Money Management

Many economists are expecting the Fed to pause its rate hiking campaign. Read on to decide if now is the right time to move cash into a CD before rates change. 

On May 3, the Fed raised the federal funds rate for the 10th consecutive time — putting the rate between 5% and 5.25%, its highest level since 2007. Many experts believe this will be the last time the Fed raises the rate this year. That means, if you want to move some cash into a certificate of deposit (CD), the clock might be ticking down to snag a CD at today’s rates.

Is now the time to get a CD?

By good estimates, yes, if you’re planning to move money into a CD, now might be the time to do it.

Many banks have raised CD rates several times over the past year, as the Fed has been consistently hiking interest rates since March 2022. While some banks may give CDs a little extra bump after Wednesday’s decision, it’s unlikely we’ll see massive upward momentum. In fact, the opposite could happen: if the Fed pauses or starts cutting rates later this year, CD rates might fall from their peaks.

Some long-term CD rates have already started to retreat. This makes sense: Banks are probably anticipating the Fed will bring the fund rate down in the coming years, and they’re adjusting long-term rates so they’re not stuck paying high interest while the fund rate is back to a standard level.

Just take a look for yourself; the following is the average APY for a 5-year online CD, according to data from Deposit Accounts:

CDs with shorter terms are still averaging between 4.5% and 5%. But these rates aren’t set in stone and will likely fluctuate as the Fed’s future policies become more clear. To get a good idea of today’s rates, you can find interest rates for various CD terms here:

6-month CD rates12-month CD rates3-year CD rates4-year CD rates5-year CD rates

Should you wait for the Fed’s next meeting?

Again, if you’re sure a CD is the right place for your money, I wouldn’t wait until the Fed makes its next decision (June 14).

For one, many economists now expect the Fed to pause rates, with a possible cut starting later this year. Inflation appears to be winding down — dropping from a high of 9.1% in June 2022 to 5% in March 2023 — and the growth of the U.S. economy has slowed significantly, expanding at a snail’s pace of 1.1% between January and March, less than half the growth of the quarter before that (2.6%).

Secondly, even if the Fed pulled a gotcha and raised the fund rate again, it’s unlikely CD rates would climb significantly higher than they are now. Most of the strong upward growth in CD rates happened because banks were expecting the Fed to raise rates. Now the tables have turned: With a downward hike becoming more likely, banks might be less inclined to raise CD rates much higher.

My only hesitation isn’t related to CD rates but to CD accounts themselves and how they work. If you don’t want to lock up your savings for a significant amount of time, then a CD may not be the best option for you. You might be better off with a high-yield savings account, which would give you greater access to your money, even though the interest rate wouldn’t be fixed like that of a CD.

But, by the looks of it, banks might be making the final call for depositors at today’s CD rates. Now isn’t the time to be greedy. If you want a CD, lock one in at today’s rates before they’re gone.

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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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Speed up your search by starting with the most common Mother’s Day gifts. Find out what people are buying for Mom, and where to quickly find the perfect gift. 

The NRF expects 74% of shoppers to gift Mom a fragrant floral bouquet (or possibly a rose for those on a budget). The same goes for those buying greeting cards. And more than half are expected to take Mom on a special outing of some sort (Mother’s Day brunch, anyone?).

Skip banging your head against the wall and jump straight to the good stuff. Here’s where to find and purchase flowers, greeting cards, and special outings for the mothers in your life.

1. Flowers

Flowers are some of the best Mother’s Day gifts for two simple reasons: They’re traditional and can spruce up any household. To give floral arrangements a unique spin, consider pairing them with a personal greeting card, customizing them to Mom’s tastes, or if you’re really into it, creating a bouquet by the meanings of each flower (i.e., hydrangeas for gratitude, etc.).

Local florists can be found budding just about everywhere across the United States. They’ll help you create custom arrangements for Mom, explain the meaning of flowers, or whip you up a one-of-a-kind bouquet. Florists tend to be on the pricier side, so keep your personal finances in mind.

Affordable alternatives include pre-arranged bouquets at big grocers like Pavilions. Costco, Walmart, and Target may also offer seasonal arrangements around Mother’s Day, so keep your eyes peeled for fresh flowers at low prices.

Costco is offering Costco members an entire Mother’s Day bouquet for $60, vase included. Plus, Costco Anywhere Visa® Card by Citi cardholders snag an extra 2% cash back on their floral purchases.

2. Greeting cards

Greeting cards rock because they’re meaningful and affordable. A personal card costs more in time than cash. As a poet, I love bringing Mom to tears or spontaneous gales of laughter with a few creative stanzas. This is even better when paired with a funny card.

