Money Management

CD rates are up right now, but they could fall in the new year. Read on to see why. 

There are benefits and drawbacks to putting money into a certificate of deposit (CD). On the plus side, you’ll often be looking at a higher interest rate on a CD than a savings account. And also, the interest rate on your savings account can change from week to week. But when you lock in a CD, you’re guaranteed to continue receiving the rate you signed up at for the length of your CD’s term.

Of course, the downside of putting money into a CD is that you’ll be penalized for withdrawing your money early. The exact penalty will depend on your bank, but three months of interest is a common penalty for cashing out a 12-month CD before it comes due. And also, when you put money into a CD, you commit to that day’s rate. But if rates rise a week or so later, you’re stuck, whereas with a savings account, your interest rate simply adjusts upward.

If you have money you don’t need for near-term goals or emergency expenses, then now’s actually a good time to start thinking about opening a long-term CD — say, one with a 48- or 60-month term. And there’s a big reason why.

Lock in that rate before interest rates fall

The main reason CDs are paying so generously right now is that the Federal Reserve has raised interest rates numerous times since early 2022 to cool inflation. Of course, an unwanted side effect of those rate hikes is higher borrowing rates for loans and credit cards. But savers at least get to benefit.

At this point, though, it looks as if the Fed is done raising interest rates. In fact, the central bank actually opted to pause its interest rate hikes at its last three meetings. And the Fed has also indicated that it may be looking at cutting rates at some point in 2024.

That would be a good thing for consumers, many of whom are buckling under the weight of expensive credit card and loan interest rates. But it could also lead to lower CD rates, as well as lower interest rates in savings accounts.

That’s why you may want to open a longer-term CD in the coming weeks. Once the Fed cuts rates, CD rates are apt to fall. If you open a long-term CD soon, you can lock in a generous rate for many years.

Remember, it’s possible that in two or three years from now, CDs will be paying 2.5% interest at best. So if you can lock in a 5-year CD at 5% now, that means that once things reach that point, you’ll continue to earn more interest on your money while savers opening new CDs will be signing up to earn much less.

Can you afford to part with the money?

It’s one thing to lock some cash away in a 1-year CD. A 5-year CD is a much bigger commitment.

Before you open one, ask yourself:

Am I happy with my emergency fund, or should I boost it?Do I have near-term goals I might need cash for?Will I have big expenses to pay for in three or four years, like college tuition or a new car?

If you’re confident you can afford to tie up your money for a lengthy period of time, then now’s a really good time to open a long-term CD. But if you’re not sure you won’t need that money, then you’re better off sticking to a shorter-term CD, or even just keeping your money in a regular savings account.

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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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Today’s mortgage rates might seem like they’re exceptionally high. Read on to see why that’s far from the truth. 

If you’re a prospective home buyer, you may be frustrated by the high cost of signing a mortgage at a time when home prices are also high. As of Dec. 14, the average 30-year mortgage rate was 6.95%, according to Freddie Mac. Given that mortgage rates were close to 8% in October, that doesn’t seem like such an unreasonable number.

Still, you may be longing for the days of the 3% mortgage, and unfortunately, those may not resurface anytime soon. On the other hand, you should know that today’s mortgage rates are by no means the highest rates have ever been.

Borrowing costs have been way higher in the past

Back in 2020 and 2021, it was possible to sign a 30-year mortgage at 3%. So signing one at around 7% might seem like a real bummer.

But here’s something that might make you feel a lot better about a 7% mortgage — back in the early 1980s, it wasn’t unusual to get stuck with an 18% rate on a mortgage. Granted, home prices were a lot cheaper back then. But still, 18% is hardly a competitive interest rate — yet plenty of people signed up at that level because that’s what was available at the time.

Now to be fair, 18% mortgage rates are sort of an extreme, even if they were reality for a period of time. But 7% isn’t such an extreme borrowing rate. In the late 1990s and early 2002, mortgages in the 7% range were quite common. Rates were similarly high in the early and mid-1990s, too.

So all told, today’s mortgage rates aren’t so unusual. Rather, it’s just that borrowers got used to seeing rates at a much lower level. Plus, home prices have jumped over the past few years, too.

How to eke out savings on a mortgage

One thing to keep in mind about today’s mortgage rates is that the rate you sign at may not be the rate you’re stuck with forever. There’s always the option to refinance a mortgage when rates fall and lock in savings.

That said, if you’re in the market for a mortgage now, one of the best things you can do to snag the most competitive rate possible is to boost your credit score. You can do so by paying all bills on time, whittling down existing credit card balances, and checking your credit report for errors (which, thankfully, you can do at no cost to you).

Another good bet is to shop around with different mortgage lenders. You never know when one might offer you a better deal than another.

You may not relish the idea of signing a 7% mortgage, especially knowing that had you done so a couple of years ago, you might’ve locked in a much lower rate. But since you can’t go back in time, you might as well accept today’s rates for what they are. If you can afford a mortgage based on today’s rates, move forward if you find a home that meets your needs and hope that soon enough, an opportunity to refinance will present itself.

