Money Management

CDs rates are likely going to drop in 2024. If that concerns you, here are three reasons you shouldn’t hesitate to lock into today’s great rates. 

Well, folks, this might be the end of high interest rates.

At its last meeting of 2023, the Federal Reserve seemed confident it would cut rates in the coming year. In fact, 17 of 19 policymakers predicted it would cut rates at least once in 2024, with most forecasting a cut of 75 basis points. As incredulous as it seemed last year, it appears the central bank might be orchestrating a soft landing after all.

Unfortunately, for those who have stashed savings in high yielding accounts, rate cuts will eventually be reflected in our APYs. If the Fed continues this optimism, banks, credit unions, and other financial institutions will likely start cutting today’s high savings rates, perhaps even in advance of those implemented by the central bank.

What that means for you is simply this: If you’re a saver, now might be the best time to lock into today’s rates with a certificate of deposit (CD) before the coming year. Here’s why.

1. Rates are still high

While APYs on many short-term CDs have creeped back since September, they’re still higher than they’ve been in over a generation.

It’s still pretty common to see banks and credit unions offering 5% or higher on CDs with terms 18 months or less. In fact, there are currently dozens of CDs on the financial platform Raisin that are paying above 5%, with some even paying as high as 5.50%. You might even be able to find APYs above 5.50%, although, again, these promotions are becoming fewer.

As we enter 2024, we’ll likely start to notice high APYs on shorter and shorter terms — like three to six months — while longer terms start to scale back. This would reflect the expectation that the Federal Reserve will slowly cut rates over the next year. That doesn’t mean you won’t see great APYs on long-term CDs. What it does mean, however, is that if you do see a great APY in the long term, don’t hesitate to lock some money into it. These will become rare, so it might be worthwhile to snag a CD with 18 months or more of high interest before they’re gone. Long terms you should monitor include:

18-month CDs2-year CDs3-year CDs4-year CDs5-year CDs

2. No-penalty CD rates are also high

For many people, the problem with CDs is that you can’t withdraw money before maturity without paying a penalty. That makes CDs risky for people with smaller savings who might opt for something with more flexibility, like a money market account.

No-penalty CDs, however, offer a middle road between no-penalty withdrawals and high interest on your savings. Their APYs are typically smaller than regular CDs. But in our current high interest rate environment, it’s not uncommon to find no-penalty CDs on par with those that impose a penalty.

If you have savings that you might use in the near term, a no-penalty could help you lock into a great savings rate without risking a penalty. For instance, many of Raisin’s no-penalty CD offerings have terms ranging from three to 12 months and APYs above 5%. In fact, some of these CDs have higher APYs than comparable penalty-imposing CDs, a rarity you likely won’t find when interest rates drop.

3. Others savings products won’t freeze interest rates

The benefit of a CD is that you can lock today’s high rates for the length of your term. If your term is 12 months, your APY would last that long, no matter how many cuts the Federal Reserve implemented next year.

Other savings products, like high-yield savings accounts and money markets, don’t freeze rates. Instead, you’ll have a variable rate that will fluctuate depending on the Fed’s policy. Many of these accounts currently have rates on par with CDs, but they can’t offer you guaranteed returns on your savings. Moving money from these savings accounts into CDs would help you earn high interest for a longer period, so long as you don’t need that money in the near term.

Put some cash in a top-paying CD

The fact is, high CD rates might not be here much longer. If you have savings, now might be the best time to lock into these high rates before they’re gone. Check out some top-paying CD providers and don’t hesitate to freeze a great rate before it’s too late.

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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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For people with higher incomes and assets, charitable giving can be a smart tax planning strategy. See how to support charity and reduce your tax bill. 

Making donations to charities is a generous thing to do, and it can also help reduce your tax bill. But if you want to make the most of your charitable giving, smart tax planning should also be part of your agenda.

As tax season approaches, many Americans are thinking about how to maximize their charitable giving, in hopes of getting a tax break. Keep in mind that you can only claim tax deductions for charitable contributions if you itemize your deductions. People who take the standard deduction (which is most people — about 90% of tax returns use it, according to the IRS) are not allowed a tax break for their charitable giving.

If you can itemize deductions and you’re able to donate a significant amount to charity, there are several ways that charitable giving can enhance your tax planning. Let’s look at a few positive results that can happen from tax deductible charitable giving.

1. Save money on this year’s taxes

One simple benefit of tax deductible charitable giving is that it can reduce your tax bill for the current tax year. For example, a married couple filing jointly with a taxable income of $150,000 in 2023 is in the 22% marginal tax bracket. For every $100 that this couple gives to charity, they lower their taxes by $22.

If you have some extra cash sitting in a low-yield bank account at the end of the year, you should consider making additional donations to charity. That extra tax refund could be worth more than the APY on even the best high-yield savings accounts.

