Money Management

New capital requirement rules are aimed at stabilizing the banking industry and protecting consumers in an economic crisis. Check out what it means for you. 

On July 27, 2023, U.S. federal banking regulators issued proposals that would require banks with at least $100 billion in assets to hold nearly 20% more capital. The proposals would also overhaul how banks measure the riskiness of their behavior.

While the proposal, which is currently being put out for public feedback by the Federal Reserve, won’t go into effect until 2028, it’s already being hotly debated. Here’s what these new capital rules may mean for investors, consumers, and the industry.

What are capital requirement rules?

Under existing rules, banks are required to hold a certain percentage of capital in reserve to ensure they have enough money to absorb potential losses. These regulations are in place to protect depositors and ensure banks remain solvent during any crisis or market volatility.

What would change?

The proposed changes to the capital rules would force banks to hold more capital in reserve, ensuring they have enough cash to cover any losses during an economic downturn. Banks with assets above $100 billion would be required to increase their capital reserves by approximately 16%.

The nation’s eight largest banks will face an even higher increase of around 19%, while smaller lenders with assets between $100 billion and $250 billion can expect a more modest rise of as little as 5%. These new regulations aim to ensure banks are stronger and more resilient to financial shocks, reducing their chances of failing or requiring government bailouts.

However, the industry is not happy about having to raise an extra 20% of capital. Some officials claim that it is a significant amount and could lead to increased costs for banks, which would be passed onto customers.

How would this affect investors and consumers?

Increased capital requirements could have a significant impact. If banks are required to raise their capital levels, they may choose to pass some of these costs onto consumers in the form of higher fees on bank accounts or interest rates on loans. This could affect personal and business accounts and could hit some of the most vulnerable customers the hardest.

Higher capital requirements would also mean that banks could cut dividends, reduce share buybacks, or issue new shares. Banks may also be forced to trim services to meet the capital requirements.

Proponents however say that higher capital requirements should ultimately lead to more stable banks, which could help prevent future financial crises. So, while consumers may have to pay more in the short term, they could benefit from a safer and more stable banking system in the long run.

What does this mean for you now?

During a recent statement, Jerome Powell, the Chair of the Federal Reserve, supported releasing the proposals for public review. However, he promptly pointed out several concerns regarding the plan, emphasizing the challenging task regulators face in finding the right balance.

Regardless, if the proposals do pass, banks will have until 2028 to fully implement the new capital requirements. At this point, it’s too early to tell how this will affect the banking industry. Therefore, there’s no need to make any rash decisions based purely on speculation.

Instead, you should focus on finding the best bank accounts that suit your specific needs. By shopping around and comparing offers, you can ensure you’re still getting the most value from your banking experience.

The potential changes to capital rules for U.S. banks could have significant implications for the banking industry. While banks are not pleased about these new regulations and claim they could lead to increased costs for them and their customers, those in support say higher capital requirements should ultimately lead to a more resilient banking system. It may take some time to see the full impact of these changes, and the proposal may see some changes before it’s passed.

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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 recommends U.S. Bancorp. The Motley Fool has a disclosure policy.

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Are you a Costco member who loves eating at the food court? Find out which cheap and tasty international food court finds you should try. 

Costco is a favorite place to shop for many people because of its affordable prices. Since it’s a warehouse club, you must purchase a membership to shop there. But one little-known Costco perk that you may not realize is your membership is valid at all clubs globally.

That means you can even shop abroad when traveling if there’s a club nearby. In addition to getting a great deal on groceries and essentials, you can sample new-to-you global food court items. Below, I’ll share some international Costco food court finds you don’t want to miss.

Even better, each item is priced under $5. That could be a win for your taste buds and your wallet! For simplicity, the prices listed have been converted and are estimated in U.S. dollars.

1. England: cottage pie

If you’ll be spending some time in England, you’ll want to stop at Costco to try the cottage pie. This food court find is full of beef and potatoes and will cost you around $4.50. It’s the perfect item to order if you’re looking for comfort food after a busy shopping day.

