Money Management

What’s in store for savers in 2024? Read on to find out. 

Since March 2022, the Federal Reserve has been raising interest rates to slow inflation. That’s caused a world of upheaval for borrowers who are now facing higher interest rates on everything from credit card balances to personal and auto loans.

The one silver lining, though, is that higher interest rates are benefitting people with money in savings accounts and CDs. But will that continue into 2024?

Without a crystal ball, we can’t predict what’s in store for banking with certainty. But here are a few probable scenarios.

1. Savings account rates will remain competitive but fall as the year goes on

Right now, it’s possible to score well above a 4% APY on a high-yield savings account. But will that be possible throughout 2024? Maybe, but it’s not certain.

The Fed is expected to cut rates in 2024 if inflation continues to cool. That could result in lower interest rates for savers with money in the bank.

That said, savings account rates will likely remain competitive next year. So if you need a good place for your emergency fund, a high-yield savings account will still be a wise choice, as you can earn interest while keeping your money safe. But don’t be surprised if you don’t earn quite as much interest on your savings in the new year as in 2023.

2. Short-term CDs will be attractive

Like savings account rates, CD rates are competitive right now following the Fed’s actions. And chances are, that will still hold true in 2024.

But banks may be more willing to offer higher rates for short-term CDs than longer-term CDs in 2024 in anticipation of broad rate cuts. So you may find that you’re able to earn more on a one-year CD than on a five-year CD.

3. Long-term CD rates could drop more substantially

Banks commonly reward savers who open long-term CDs with higher interest rates than shorter-term CDs. But we may see the opposite in 2024 due to projected rate hikes from the Fed.

This isn’t to say that opening a longer-term CD won’t make sense in 2024. But we could end up seeing lower rates next year than the rates that are available for five-year CDs today. So if you’re interested in opening a five-year CD, you may not want to wait until the new year, but rather, take action in the coming weeks.

All told, there’s a good chance that banks will be able to continue to offer attractive interest rates on savings accounts and CDs in 2024. But it’s good to have a sense of changes that might arrive as inflation continues to moderate.

Of course, that’s not guaranteed to happen, either. And if inflation picks up and the Fed is forced to raise rates in the new year, all of the above predictions could be a bust. But since that’s not expected to happen, you may want to assume the projections above are reasonably spot-on — and sock your money away 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.
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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Fewer reporting requirements, more deductions and tax breaks are included in the bill. Read on for more information about it. 

Between pandemic lockdowns, high inflation, and rising interest rates, small businesses have faced a variety of obstacles over the past few years. A new bill by House Republicans, the so-called Small Business Jobs Act, seeks to offer relief to American businesses by taking aim at some hot-button issues.

Read on to learn what small business owners need to know about the proposed legislation.

Rethinking taxes in the gig economy

In 2021, Congress passed a law that included stricter regulation on payments received through apps and e-commerce websites. Under the new legislation, those using PayPal, CashApp, Venmo, eBay, Etsy, and other services may have more paperwork to file come tax time. The Small Business Jobs Act would make some key changes to this rule and could save contractors a headache in future tax years.

Online transactions have been a thorn in the side of the IRS for years, which has resulted in various reporting rules over the years. In 2021, the old rule of reporting aggregate transactions of over $20,000 in a given year was replaced by a stricter rule, which reduced that reporting threshold to just $600. Since then, the new rule has caused widespread taxpayer confusion, leading to the IRS suspending the rule for the 2023 tax year and delaying implementation until 2026.

The Small Business Jobs Act would increase that reporting threshold to $5,000, and include an inflation adjustment in future years. If it passes, the bill would reduce reporting paperwork for payment processors and recipients alike.

It should be noted, however, that business income is always subject to tax, regardless of whether a payment processor reports it. Always consult with a tax expert for the best advice on your tax situation.

Increased immediate expensing

One way that small businesses save on taxes is by claiming deductions on business-critical expenses. In years past, buying a $20,000 photocopier meant that over the following years, your business could reduce its taxable income by some percentage of that cost for a few years down the road. In 2017, business owners were given more flexibility to claim deductions on equipment, which the Small Business Jobs Act seeks to expand on.

Prior to 2017, businesses were allowed to gradually recapture the cost of buildings, vehicles, machinery and more through a complex depreciation calculation known as MACRS. The Tax Cuts and Jobs Act introduced a provision allowing business owners to deduct 100% of certain business expenses through a Section 179 deduction. Allowing an immediate deduction on over $1 million of business purchases in a given year, business owners could greatly reduce or outright eliminate their taxable income in high expense years.