If you want to qualify for a tax deduction in the current tax year, you must make your charitable contributions before the close of the tax year. Unlike IRAs or health savings accounts (HSAs), you are not allowed to make charitable contributions that count toward the prior tax year. So be sure to plan ahead and think about how much money you want to give before the year is done.

2. Use charitable donation “bunching” to reduce your tax bill two years in a row

If you have some extra cash to give to charity, and you are pretty close to being able to itemize deductions, you might want to consider a tax planning strategy called “bunching” charitable donations. With this strategy, you give extra money to charity in the current tax year, with the goal of itemizing deductions this year, and taking the standard deduction next year.

“Accelerating your charitable contribution tax deduction could help lessen the burden for those facing significant taxes as 2023 ends,” said Richard Lavina, co-founder and CEO of Taxfyle. “If you plan to donate to charity, consider accelerating multiple years’ worth of donations into 2023. This could push you over the standard deduction limit and allow you to itemize deductions.”

If you are close to having more itemizable deductions, giving a little extra to charity during the current tax year might help you get over the top — and reduce your tax bill two years in a row.

Here’s how it might look. Let’s say that there’s a married couple (filing jointly) who has given $6,000 to charity in 2023 and plans to do the same in 2024. Here’s what their itemizable deductions would look like:

In this case, they should take the standard deduction in 2023 ($27,500) and 2024 ($29,200), for a total of $56,700 of deductions in two years. But what if they could give just a little bit more money in 2023? Instead of waiting for 2024 to donate that extra $6,000, they can accelerate those donations into 2023. Now, they will have $32,000 of deductions in 2023, and they can itemize in 2023.

Even if they still end up taking the standard deduction in 2024, their combined deductions for two years will be $61,200. With this tax planning strategy, the couple can deduct an extra $4,500 from their taxable income across both tax years, compared to just taking the standard deduction both years.

3. Get a double tax break by donating certain stocks or other assets

Another easy tax planning strategy for charitable giving is to donate stocks or other financial assets that have appreciated in value. If you own stocks, bonds, or mutual funds that have gone up in value, you can donate those assets to charity to get a double tax break. Not only can you claim a tax deduction for the fair market value of the assets at the time of your donation, but you also avoid paying capital gains tax — by giving away the assets, you do not have to realize a gain by selling them. And the charity can then sell the assets tax free. This tax planning maneuver can help you reduce your income tax and capital gains tax bill, while supporting your favorite charities.

Bottom line: For people who have higher incomes, who can itemize deductions, and who have significant assets that they want to give to charity, charitable giving should be part of the mix for your tax planning. Be sure to talk with a professional tax advisor to get ideas for your specific tax situation and financial goals.

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Year-end financial planning is a time to make smart money moves. Learn powerful ways to boost your savings, pay off debt, and invest for retirement. 

It’s never too late to improve your personal finances, and sometimes the best time to start is the end of the year. There are lots of smart year-end money moves you can make to reduce your taxes, pay off debt, save more for retirement or other financial goals, and strengthen your financial foundation for the future.

Here are a few must-have elements in your year-end financial planning checklist.

1. Check on your emergency savings

During recent high inflation and post-pandemic “revenge spending,” many Americans are discovering that they have depleted their savings. The end of the year is a great opportunity to take stock of your emergency savings fund; you should ideally have at least three to six months’ worth of essential expenses. Use our emergency savings fund calculator to see how this looks for your monthly spending.

Keep your emergency savings in cash — not in stocks or other investments that could lose value in the short term. And if your savings are sitting in a bank account that pays near-zero interest, it’s time to shift your emergency fund to a high-yield savings account to earn 5% APY (or higher).

If you don’t have an emergency savings fund, you’re not alone. Many Americans — even high earners — are living paycheck to paycheck, and don’t have $500 for an emergency. But now is a great time to start saving. Find room in your monthly budget to automatically transfer $50 per month into an emergency savings account. At the end of next year, you’ll have $600 saved! And ideally your savings momentum will grow from there.

If you struggle to save money, try an automated savings app Oportun (formerly Digit). This app (with your permission) will automatically move small amounts of money into your savings account, based on your everyday spending patterns. You can boost your savings without even noticing!

2. Pay off high-interest debt

If you have credit card debt, or other high-interest, non-mortgage debt, now is the time to make a plan to pay it off. The best debt payoff apps can help you choose a payback strategy, see how long it will take to become debt-free, and even automatically send your money to savings or debt balances each month, so you don’t have to think about it.

Want a quick way to save money on credit card interest? Consider a balance transfer credit card to help get out of debt. If your credit score is good enough to qualify, these cards can give you 0% APR for 12 months (or more), which reduces your interest charges and gives you some breathing space to pay off debt faster.