2. China: truffle mushroom pizza

Like in the United States, many international Costco food courts sell pizza. But you’ll often find more unique pizza toppings when you visit abroad. In China, shoppers can order truffle mushroom pizza. It’s delicious and affordable — a slice will cost you around $1.80.

3. Mexico: hot dog

Yes, even the international Costco food court sells hot dogs. But in some international locations, you may find that more toppings are available. In Mexico, there are forty Costco clubs. You can get a hot dog with a soft drink for around $1.75 here. But even better, there are onion and jalapeno dispensers so you can load up your hot dog with all the fixings.

4.China: mango ice cream

Craving a sweet treat after strolling the aisles of Costco? If you’re visiting one of the four clubs in China, you may be lucky enough to see mango soft-serve ice cream on the food court menu. You won’t run up a pricey credit card bill when ordering this sweet snack. It costs just over $2.

5. South Korea: bulgogi pizza

Bulgogi, which translates to fire meat, is a popular South Korean beef dish with a sweet and tangy sauce. If you visit one of Costco’s eighteen club locations in South Korea, you will want to head to the food court to order a slice of bulgogi pizza.

A slice of this delicious pizza costs about $2.70 — so it’s an affordable way to satisfy your cravings after loading up your shopping cart. I lived in South Korea for two years, and after writing this, I’m super disappointed I never made my way to Costco to try this food court item.

6. Canada: poutine

No trip to Canada is complete without poutine — and guess what? Costco has you covered. Canada has over 100 Costco locations nationwide, and you’ll find poutine on the food court menu. You can get an order of poutine for around $4.50.

7. Spain: chicken barbecue pizza

Another delicious pizza makes our list! Spain is home to four Costco clubs. One food court item that stands out here is chicken barbeque pizza. Not only does that sound amazing, but it’s affordable. You can order a slice for around $2.20.

Costco can help you save money when traveling abroad

If you’re a Costco member planning to travel abroad, don’t forget to bring your membership card. Whether visiting for a few days or planning a more lengthy trip, you can get a great deal by purchasing the essentials you need at Costco.

Even when traveling, you can stay on track as you work to meet your personal finance goals. I dare you to try one of the delicious global food court items mentioned above. After sampling them, I bet you’ll wish your local Costco club at home sold the same food court offerings.

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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.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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CDs are a useful tool for generating risk-free interest. But read on to see when a savings account might be far more appropriate. 

The benefit of keeping your money in the bank is that your principal deposits are guaranteed for up to $250,000 per person, per bank, provided your bank is FDIC-insured. But when it comes to keeping money in the bank, you have choices. You could keep your cash in a regular savings account, or you could open a CD instead.

The upside of opening a CD (certificate of deposit) is that you might snag a higher rate of interest on your money than what a savings account will give you. Also, that rate is guaranteed for the duration of your CD.

Your savings account might be paying an APY of 4.2% at present. But if market conditions change, in three months from now, you could be looking at 4% instead. However, if you lock in a 12-month CD at 4.5%, that’s the interest rate you’re guaranteed to get until your CD matures.

Despite these advantages, there are some scenarios where it makes more sense to keep your money in a savings account. Here are a few that might apply to you.

1. It’s for emergencies

It’s important to have an emergency fund so you have cash reserves to tap when an unplanned bill pops up, like a home or car repair. But if you keep your emergency fund in a CD, you might run into some issues when you need to raid it.

CDs generally impose penalties for cashing out early. And whereas savings accounts allow you to withdraw a portion of your balance, with a CD, you generally have to keep your money locked away or cash out the entire thing. So it’s best not to put yourself in the position of facing an early cash-out penalty.

2. It’s for a near-term goal

You may be on the cusp of being able to put a down payment on a new car or being able to buy the new piece of furniture your house has been needing. If you put that money in a CD, you might have to wait months until it comes due to access your cash. That could mean missing out on a great deal (such as if your dream couch goes on sale) or simply having to wait longer to meet your goal when the money is sitting right there.

