll roll over into another 4-year CD.) This includes the interest you earned during the first CD term.

Provided you can still do without that money — and the new rate is still competitive — let it roll over. It will grow even faster since you now have a larger principal.

7. Withdraw your funds during the grace period

If you’d rather use your money elsewhere, be sure to withdraw it as soon as your CD matures. CDs have a grace period of seven to 10 days after the maturity date for you to withdraw your money with no penalties.

If you don’t withdraw those funds within the grace period, you’re locked into that new CD. At that point, you’re once again subject to the withdrawal rules — and penalties — of that CD. (To be clear, the penalty would be on interest earned during the new CD, not both CDs.)

With rates as high as they are now, it’s definitely possible to use CDs to grow your savings. Just make sure you find the best rate, plan ahead for your money needs, and keep maturity dates in mind.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

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 a disclosure policy.

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