Money Management

Stuck with a credit score you’re not happy with? Read on to see why you may not be making progress boosting it. 

You’re probably aware that the higher your credit score is, the more likely you are to get approved for a loan or credit card when you apply. And a higher score could lead to a more favorable borrowing rate.

But what if your credit score just isn’t budging, despite your best efforts to boost it? If your credit score seems stuck, these could be some of the reasons why.

1. You’re only making your minimum credit card payments

You may know that paying bills on time is important to raise your credit score. And it may be that you’re paying your credit cards on time every month by making your minimum payments.

But one thing you may not realize is that if you owe a lot of money on your credit cards relative to your total spending limit, your credit score might get stuck in less-than-favorable territory even if you’re making those payments on time.

So take a look at what you owe on your cards. If it’s more than 30% of your total spending limit, that may be the reason why your score isn’t rising. And if that’s the case, it may be time to focus your efforts on whittling your balances down.

2. There’s a mistake just sitting on your credit report waiting to be corrected

You might assume that the reporting bureaus that put together credit reports are super thorough in gathering financial information on you. And to be fair, they certainly try.

But you may be surprised to learn that a whopping 20% of credit reports are said to contain errors. And if yours contains a mistake that paints you in a less favorable light, it could be why your credit score isn’t rising.

The solution? Get a free copy of your credit report from AnnualCreditReport.com and check it carefully for errors. Pay attention to things like delinquent debts that may not actually be delinquent, or accounts that are delinquent but aren’t actually yours.

Credit bureaus are obligated to investigate once you alert them to a mistake. So definitely take that step if you want to see an increase in your credit score.

3. You have a major black mark on your credit report that will take time to disappear

In some situations, a lack of progress on the credit score front may be due to a factor beyond your control. Let’s say you fell victim to foreclosure last year when you lost your job and couldn’t pay your mortgage for an extended period.

A foreclosure will generally stay on your credit report for seven years. And while the extent to which it hurts your credit score will likely wane over time, if that foreclosure is fairly recent, you may be stuck in unfavorable credit score territory for a while.

You should do whatever you can to boost it in that situation, whether by keeping your credit card balances to a minimum or resolving to pay bills on time. But in some scenarios, it might just take time before your credit score can rise substantially.

Having a credit score that doesn’t seem to want to increase can be frustrating. So take the time to try to figure out why that is. That way, you can act accordingly.

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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.
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There’s no way to predict the future of CD rates. Keep reading to learn what we do know. 

The interest rates you can get from deposit accounts at banks have soared over the past two years. It wasn’t too long ago where a 2% APY on a “high-yield” savings account or CD was considered a great find. But as of this writing, it’s not difficult to find CDs with 5% or greater yields, thanks to the recent inflationary environment that has led to rapid increases in benchmark interest rates.

This raises the question — how high could CD rates go? Could we see 7% CD yields before the end of 2024? While nobody has a crystal ball that can predict the future direction of interest rates, here’s what we know and what you can expect going forward.

Where CD yields stand today

Before we get into a discussion of where CD interest rates could go, here’s a bit about where things stand right now. As you might expect, the best CD yields can be found at online banks (for the most part), and here’s what you can get as of Dec. 11, 2023:

Our top-ranked 1-year CDs have yields ranging from 4.25% to 5.61%, with most in the low-5% range.Our top 18-month CDs have yields as high as 5.6%.2-year CDs with yields as high as 5.5% can be found.Most of our top online banks have 5-year CDs with yields in the 4% ballpark.

Be sure to check our best CD rates page for the latest offers from our top-ranked banks.

Using the high end of the 1-year and 18-month ranges as a guideline, this means that CD yields would need to increase by about 140 basis points (1.4%) from current levels to produce 7% CD yields.

It’s worth noting that historically, the longer your CD’s maturity length, the higher the APY you could expect to get. But the opposite is generally true right now. I don’t want to turn this discussion into an economics lesson, but the general idea is that when short-term CDs pay more than longer-term ones, it indicates that interest rates are expected to decline going forward (you may have heard the term “inverted yield curve” on the financial news, and this is a form of one).

Interest rate projections for 2024

With that last point in mind, let’s take a look at what experts think interest rates are going to do in 2024.

The short version is that most experts expect rates to fall. But there is little agreement when it comes to the magnitude of a potential decline.

The latest version of the Federal Reserve’s economic projections (by the people who actually make policy decisions) calls for a single 0.25% rate cut, compared with current levels, in 2024. However, it’s worth noting that this is from the September Fed meeting, and the inflation data since then has generally been better than expected.