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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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Millions of Americans plan to travel this winter. Here’s how you can get from point A to point B at a price you can afford. 

Roughly half of Americans are expected to travel for the holidays this year, according to a recent PwC survey. And when there’s a lot of demand for flights and hotels, costs are usually pretty high.

That can often be the case for those looking to travel far away or find a deal at the last minute. But there are strategies you can use to reach your destination as cheaply as possible. Here are five of them.

1. Be flexible

This is the cardinal rule of booking travel all year round. If you need to fly on a specific airline out of a specific airport at a certain hour of the day, you’re not going to have a lot of options and you’ll probably pay a fortune. Flexibility opens a lot of doors to cheaper alternatives.

You probably know about being flexible with the days you travel on, but that’s not the only way you can save. You should also try:

Checking other nearby airports to see what flights they haveFlying into an airport that’s located a little farther away from your destinationConsidering red-eye flights or choosing a flight with extra layoversLooking at other airlines you don’t typically fly on

If you’re willing to be flexible when you celebrate winter holidays, you could also consider traveling on the holidays themselves. These days are often more affordable than the ones right before or after them.

2. Don’t assume flying is the best way to travel far away

Flying might be the most efficient way to travel to another state or country, but it’s not always the most economical for your wallet. If cost is more important to you than speed, check into other routes that could help you reach your destination. Driving is one alternative, but there are plenty of others too.

Rome2Rio is a nifty site that outlines all the different routes to get you from where you are to anywhere in the world — yes, even on another continent. You can compare travel times and costs, and then follow the links to book arrangements right from the site.

It includes options like train or bus routes that some travelers may never have explored before. Though not always the case, it’s possible one of these options could be a better fit for you than a traditional flight.

3. Try out alternative accommodations

Hotels can also be pretty costly around this time of year, and they usually don’t provide the space or comforts of a home environment. It’s not a bad idea to look for vacation home rentals in your area if you’d prefer a little more space. Just make sure you read reviews carefully before you book, so you know what you’re getting.

Or if you’re visiting family and they have the space, you could always stay with them instead. This is the cheapest option for most people, but of course, you have to be open to a lot of family time if you’re going to do this.

4. Shop for deals

Even though travel costs can be quite high this time of year, airlines and hotels are still competing for your business. So it’s not unusual to find special winter travel deals if you search for them.

You can sign up for the email newsletters of your preferred travel partners so you don’t miss any updates. Or you can use travel booking sites to help you compare your options. Just make sure you use an incognito browser window or delete your cookies before each search, so you see the current rates.

5. Use credit card rewards

Now is the time to use up travel credit card rewards if you’ve got them. You could earn free or discounted flights, free checked bags, or free hotel stays, depending on your card. Cash these in now to reduce your winter travel costs if you’re able to.

Make sure you understand the limitations of your card’s rewards, though. Some have blackout dates, for example, that prohibit you from using your rewards on that day. If you run into this, you may have to rely on some of the other tips here to save.

If you haven’t booked your winter travel accommodations yet, don’t wait any longer. Start shopping now to give yourself the best chance of finding something that suits your schedule and budget. And if you don’t see anything you like right away, keep checking over the next few days and weeks to see if you can snag any last-minute deals.

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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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Do you wonder if working to achieve top frequent flier status with your favorite airline is worthwhile? It may be. These are the perks you can expect to get. 

For many travelers, achieving top frequent flier status can feel like an impossible dream — like winning a lottery jackpot. But it’s an achievable goal for those who fly often, and some travelers remain top tier members year after year.

You’ll score fantastic perks after reaching the highest level through your airline’s frequent flier program. Find out what benefits you can expect and discover how these top frequent flier status perks can improve your entire travel experience.

Earn bonus miles when you fly

Most airlines provide bonus miles to all elite status members when they fly with the brand or a partner airline. But if you reach premier status, you can expect to earn bonus miles. This is excellent news if you’re saving up your miles for an award flight. Earning more miles every time you fly means you’ll be much closer to your redemption goals.

The exact bonus varies by airline, but to give you an idea, we’ll compare benefits provided through the American Airlines AAdvantage program. AAdvantage Gold fliers, the lowest-tier elite status members, earn a 40% miles bonus on qualifying flights. But AAdvantage Executive Platinum® fliers earn a 120% miles bonus on qualifying flights. That’s a big difference.

Extensive checked baggage allowance

When you reach top status through your airline’s frequent flier program, you can expect to enjoy a more generous checked baggage allowance. If you find it difficult to pack light when you fly, this can be a helpful benefit because you can bring everything you need. And by not having to pay checked bag fees, you can keep more cash in your checking account.