My favorite place to shop for high-quality cards is Etsy, the online marketplace for custom-made goods. It has some of the funniest, most original cards out there, many handmade. But order sooner rather than later; near big holidays like Mother’s Day, deliveries get tied up.

Affordable alternatives include dollar store cards, which are $1 apiece, or big stores like Costco, Trader Joe’s, Walmart, etc. A thoughtful interior can make up for a standard design, so consider setting aside time to include something personal.

3. Special outings

Folks plan on spending about $274.02 per person this year, according to NRF data. Group activities and alcohol can cause budgets to spill over. Keep things affordable by estimating expenses ahead of time.

It’s trickier to purchase an entire experience for Mom, but it’s possible. Airbnb offers virtual classes on everything from origami to foreign cooking, taught by English-speaking instructors worldwide. Ticketmaster likely offers a long list of big-ticket local events to treat Mom.

Affordable alternatives include outdoor activities like hiking or picnicking, which charge zero admission fees. Pair a traditional gift with an at-home brunch to make Mom feel special. It’s casual, affordable, and unlike big-ticket events, it’s chaos-free.

Now you know the most common Mother’s Day gifts and where to find them. Use these gifts as a springboard to launch your search into hyperdrive, or avoid these tried-and-true gifts entirely in favor of something out of the box.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, Etsy, Target, Visa, and Walmart. The Motley Fool has a disclosure policy.

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The Federal Reserve has raised interest rates yet again. Read on to see how that could impact consumers — including you. 

The Federal Reserve has raised interest rates during its last 10 consecutive meetings. On May 3, it hiked up interest rates by 0.25%, which was the third rate hike of that nature since the start of 2023.

The reason the Fed has been raising interest rates is that it wants to bring inflation levels down. The last Consumer Price Index had annual inflation measured at 5%. The Fed, meanwhile, has pledged to keep raising interest rates to bring inflation down to the 2% mark. So the most recent rate hike on the part of the Fed will likely not be the last one we see in 2023.

Unfortunately, though, interest rate hikes have the potential to hurt consumers looking to borrow money. And it could also bring us even closer to a broad economic decline.

Prepare for borrowing costs to rise even more

It’s a big misconception that the Fed is tasked with setting consumer interest rates, like those charged for products like auto and personal loans. Rather, the Fed oversees the federal funds rate, which is what banks charge each other for short-term borrowing. But an increase in the federal funds rate tends to trickle down to consumer borrowing rates, resulting in higher costs.

In light of the latest rate hike, consumers are now looking at more expensive interest rates pretty much no matter how they borrow and what they’re borrowing for. And some consumers with existing debt could see their payments rise.

While debts like personal loans and home equity loans tend to come with fixed interest rates, credit card and HELOC (home equity line of credit) interest tends to be variable. This means that consumers carrying these types of debt could see their costs rise in the near term.

A recession could ensue

Another problem with the latest Fed rate hike? It could drive the economy closer to recession territory.

As it is, the Fed is already anticipating a 2023 recession, albeit a mild one. But if it becomes prohibitively expensive for consumers to borrow money, they’re not going to. And if consumer spending declines quickly and drastically, it could set the stage for a prolonged economic downturn. That means millions of Americans could find themselves getting laid off through no fault of their own.

The one silver lining

While the Fed’s latest interest rate hike isn’t good news, one benefit is that it could result in higher interest rates for savings account holders. And CD rates could rise as well. So all told, consumers with money in the bank might benefit. But consumers in the opposite boat — those who don’t have money and need to borrow it — may be in for a world of struggle.

While it may be possible for some consumers to hold off on borrowing until costs come down, that’s not always feasible. Someone who needs to buy a car to function, for example, may not have the luxury of waiting another year or two in the hopes that financing one will be more affordable.

And the worst part? The Fed might not be done raising interest rates, so consumer borrowing costs could get even more burdensome as 2023 moves along.

Normally, borrowers are advised to work on boosting their credit scores to snag more affordable rates on the loans they take out. That’s still applicable advice. But it may not have as much of an impact at a time when loan rates are high — and climbing — across the board.

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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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Have a Costco membership? Read on for a list of products worth checking out. 

Many people shop at Costco for things like groceries and household essentials, like paper towels. But the reality is that Costco can be a great source for everything from furniture to apparel to kitchen gadgets. And the benefit of buying these items at Costco is that you might end up with a lower credit card tab than you’d see elsewhere. With that in mind, here are some May Costco deals worth checking out.