3. Save more money for retirement

The end of the year is a perfect time to think about how much you’re saving for retirement, and boost your retirement savings contributions. Here are four quick moves you can make at year-end to save more for retirement.

Boost your 401(k) contributions

If you have a 401(k) or other employer-sponsored retirement account at work, you should probably be putting money into it. If your employer offers a 401(k) match, be sure to contribute at least enough to get that full matching amount. For example, your employer might offer to match 50% of the first 6% of your salary that you put into your 401(k). If your salary is $60,000, getting that full match gives you an extra $1,800 of “free money” for retirement. Your 401(k) match is part of your compensation, and you deserve to get the full amount, just like you deserve to take all your vacation days. Don’t throw it away.

Use a traditional IRA for extra retirement savings

Your company’s 401(k) isn’t the only way to save for retirement. Even if you’re maxing out your 401(k) at work, you can put up to an extra $6,500 for 2023 ($7,500 for people age 50 and up) into an individual retirement account (IRA). Depending on your income and filing status, your traditional IRA contribution can be tax deductible.

Consider opening a Roth IRA

Depending on your income and life stage, even if you’re already maxing out your 401(k) at work, you might want to consider opening a Roth IRA. The Roth IRA (unlike a traditional IRA) lets you save money for retirement with after-tax dollars. You don’t get a tax deduction for your Roth IRA contributions like you do for a typical 401(k) or traditional IRA. Instead, your Roth IRA money grows tax-free — and gives you tax-free income in retirement.

Age 50 or over? Make catch-up contributions

If you’re in the 50-and-over age group, the IRS wants you to save more money for retirement. You can save an extra $7,500 per year in your 401(k) or an extra $1,000 in an IRA. These are called catch-up contributions and they can help you boost your retirement savings while reducing your taxable income.

Bottom line: Putting more money into savings, getting rid of credit card debt, and boosting your retirement accounts can help strengthen your financial security. Doing some year-end financial planning can help you clarify your financial goals, prioritize how you want to spend (and save) your money, and look forward to the future with confidence.

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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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Affordable winter trips don’t have to be complicated. Here are two top picks for surprising places to go for fun, family-friendly, lower-cost winter vacations. 

They say that writers should write what they know. So in this article, I am only writing about affordable winter trips to places that I have personally visited! You will only get the best, from-the-heart travel advice from The Ascent! We would never lead you astray.

Let’s look at a few real-life examples of affordable winter trips, and how to book cheap flights and lodging.

Affordable winter beach vacation: Galveston, Texas

Many people love to go to the beach in the winter. But if you’re trying to save money, you should steer clear of the most popular high-season beach destinations.

Instead, book an affordable winter trip to a place that’s near and dear to my heart: Galveston, Texas. Galveston is a popular spring break destination on the Gulf of Mexico, and it’s the closest beach town to Houston. In winter, Galveston is less crowded and life is more laid-back — but it offers mild weather (temperatures from upper 40s to 60 degrees Fahrenheit) and fun stuff to do.

A few years ago when my children were small, ages 6 and 4, our family booked an oceanfront Airbnb condo for a few nights in Galveston. It was a great place to give my children their first visit to the beach. We rented a four-seater bike and pedaled along the Galveston Seawall while we watched cargo ships and oil tankers and shrimping boats out on the water. The kids played in the sand while the waves lapped up against the shore. We ate delicious crab cakes and Tex-Mex food, and had breakfast at the iconic and rightly beloved Waffle House.

In case the winter weather is not good for sunbathing, you can still enjoy fun indoor activities like local museums, great Gulf seafood restaurants, coffee shops, the Moody Gardens events center (featuring an aquarium, indoor rainforest, and IMAX theater), and spooky local history like Haunted Mayfield Manor. Galveston also offers fun antique shopping and gorgeous Victorian architecture that’s reminiscent of New Orleans.

If you want pristine white-sand beaches and turquoise ocean water, that’s not quite what Galveston offers; the beaches are grittier, the water is muddier. But Galveston is the first place I ever saw the ocean, and it has a special place in my heart. If you live in a colder climate and you’re longing to get away to somewhere warmer, even if it’s not absolutely perfect “beach weather,” Galveston, Texas, can be an easy, affordable winter trip.

How much it costs: Galveston lodging is cheaper in the winter. I used Google to find 4-star (and above) hotels and vacation rentals for $80 to $100 per night in mid-January. Get close to the Gulf and fall asleep to the sound of the sea.

How to get there: Fly into Houston Hobby Airport (HOU) because it’s closer to Galveston than Houston’s “big” airport (George Bush International), which is on the north side of the metroplex. I found mid-January flights from my home city of Des Moines to Houston Hobby for as little as $147 (which includes a checked bag).