3. CD rates are lower than what savings accounts are paying

CDs often pay more than regular savings accounts — but that’s not always the case. And if you’re not going to get a higher interest rate from a CD, then there’s really no sense in committing to one when you can keep your money in a savings account instead.

Right now, for example, Capital One is offering a 4.30% APY on its Performance Savings Account. But it’s only offering a 3.90% APY on a six-month CD. So in this case, opting for the CD could mean earning less interest on your money.

There are many situations where putting money into a CD makes sense. But in these scenarios, a savings account is generally a much better option.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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You don’t have to be over 50 to join AARP. Keep reading to learn about the discounts you’ll gain if you become a member. 

As life gets more and more expensive, everyone is looking for ways to save. It might seem counterintuitive to dip into your checking account to pay for an organization membership in your quest to spend less, but what if paying an annual membership fee unlocked more than enough opportunities to save to make it worthwhile?

AARP has been in my own consciousness since I was a young child. Back then, it was known as the American Association of Retired Persons, and I only knew about it because my grandparents were members and received the AARP magazine (which was a great read even when I was single-digits old!). But while you need to be a certain age to benefit from some of AARP’s insurance products, any adult can join AARP and take advantage of savings.

Let’s take a look at a few broad (and fun!) categories for AARP discounts!

1. AARP can save you money on travel costs

If you like to travel, you should absolutely consider an AARP membership. There’s an entire section on the AARP website devoted to travel information and deals. The cost of renting a car can add quite a bit to your credit card balance, but you can save up to 30% on car rentals from Budget and Avis. If you need a car for your everyday life occasionally, AARP will save you $20 on an annual Zipcar membership (which will run you $90 otherwise).

Need a place to stay when you arrive at your destination? AARP has partnership deals with several dozen hotel chains and you can save at least 5% off the best available rates when you book. In addition, some hotels offer other sweet deals for AARP members. I’m a Hilton Honors member, and as an example, an AARP membership would give me 10% off the best available rate at a Hampton Inn, plus the tantalizing possibility of a late checkout. If you’re part of a hotel chain’s loyalty program and it partners with AARP (or you’ve got a hotel credit card), you could conceivably stack deals and save quite a bit while earning points towards future stays and higher membership tiers.

2. AARP can save you money on entertainment costs

Chances are, entertainment spending makes up some part of your monthly budget, and AARP can help your dollars go further. Among AARP’s less-lauded perks, the website has a section devoted to online games, and there are opportunities to see free live performances and watch streaming movies. You can even get 30% off a one-year Ancestry World Explorer or All-Access membership if you dig genealogy.

But if you head down the AARP rabbit hole, and are willing to provide your ZIP code, you’ll dredge up coupons galore. For an example of a fun savings opportunity, AARP members can score up to 44% off tickets to Hersheypark in Pennsylvania.

3. AARP can save you money on food

We all need to eat to live, and if you’re willing to whip out an AARP membership card, you could save quite a bit in a few different food categories. Plug your local ZIP code into the AARP website and you’ll find dozens of deals on restaurant meals. You can take $5 off a purchase of $25 or more at Buffalo Wild Wings or 15% off a regular-priced dinner at Texas de Brazil (a great place, I recommend).

Want to save on meals you can cook yourself at home or have delivered already made? There are savings opportunities for that too. Both Landry’s Kitchen and Schwan’s Home Delivery have deals for AARP members.

How much does it cost to join AARP?

All this sounds pretty good, right? If you want to join AARP, a one-year membership can be yours for just $12 if you agree to auto-renewal (which will save you $4 off the regular cost of one year). You can also save if you opt for a multi-year membership; you can get three years for $43 and five for $63.

As life keeps going up in price, it’s a good idea to seek out as many opportunities to save as you can. I barely scratched the surface of the savings available to you as an AARP member, so if what I’ve discussed here sounds worthwhile to you, I recommend giving AARP a closer look, especially if you never realized that you could join before you turn 50.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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