Money Management

Costco warehouses may have good prices, but a special breed of Costco stores may have better deals. Read on to learn if one is near you. 

Every Costco store offers a slightly different experience, but if there’s one thing that unifies them, it’s the crowds. Unless you go on a Monday morning, you’re likely going to be competing for parking, slowing and stopping for other shoppers, waiting in long checkout lines, and avoiding eye contact with drivers waiting on you to load your car so they can take your parking spot.

If crowds are the price we pay for cheap groceries, I’ll certainly take it. But what if I told you there’s another breed of Costco store that offers the same great prices with fewer people? And no — I’m not talking about BJs. I’m talking about Costco Business Centers. And if you’re lucky enough to have one of these special Costco stores near you, it might just become your new favorite store.

Why you should check out Costco Business Centers

Costco Business Centers are warehouses stocked with business merchandise and other goods geared toward small business owners. But don’t get the wrong impression — even though they’re designed for small businesses, any Costco member can shop there. And sometimes doing so will actually save you money.

Many products that you typically see at a Costco warehouse you’ll also find at a Business Center — just in bigger quantities. For example, though you can find 12 to 20 pound bags of rice at Costco, you can find 50 pound bags at Business Centers. You might even find the same products with the same weights sold cheaper at a Business Center. A 20 pound bag of Royal Basmati Rice, for instance, costs $24.99 online from Costco, whereas the same bag costs $22.99 from a Business Center.

Admittedly, the quantities can sometimes be too large for consumer use, like a 7 pound jug of Nutella. But if you’re throwing a party, hosting a gathering, or sponsoring an event for charity or church, the large quantities could help you feed more mouths at a much lower cost than even traditional Costcos.

Of course, these are Business Centers, so you’ll find a lot of business merchandise there, too, like cooking equipment, industrial-sized refrigerators, and office supplies. But even that could work to your advantage, especially if you work from home and need cheap office supplies, like chairs, desks, and paper.

Where are Business Centers located?

Business Centers aren’t located everywhere, and the chances of one being close to you are fairly slim. Costco strategically places Business Centers close to highways and major business areas. And while “highways” and “businesses” may seem pan-American, these centers are currently limited to the following metropolitan areas:

AnchorageAtlantaChicagoDallasDenverHoustonLas VegasLos AngelesMinneapolis-St. PaulOrlandoPhoenixRenoSacramentoSalt Lake CitySan DiegoSan FranciscoSan JoseSeattleTacoma

If you live near one of these areas, there’s a chance Costco Business Centers will deliver directly to you. Keep in mind that prices online are typically more expensive than in warehouses, and there’s a $25 surcharge for orders under $250.

With inflation still relatively high, a Costco Business Center might help your personal finances by cutting grocery bills and saving you money. If you’re fortunate enough to have one of these centers near you, check out the prices and goods. If anything, it’s a fun experience, as it’s not every day you see 50 pound bags of onions and enough Nutella to fill all of France’s croissants.

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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 Costco Wholesale. The Motley Fool has a disclosure policy.

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If your savings isn’t generating you passive income, you’re not maximizing your earning potential. Learn how to make the most of your emergency cash. 

I’ll admit, when the Federal Reserve began raising rates, and online-only banks started raising their savings account APYs in turn, I became very curious about the benefit I might see from moving my money to one of those accounts. Ever since my teen years, I have banked with the same large national chain brick-and-mortar bank. And while I’ve always experienced good customer service and convenience with accessing my money when I need it, the savings account rate I’ve been given is just a paltry 0.01%. So I decided to make a change. I started by scouting offers touting the highest savings account interest rates. When I found one offering an astounding 5.02% (a rate that is no longer offered by the same bank today, unfortunately), I pulled the trigger and opened an account. I then made an initial deposit by transferring funds from my previous savings to the new account.

I was hesitant to put my trust (and money) in a new bank after all these years, so I started by transferring just about half of my savings balance — $10,000. Now, four months later, that decision has earned me $188 in completely passive income. Find out how you could be earning some easy cash of your own.

What kind of funds should you stash in a high-yield savings account?