1. $500 off the Agio Portland 7-piece High Fire Outdoor Dining Set

Now that the weather is warming up and summer is approaching, many people are picturing themselves dining outdoors and enjoying more fresh air. If your patio furniture needs a refresh, you may want to turn to Costco. Right now, you can score $500 off of a seven-piece set that includes six cushioned chairs and a table with a built-in fire pit.

2. $5 off FILA Men’s and Women’s Trazoros Sneaker

Spring is a great season to be active. It’s no longer freezing cold (at least in many parts of the country), but it’s not too hot to go for a run. If you need to replace a pair of sneakers, you may want to look at this FILA pair seeing as how it’s discounted.

3. $5 off UV Skinz Kids’ 3-piece Swim Set

Although May isn’t quite beach season, we’re getting closer. If you have kids who enjoy the water, but you don’t want to find yourself constantly lathering sunscreen on them, then it pays to scoop up this three-piece swim set. It comes with board shorts, a rash guard, and a bucket hat for optimal coverage and sun protection.

4. $100 off a Weber Genesis II S-435 Gas Grill

Whether you’re aiming for the title of Neighborhood Grill Master or you simply enjoy barbecuing with family and friends, now’s a good time to replace an older grill with a newer model. And right now, you can score $100 in savings on this higher-end Weber gas grill. Not only does it come with a 10-year warranty, but it includes a side burner that’s perfect for veggies and a sear station so you can get those perfect grill marks on your meat.

5. $15 off the Titan Deep Freeze 60-Can High Performance Rolling Cooler

Whether you’re tailgating this summer, hitting the beach, or just trekking over to your neighbor’s place, you may want a means of transporting large quantities of beverages with ease, all while keeping them cold. This large-sized rolling cooler might do the trick. It’s leak-proof, easy to clean, and seamless to move around.

6. $30 off the Ninja CREAMi Ice Cream Maker

You could head to the local ice cream shop this spring or summer to get your fill of frozen treats. Or, you could make your own at home and put the money you’re not spending into your savings account for something special down the line. This ice cream maker is easy to use and comes with a recipe book to help newbies get started. It also includes three storage pints with lids so you’ll have a place to put your frozen concoctions.

When you shop at Costco, you get peace of mind. Costco is known for its excellent customer service and generous return policies, and that alone is a good reason to shop there. But if any of the above deals are exciting to you, you may want to move quickly — before those discounts cease to apply.

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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 positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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A bank failure could be catastrophic if you have more than $250,000 in deposits. Read on to learn more. 

There’s a reason it’s important to make sure any bank you put money into is FDIC-insured. FDIC insurance protects your deposits of up to $250,000 as an individual, or up to $500,000 for joint account holders. And to be clear, that limit applies on a per-institution basis.

Here’s what that means. Let’s say you have a savings account with $50,000, two CDs with $100,000 in each, and a checking account with a $5,000 balance for a total of $255,000 all at the same bank. In that case, if you don’t have a joint account holder, you’re just over that $250,000 limit. So if your bank were to fail, you’d potentially end up losing $5,000.

But while your deposits in excess of $250,000 aren’t protected in theory, they may be protected in actuality if push comes to shove. So if you have more than $250,000 in savings and your bank fails, you’re not automatically doomed to lose money.

You could get a lifeline

Earlier this year, when Silicon Valley Bank collapsed, the U.S. government was quick to step in and make depositors whole. A lot of the bank’s customers — notably, businesses — had funds at Silicon Valley that exceeded $250,000. But ultimately, those who banked there didn’t end up losing money.

Now, part of the reason the government stepped in to do that was to avoid a broad bank run and avert a banking industry crisis. If more banks continue to fail, there’s no guarantee that the government will step in every time and make sure depositors don’t lose any money. And that’s important to know.

The best way to protect your money

If you don’t want to lose money in the event of a bank failure, there are a couple of steps you’ll need to take:

Only put your money into FDIC-insured banksMake sure you don’t put more than $250,000 into any individual bank

So, let’s say you have $250,000 in savings at one bank and you’re interested in opening a $20,000 CD after having received a bonus at work of that amount. Rather than let your total deposits at that initial bank reach $270,000, you can simply open your CD at a different institution. That way, all of your money will be safe.

The $250,000 FDIC insurance limit that applies to individuals is on a per-bank basis. This means that for each bank you have accounts with, you get $250,000 worth of protection, provided each bank holds FDIC insurance.

Of course, many people don’t have anywhere close to $250,000 to put in the bank. A recent SecureSave survey found that 67% of Americans couldn’t cover a mere $400 emergency expense by pulling from their savings.

But if you have a large amount of cash you want to keep in the bank, there are steps you can take to secure protection — even if you’re looking to sock away well more than $250,000.

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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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