On the other hand, according to the CME FedWatch Tool, the futures markets are pricing in a median of five quarter-point rate cuts by the end of next year (a total of 1.25%). Some experts think even more cuts will be needed.

However, one common theme among all of the predictions I could find from notable experts is that nobody thinks the benchmark federal funds rate will be higher at the end of 2024 than it is today.

The bottom line

One important thing to know is that while CD yields tend to move in the same direction as benchmark interest rates, they aren’t usually directly tied to them. In other words, if the Federal Reserve cuts the federal funds rate by one percentage point in 2024, there’s no guarantee that CD yields will decline by the same amount — or at all.

Having said that, virtually every expert is predicting that interest rates will go down in 2024, not up. But that doesn’t mean the unexpected won’t happen. At the start of 2022, when mortgage rates were around 3%, few people would have predicted that they’d more than double over the course of the year. If inflation unexpectedly spikes, for example, it could cause policymakers to raise rates, which would likely move CD yields higher.

However, given the information we have now, it is looking more likely that CD yields could fall in 2024, so it could be a smart idea to take advantage of high-yield CDs in the near term. But again, there’s no guarantee rates won’t rise.

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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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A simple matter of throwing out the wrong piece of mail almost cost us our affordable homeowners insurance policy. Read on to learn more. 

When my husband and I signed our mortgage years ago, we knew we’d face numerous costs in the course of owning a house. And one big expense we have to budget for every year is homeowners insurance.

Some homeowners don’t pay their homeowners insurance companies directly. Instead, they send their mortgage loan servicers a sum of money each month that’s greater than their actual mortgage payment. The excess funds are put into an escrow account and are used to cover recurring expenses like property taxes and homeowners insurance, which those loan servicers take care of paying.

I, however, prefer to pay my homeowners insurance myself. I don’t like the idea of having to send my mortgage loan servicer extra money every month. I’d rather keep the extra cash in my own savings account so it can earn interest, and then move money into my checking account and pay my insurer directly when my bill comes due.

Since I pay my annual homeowners insurance premium all at once, I get a small discount compared to paying it monthly. But this year, I accidentally neglected to pay my homeowners insurance premium on time. And it almost cost us our policy.

A really big oops with my homeowners insurance

Most of the bills I have are sent to me electronically. For some reason, this isn’t the case with my homeowners insurance.

To be honest, I’m not sure if that’s because my insurer won’t do it or if it’s because I’ve yet to sign up for paperless billing. But since I only get one bill a year, it’s not a big deal to shred a single piece of paper.

This year, however, I must not have seen my homeowners insurance bill arrive in the mail. Or maybe I saw it, but it got buried under a stack of papers somewhere in my office. It’s also possible that it never actually got delivered.

Either way, the punchline is that I didn’t see the bill and I didn’t pay my premium when I was supposed to. As a result, we got a notice from our insurer threatening to cancel our policy due to a lack of payment.

Once that notice arrived, I paid the bill right away and then followed up with my insurer shortly thereafter to make sure it was received. I thought I had managed to resolve things painlessly, but nope.

See, when we got the notice threatening to cancel our homeowners policy, our mortgage loan servicer also received a copy. It then threatened to buy us insurance and pass the cost on to us if we couldn’t provide proof of having avoided that cancellation.

So even once things were squared away with my homeowners insurance company, I still had to take the extra step of providing my mortgage loan servicer with proof that my premium was paid. That was a stressful and time-consuming hassle to deal with.

And the frustrating thing is that it’s not as if we were late paying due to a lack of money. I make a point to set aside funds every month for when my annual homeowners premium comes due. Rather, I simply didn’t see a piece of paper, and that resulted in a lot of extra legwork.

Lesson learned

I certainly do not wish to have a repeat of the above fiasco. But it’s also conceivable that a future piece of mail might go missing in my home, or en route to my home. So what I’m doing to avoid a repeat is signing up for autopay.

Next year, when my insurance premium is due, I won’t have to worry about not seeing the notice in the mail. Rather, the funds will just get debited from my checking account when they’re supposed to.

If you have any major bill you only pay once a year, and you know that being late could have serious consequences, then it makes sense to see if setting it up to get paid automatically is an option. Of course, you’ll need to make sure the associated bank account you use has the funds to cover that withdrawal. But that might prevent you from almost having your homeowners insurance, or another important type of coverage, canceled due to nothing more than a bit of carelessness on your part.

You could also decide to have your mortgage loan servicer take over the process of paying your homeowners insurance. But, as mentioned, doing so will generally mean having to send it more money each month. If you don’t want to do that, then autopay is a pretty good solution.

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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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