Online-only banks have become well known for being able to offer much higher rates on their banking products than brick-and-mortar banks can. This is mostly because online-only banks operate without the overhead that banking institutions with hundreds of locations requiring employees and real estate do, so they’re able to pass some of those savings along to their customers.

While there are different account types for different savings goals — perhaps a CD for down payment funds you’ll need in a couple of years, or an IRA or brokerage account for retirement funds — a high-yield savings account is arguably the best place to keep funds that you expect to need access to in the shorter term. Notably, your emergency fund.

Experts recommend keeping three to six months’ worth of living expenses in an emergency fund for things like home repairs, unexpected medical costs, or to use in the event of job loss. The amount you should keep in your emergency fund will vary based on your personal situation, but you can use an emergency fund calculator to give you a good starting estimate of what yours should look like. Once you have your emergency savings started, finding the best place to stash it should be a priority.

The great thing about today’s high-yield savings rates

The high rates being offered today haven’t been seen since before the Great Recession and they give us as consumers an opportunity to earn more passive income on our funds than we’ve seen in years. As our savings earn interest and that interest adds to the total savings balance, those new, higher balances also benefit from the power of compounding. While you only earn interest the first month on your initial deposit, the second month you’ll earn interest on the initial deposit plus the first month’s interest, and so on and so forth each month after that.

The $188 I’ve earned over the last four months was based on an initial deposit of $10,000 in early March and an additional $5,000 deposit in mid-May. Today, the balance of that account sits at $15,188.75, and the only thing I had to do to earn those extra dollars was to simply leave that money alone. Talk about easy money! When you consider that the same $15,000 left alone for a full year in my old bank account would have only earned me a pathetic $1.50, the realization is even more shocking.

How much passive income could you earn?

Not everyone will have tens of thousands of dollars to deposit right away, so let’s take a look at a few different scenarios to see what you stand to earn just by moving your current savings to a bank account with a higher yield. There are savings accounts today offering over 5% APY, but let’s go with 4.5% for our illustration, as that’s a more common number and typically comes with fewer conditions to meet. For our brick-and-mortar bank, we’ll stick with the 0.01% my old savings account earns. Our calculations assume an initial deposit only, with no recurring or additional deposits made.

As you can see, even someone with a beginning savings balance of just $500 stands to miss out on more than $20 just by being complacent in their current account. And the more you have saved, the more you’re missing out on. As easy as it is to change banks these days, there’s really no excuse NOT to move your money and maximize your passive earnings.

As you’re looking for your new savings account, be sure to keep an eye on any account terms and conditions, as some banks require a higher minimum deposit amount to earn their maximum APY. Also take a look at what options you’ll have for accessing your money once it’s in your new account, as you’ll want to make sure the bank’s available options will work for you. Once you find the perfect account and make your deposit, all that’s left to do is to sit back, relax, and watch as your balance grows over time.

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A writer could fetch a high sale price for her home, but that likely won’t leave her ahead financially. Read on to see why. 

The average U.S. home value is about $346,000, according to Zillow, up about 2% from a year prior. But in some parts of the country, home prices are up by quite a bit more, due largely to limited inventory and strong buyer demand.

Such is the case in my neck of the woods. Zillow tells me that my estimated home value is about $300,000 more than what I paid for it 14 years ago. And you’d think that would inspire me to consider a sale.

But actually, I have no plans to sell my home in the near term. For one thing, I don’t have the time and patience to deal with a move. Secondly, I refinanced my mortgage back in 2020 when rates dropped and have an extremely competitive rate on it as a result. If I were to sign a new mortgage loan today, I’d be looking at a considerably higher rate.

Plus, because housing inventory is down in my area, I’d likely struggle to find a replacement home that meets my family’s needs. So that’s another reason to stay put, despite the potential to walk away with a profit.

In fact, a big part of me thinks that if I were to sell my home today, I wouldn’t actually profit at the end of the day. Here’s why.

It’s not just about your home’s purchase price

Based on my home’s purchase price and my home’s current value, I’m looking at a $300,000 profit on paper. But when we factor in the amount of money I’ve spent to own my house over the past 14 years, I’m really not looking at a profit at all.

For one thing, property taxes in my area are really high. By my estimates, I’ve spent well over $200,000 on property taxes alone since buying my home.