Same-day travel change perks

There may come a day when you need to adjust your travel arrangements at the last moment. Elite status flier same-day travel perks can help. Your airline will likely extend complimentary same-day flight change benefits and complimentary same-day standby perks to you if you’re a frequent flier who has achieved the highest elite status tier. Having the ability to change your flight or fly on standby without paying additional fees is a win for your personal finances.

Complimentary seat upgrades

A seat upgrade can brighten your day — especially if it’s free. You can expect to have access to complimentary upgrades, when available. Many airlines have an upgrade list for each flight, and if premium seats remain unsold, you can expect your name to be on the list.

This benefit won’t be available if there are no empty premium seats. While other elite status tier members may also be on the upgrade list, top frequent fliers get priority. That means you’ll have greater odds of getting a free upgrade. You may also qualify for a complimentary upgrade for a companion if they’re flying on the same reservation. So this perk is a win for your best pal, too.

More extensive award flight availability

Many people who travel redeem their airline miles for award flights. Doing this can provide significant savings on travel expenses. However, award flight availability can be limited, meaning you may be unable to redeem your miles for a preferred flight if no award flight seats are left. But, once you achieve top frequent flier status, you can expect more award flight options, giving you more opportunities to redeem your miles for flights.

Exact perks vary by airline

This is not an exhaustive overview of the benefits you can expect as a top status flier. Frequent flier perks vary by airline — so review your go-to airline’s offerings. If you’re loyal to one airline and fly frequently, check to see if earning top elite status may be worthwhile. For some fliers, it’s doable, and these benefits can significantly improve their travel experience.

Earn rewards when you swipe your credit card

When you book upcoming travel, don’t forget to consider which credit card to use at checkout. Using a travel rewards card or an airline credit card can be advantageous. You could earn rewards on your spending and unlock valuable travel benefits. If you want to add a new credit card to your wallet, check out our list of the best airline credit cards to explore your options.

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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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Airlines offer lots of extra perks for their most frequent flyers. Explore the best ways to move up your favorite airline’s frequent flyer program. 

As you move up in an airline’s frequent flyer program, you get more and more benefits. Some of the typical offerings include complimentary upgrades, waived fees, and bonus miles every time you fly. These can raise your travel experience and, by saving you money, also improve your personal finances.

The traditional way to move up is to fly often with the same airline. This works, but only if you fly a lot. Most airlines require you to either rack up a ton of miles flown or dollars spent with them to reach their highest status tiers.

But there are ways to speed up the process, without needing to fly every week. Here’s how you can elevate your frequent flyer status.

1. Get an airline credit card and use it for all your everyday spending

Most major airlines have their own airline credit cards. One benefit that many of these cards offer is the option to earn status points in the airline’s frequent flyer program. These points can help you meet the requirements of a higher frequent flyer status.

This makes it much easier to get to a higher status. Instead of only earning points when you fly, you can earn them on all your credit card spending. With some programs, status points are all that matter, so you could conceivably reach elite status through spending alone.

If you’re interested in getting a credit card with your favorite airline, here are the best options with the major U.S. carriers:

American Airlines credit cardsDelta Air Lines credit cardsSouthwest credit cardsUnited Airlines credit cards

2. Know the rules of the airline’s frequent flyer program

Every frequent flyer program is different. Each has its own requirements for its elite status tiers. Some use point systems that are based on your spending with the airline. Some use miles systems based on the number of miles you’ve flown. And some use a combination of the two.

The ways you can earn status points also vary from program to program. You may be able to earn points through seat upgrades, flying with partner airlines, and even shopping with the airline’s partners.

Go to the website for your preferred airline’s frequent flyer program to learn all the details. Check the requirements to move up, and see what all the options are to earn status points. Airlines also occasionally make updates to their programs, so if you get any emails about that, review them carefully so you know what’s changing.

3. See if an airline offers status matching

Airlines love frequent flyers, and they also love stealing their competitors’ frequent flyers. That’s why many airlines will offer you a status match.

Here’s how it works: If you have status with one airline, another airline will offer you the equivalent in its own program. It lasts for a limited period, often three or four months.

While a status match is temporary, some airlines also offer a status challenge. If you meet certain requirements during the status match period, then you get to extend that status for the rest of the year, and possibly also the next year.

4. Take advantage of shopping and dining programs to earn more status points

Many airlines have retail and restaurant partners. If you spend money with these partners, you can earn miles. In some cases, you can also earn status points. Not all airlines let you earn status points this way, but some do, with American Airlines being one example.

To earn points on shopping, you need to go through the airline’s online shopping portal to choose a retailer and make your purchase. For dining, you set up an account and link a credit or debit card. You then earn points when you use that card at participating restaurants.

By knowing the tips and tricks to frequent flyer programs, you can reach a higher status than you would from flying alone. If you’re loyal to one airline, then working your way up its program can be well worth it for all the extra benefits you’ll receive.

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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.Lyle Daly has positions in Delta Air Lines. The Motley Fool recommends Delta Air Lines and Flow. The Motley Fool has a disclosure policy.

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