Affordable winter mountain vacation: Albuquerque, New Mexico

Want to take an outdoorsy winter vacation in the mountains? The big-name ski destinations are expensive and get booked fast. What if you could zig where others zag, and be far from the madding crowds? Take a winter vacation in Albuquerque, New Mexico (elevation: 5,312 feet — higher than Denver).

Albuquerque (“ABQ”) is beloved by fans of the TV shows Breaking Bad and Better Call Saul. The enchanting blue skies and unique local culture made this city into a supporting character in these acclaimed series. But Albuquerque is not just a filming location for Hollywood shows about morally flawed lawyers; it’s an underrated destination for affordable winter trips.

Albuquerque is close enough for day trips to some of New Mexico’s best ski resorts. But you can likely find much more affordable lodging, food, and attractions in ABQ than you’d get in higher-priced places like Taos and Santa Fe. Winter weather is mild in ABQ, with temperatures ranging from 26 to 54 degrees Fahrenheit December through February.

If you’re not a skier or snowboarder, Albuquerque offers mountain activities like hiking and biking in the Sandia Mountains. It’s also close enough for day trips to White Sands National Park and indigenous heritage sites like the Chaco Culture National Historical Park in the scenic four corners region, where you can see archaeological artifacts from the Ancestral Puebloan native people.

ABQ also has great museums, art galleries, indigenous culture, and lots of places to buy artisanal crafts like New Mexico’s famous turquoise jewelry. Albuquerque’s restaurant scene features excellent brewpubs, breakfast spots like the Range Café (where I had some of the best coconut cream pie ever), and the distinctive New Mexican cuisine with lots of green chile.

New Mexico is truly the Land of Enchantment. It’s one of the most mystical, memorable places I’ve ever visited. Go there!

How much it costs: A quick Google search revealed ABQ hotels and vacation rentals with 4 star or better ratings available in mid-January for $100 to $125 per night.

How to get there: Fly into Albuquerque International Sunport. I used Google Flights to find cheap airfares from my home city (Des Moines) to ABQ in mid-January for as little as $327.

Bottom line

Affordable winter trips are within your reach, especially if you have a travel rewards credit card or airline frequent flyer miles. But before you reach for your credit card, think about what must-have experiences you want from your winter vacation, and where you can compromise. Vacations at the most in-demand beach or ski resorts might cost a lot. But you can have happy winter vacations in less-traveled beach towns like Galveston, and smaller cities like Albuquerque — at prices that fit your budget.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

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Auto insurance is often expensive for drivers with accident histories. But these nine insurers offer pretty reasonable rates. 

The average American driver with a single accident on their record paid $3,370 for auto insurance in 2023. That’s $981 more than drivers with clean records. And in some states, that figure is a lot higher.

But a lot also depends on which insurance provider a driver works with. We dug into our data and found the nine companies that offered the lowest rates to drivers with accident histories in 2023.

Nine companies with the best rates for drivers with accident histories in 2023

The following nine car insurance companies had the most affordable rates for drivers with one accident on their records in 2023. This isn’t a guarantee that they’ll be the cheapest in 2024 or for any particular driver. But they’re worth investigating for drivers with accident histories who want to keep their premiums manageable next year.

COUNTRY Financial ($2,183)USAA ($2,329)*GEICO ($2,378)Travelers ($2,450)Erie Insurance ($2,647)State Farm ($2,874)Nationwide ($3,122)Progressive ($3,140)Farmers ($3,145)

* USAA insurance is only available to active-duty military members, veterans, and their family members.

It’s important to recognize that the above figures are averages for the entire country. Factors like where a driver lives and the type of vehicle they own will also have a huge effect on premium rates.

How drivers with accident histories can keep costs down in 2024

Affordable rates aren’t always easy to find for drivers with accident histories, but shopping around can help them score the lowest possible prices. Every insurer weighs the aspects of a driver’s application a little differently, and some penalize drivers for accidents more than others. The only way to know which will offer a particular person the best rate is to compare quotes from a handful of providers.

Drivers with special considerations, like those who have served in the military and those who own electric vehicles, may want to seek out companies that offer discounts for these factors. However, it’s important to recognize that more discounts don’t always translate to a lower rate.

A surer way to reduce monthly premiums is to aim for a higher deductible. This will increase out-of-pocket costs in the event of another accident, but this might not be a concern for those who can save for their deductible in an emergency fund.

Another option is to reduce coverage, but be careful with this. It could leave drivers without enough insurance in severe accidents, and this could lead to even larger out-of-pocket costs than an insurance premium or deductible.

Even the lowest auto insurance premium a driver with an accident history finds might not be very affordable. But try not to get too discouraged. Accidents don’t stay on a driving record forever. Most fall off within three to five years. When they do, these drivers will be able to find cheaper insurance again.

Our best car insurance companies for 2022

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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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