And then there are repairs to consider. I’ve had to re-grade my property, replace two air conditioning systems and a water heater, and address countless smaller issues through the years, like busted faucets and sprinkler parts. So all told, I’ve easily spent a good $50,000 on home repairs since moving in.

And remember, if I were to sell my home, I’d probably need a real estate agent who would take a 5% or 6% commission on the sale of my home. Throw in real estate transfer taxes, which my state imposes when you sell a home, and my $300,000 profit is basically wiped out.

Remember that your home is not an investment

I didn’t buy my home for the purpose of making money. I bought it so my family would have a place to live in a decent neighborhood.

But many people do go into homeownership with the intent to score a profit by selling their properties down the line. Those profits are by no means guaranteed. And even if you end up in a situation like mine where your home’s value rises a lot over time, it still doesn’t mean you’re going to come out ahead financially in the event of a home sale.

So keep that in mind in the course of your home buying decision. And also, make sure you’re buying a home in the first place for the right reasons.

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Car insurance premiums can be impacted by driving history, other drivers on the policy, and more. Learn more about major factors affecting premium prices. 

Buying auto insurance is crucial to protect assets. But paying premiums can be a big hit to a checking account. To help make sure auto insurance doesn’t cost any more than it needs to, it’s a good idea to learn a little bit about how policies are priced.

In particular, here are four factors affecting auto insurance premiums that drivers should know about.

1. Driving history

A policyholder’s driving history has a huge impact on how much premiums cost. A driver with a history of accidents, speeding tickets, or DUIs is considered to be much more risky to insure than someone with a clean driving record.

Depending on the state, rates could increase anywhere from 26% to 74% following an at-fault accident. That could mean paying hundreds of dollars more per month and thousands of dollars more per year for auto insurance coverage.

2. Other drivers on the policy

An auto insurance policy is affected not only by the policyholder’s driving record, but also by who else is in the household and covered by the insurance.

For example, when a teen driver is added to an insurance policy, premiums can increase substantially. Teens are viewed as being very high risk to insure due to their lack of experience and the fact that teenagers aren’t exactly notorious for being careful, prudent motorists.

Adding another driver with an accident on their record or with any other red flags that increase the risk of a claim could also send premiums skyrocketing.

3. Vehicle type and features

The type of vehicle a policyholder has is going to play a part in determining how much insurance premiums should be as well.

Some cars are safer than others, due to features like collision avoidance technology or a higher number of airbags to reduce the risk of serious injury. By contrast, other cars may be viewed as riskier both because they have fewer safety features or simply because more people who drive them tend to get into accidents more often, so they have a higher risk rating.

Some cars are also more prone to theft than others. Since insurers may have a greater fear of a Porsche being stolen (and insurance having to pay for it) rather than a minivan or a Subaru wagon. This will be factored into the insurer’s calculations when it sets the price of coverage.

4. Location

Finally, location can matter more than a driver might think when it comes to insurance premiums.

Some locations present a higher risk of collisions than others due to the number of vehicles on the road, the design of roadways, and other factors. There are higher rates of insurance fraud in some areas than others as well. And there’s a greater chance of theft in certain locations.

Because of this, moving locations can result in a big premium increase or decrease. And, those who live in riskier areas can expect to pay more from the start.

Some of these factors are within the control of the policyholder, but others aren’t. Those buying insurance should do what they can to reduce the risks they have control over to reduce their premium costs. This could make a big difference in how big of a dent auto insurance puts in their monthly 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.The Motley Fool has a disclosure policy.

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You generally can’t withdraw funds from a CD once it’s opened. Read on to learn more. 

There’s a reason some savers are tempted to put money into a certificate of deposit, or CD, rather than stick to a regular savings account. With a CD, you commit to keeping your money at the same bank for a preset period of time. In exchange, you’ll generally snag a higher rate on your CD than you will on a savings account.

Also, the rate on a regular savings account can change on a whim. Yours might start out high, only to drop continuously.

With a CD, the rate you lock in is the rate you get to earn throughout your CD’s term. So if you sign a 24-month CD at 4.5%, for example, that’s the rate of interest you’re guaranteed for two full years.

But there’s a drawback to keeping money in a CD, and it’s that you forgo some flexibility. And that could become a problem if you need to access your cash in a pinch.