The proposed legislation would further increase the amount of business property expenses that can be deducted in a given year. The Small Business Jobs Act would more than double the current Section 179 limit to $2.5 million starting in 2024.

Business owners should be aware that deduction-claiming strategies can be complicated, and that maximizing your business’ deductions should be left to the pros.

Introduction of Rural Opportunity Zones

Another provision of the 2017 Tax Cuts and Jobs Act introduced so-called Opportunity Zones, which encourage investment in low-income communities. With the goal of fostering job creation and economic prosperity in distressed communities, tax benefits are offered to taxpayers who invest in Qualified Opportunity Funds. In recent years, opportunity zone investments have amounted to nearly $50 billion.

The Small Business Jobs Act would expand the program, which often benefits urban areas, to rural communities throughout the country. These Rural Opportunity Zones would be limited to areas of persistent poverty in rural counties. Business owners in those communities may reap tax benefits should the bill pass, but should discuss the qualification requirements with a tax professional.

At its core, the Small Business Jobs Act looks to offer less restrictive tax-reporting requirements, more opportunities to claim business deductions, and a boost to economic development in rural communities. Whether the bill will pass is yet to be seen, but in a closely divided Congress, the bill could find bipartisan support. Until then, business owners should maximize their tax savings with the help of a qualified tax preparer.

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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 positions in and recommends Etsy and PayPal. The Motley Fool recommends the following options: short December 2023 $67.50 puts on PayPal. The Motley Fool has a disclosure policy.

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Amazon, Target, and Walmart dominant holiday sales events. But they don’t always have the best deals. Here are five other stores to consider. 

The holiday season is when retailers make their best attempt at getting our foot into their store or cookies on their website. Most of the big dogs — Amazon, Target, Walmart — command attention with ongoing deals, but they’re not the only ones that can help your personal finances with big savings. As you’re looking for holiday deals, check out sales at these five underrated stores.

1. Bed Bath & Beyond

I know what you’re thinking, and, yes, this store went bankrupt. But ever since Overstock purchased its intellectual property, Bed Bath & Beyond’s online store has been pretty robust. It sells pretty much the same inventory and still gives out 20% coupons for single items. It also has immense sales on a variety of items, from Christmas decor to furniture to kitchen appliances. It’s worth taking a look, if only for nostalgia’s sake.

2. Costco

Costco isn’t an underrated store, but during the holidays, the warehouse retailer’s sales can be easy to miss. That can be a huge loss, as Costco’s prices are often the lowest you’ll find for certain products.

Of course, Costco doesn’t have the largest selection and may not have specific items that people have asked for. For example, you’re likely not going to find the hottest toys at Costco, nor will you find a wide selection of electronics and gadgets. But you will find heavily discounted kitchen appliances, furniture, clothes, and even wine. It might not be a catch-all for everything on your list, but if you’re a Costco member, it’s worth exploring.

One thing that Costco does well is gift cards. Costco sells gift card packages to a variety of retailers — from restaurants to games for popular consoles — with savings ranging from 10% to 30%. Many of these gift cards come in packs of two or four, so this could be an excellent way to buy several people a gift at once.

3. Disney Store

During the holidays, the online Disney Store runs frequent sales on its toys, clothes, and accessories. Often, it gives you a coupon code that you can apply toward one item at checkout. For example, during Black Friday, Disney is offering 20% off toys and sleepwear with the code DREAM and 25% off with the code GIFT. If someone on your list wants Disney items, buying them directly from the Disney Store in this way could offer the most savings.

4. Barnes & Noble

Even though Amazon’s prices dominate for single book purchases, Barnes & Noble remains a top contender when you’re buying more than one. One of the best deals you’ll find on books is the bookseller’s “buy one, get one 50% off” promotion. Through this promotion, which you’ll find in store and online, you can save a significant amount of money on popular fiction, nonfiction, and kid’s books.

5. Chewy

For pet parents, Chewy’s “Goody Boxes” make good presents. Like a gift basket, these boxes come with pet treats and toys. Better yet, the boxes are discounted by 30% with code PET30 through Nov. 30.

All in all, it’s easy to go with your favorite retailers for your holiday shopping. But by keeping your options open, you might find greater savings opportunities elsewhere. Keep tabs on these retailers and strike when the deals are hot.

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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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.

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