When you need to take money out of a CD

When you have cash in a regular savings account, you can take withdrawals whenever you want, and without penalty. But CDs don’t work that way.

CDs generally do not allow you to withdraw a portion of your balance. Rather, if you need money and don’t have another way to get it, you’ll have to cash out your CD in its entirety.

To put it another way, let’s say you need $500 to cover a car repair bill and you have a $5,000 CD. You can’t simply remove one-tenth of your balance and leave the remaining $4,500 locked up. Instead, you’ll generally be forced to cash out your $5,000 CD entirely. And doing so will usually result in a penalty.

The amount you’ll be penalized will depend on your bank. There’s no single universal rule banks have to follow when it comes to early CD cash-out penalties.

But as an example, here are the penalties Capital One imposes if you cash out a CD before it matures:

Three months of interest for a 12-month CD or shorterSix months of interest for a CD with a term that’s greater than 12 months

So let’s say you bank with Capital One and cash out a 12-month CD prematurely. If that CD was paying 4.5% interest on $5,000, it means you’re giving up about $56.

Be careful when opening a CD

You may be tempted to open a CD so you can snag a higher interest rate on your money, and one that’s guaranteed. But before you do, make absolutely sure you have other funds set aside for emergencies, and that you don’t expect to need the money you’re putting into a CD anytime soon.

Another good bet may be to do a CD ladder instead of putting all of your cash into a single CD with a single maturity date. Let’s say you have $5,000 to put into a CD. Instead of pumping all of it into the same one-year CD, you may want to put $1,250 into a one-year CD now, wait a few months, put another $1,250 into a different 12-month CD, and so forth. This way, your money frees up at different intervals, which could help you avoid having to cash out a CD early and get penalized in the process.

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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 $5,000 credit card balance could cost you thousands of dollars in interest over time if you only make minimum payments. Find out just how much here. 

If you use a credit card, it’s a good idea to pay your balance in full when the statement comes to you. This will enable you to avoid paying credit card interest.

With the Federal Reserve reporting the average commercial bank interest rate on all credit card accounts was 20.09% as of February 2023, avoiding interest is especially important, as this is a very high rate to pay.

But what if you don’t have enough money in your savings account to pay off your bill? It’s important to understand the potential costs you could incur. For example, if you had a $5,000 credit card balance, here’s how big of a price you might end up paying.

The cost of a $5,000 credit card balance could shock you

If you have a $5,000 credit card balance, your minimum payment equals 2% of your balance, and your interest rate is 20.09%, it would take 677 months for your entire credit card balance to be repaid. That’s 56 years — nearly double the amount of time it takes the typical home buyer to pay off their mortgage loan in full.

During the 56 years that you would be paying off your debt, you would incur a ton of interest charges. Specifically, you would pay $22,126.31 in interest on your $5,000 balance — nearly five times the amount that you actually charged on your account in the first place.

This seems like an astronomical sum of money, and it is. It also seems like a huge amount of time to be stuck in debt for purchases you made on a card that you almost assuredly will not still be enjoying 56 years from now. And it is.

How minimum payments keep you in debt

If you’re wondering how this can happen, it’s because the minimum payment on a credit card is absolutely not designed to help ensure you get out of debt in a timely manner. The minimum payment is very low to keep you in debt and to enrich creditors with your interest costs. With a minimum payment equal to just 2% of your card balance (a common amount) and an interest rate that high, the bulk of your payment will go to interest every month.

When you pay a lot of money toward interest and only a very tiny amount toward reducing your balance, you never actually make much progress on paying off your debt. Your first payment, for example, would be $100 — $83.33 of which would go to interest and just $16.67 of which would actually reduce what you owe. And this would keep going for almost your entire payoff period, because your balance would remain high even while you make payment after payment.

How to reduce your borrowing costs

If you don’t want this to happen to you, there’s a simple way to avoid it: You need to pay more than the minimum. Every extra dollar you send in can go directly toward reducing your principal balance so you’ll actually make progress in paying off your balance. As your balance goes down, interest costs will also decline along with it.

So do whatever you can to pay more than the minimum on your credit card balance. Otherwise, you could be dealing with credit card payments for a long, long time.

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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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