Money Management

Many savers fear a return to the ultra-low savings account yields of 2021, but that isn’t likely to happen. Find out more here. [[{“value”:”

The Federal Reserve recently cut the federal funds rate for the first time since early 2020, and the rate cuts are expected to gradually continue for the foreseeable future, impacting bank accounts, loans, credit cards, and more. Because of this, many consumers are worried that the best time to start using a high-yield savings account has passed.

I’m not so sure. Although we are likely to see high-yield savings account APYs move generally lower as the Fed rate cuts proceed, the environment for these accounts could hold up better than you think.

Will the Fed’s rate cuts impact savings account yields?

The short answer is yes. As the Federal Reserve lowers its benchmark interest rate, it’s fair to expect that high-yield savings account interest rates will trend lower as well. In fact, we’ve already seen several top online banks lower their savings yields. However, it might not be as dramatic as you expect.

The Federal Reserve lowered interest rates by 50 basis points, or half a percentage point, and as a personal example, my bank lowered the maximum interest rate on its high-yield savings account by 20 basis points (0.20%) soon after.

Of course, this is just one example, but the point is that there isn’t a one-to-one relationship between the Fed’s rate cuts and high-yield savings account interest rates. My bank lowered rates, but to a lower extent than the Fed’s rate cut.

And in the context of recent history, my savings account’s APY of 4.30% is still solid. As of this writing, nearly a month after the Fed’s rate cut, some of the top high-yield savings accounts on The Ascent’s radar still have yields as high as 5.15%.

If you’re curious how much yield you can still get from your savings, check out our updated list of the top high-yield savings accounts.

How far will rates fall?

Of course, this was just the first in what is expected to be a series of Fed rate cuts lasting through at least 2025. According to the CME Group’s FedWatch Tool, which shows the rate expectations priced into financial markets, the median expectation is for another 50 basis points of rate cuts by the end of 2024, and another full percentage point by the end of 2025 — so a total of 1.50% from current benchmark levels.

So, while I would expect banks to steadily lower savings account rates as the rate-cutting cycle continues, I would expect the overall pace of savings account interest rate reductions to be somewhat slower than the Fed’s moves.

Of course, I don’t have a crystal ball and each individual bank can set its own rates, but if your high-yield savings account has a 4.50% APY today, it would be surprising if its rate dropped below the mid-3.00% range by the end of 2025.

In a nutshell, while savings rates have certainly started to drift lower and are likely to continue to do so, there is virtually no expert who is predicting that the near-zero interest rate environment we saw in 2020 and 2021 will return anytime soon.

The best way to maximize the yield from your cash while maintaining flexibility is through a high-yield savings account, and if you have cash that you don’t foresee yourself needing for a while, high-yield CDs are still available that can allow you to lock in a guaranteed rate before the Fed makes any further cuts.

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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.Matt Frankel has no position in any of the stocks mentioned. The Motley Fool recommends CME Group. The Motley Fool has a disclosure policy.

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As scary as debt can be, strategies exist to make the most of a business loan. Find out how a loan can help your small business. [[{“value”:”

Being a business owner takes courage. After all, who else but someone with courage would start a new business despite hearing that about 20% fail within the first two years? If you own a business, you’ve probably gone out on a limb and invested plenty of your money, not to mention time. Even if you have the best cash back business card and can recoup some of your start-up cash, being a business owner requires taking risks.

Today, rather than repeat old lessons about the evils of debt, we’ll touch on four reasons a savvy business owner might want to consider taking on a business loan.

1. A strategic investment

Let’s say you own a printing business. Your major competitor in the area is smaller and less established than you but has implemented some innovative ideas that you’re confident will take off like a rocket and bring in cash. The owner of the other business decides to sell, so you take out a business loan to buy their business and have sole rights to the innovative ideas.

A loan can help you accomplish your goals, whether you want to upgrade your equipment, launch a new product line, increase your territory, or buy another business.

2. May be superior to bringing in an equity partner

Imagine you’re starting a lawn care business and have the inside track on a steady gig with an area developer. The developer has promised you’ll start with at least five business parks once your limited liability company (LLC) is set up.

You file your LLC (and don’t forget to open one of the best business credit cards designed specifically for LLC owners) and start purchasing the equipment your new business will need.

However, the cost is much higher than you anticipated. Then in steps your brother-in-law, a guy with more money than he knows what to do with. He tells you he’ll front you the cash you need to buy equipment for a 35% equity stake. He tries to convince you it’s better than taking out a business loan.

You’re not so sure.

You decide that mixing family and business is not a good idea and take out a business loan for the cash you need. It takes you three years to repay the loan. By the end of three years, the property developer has come to trust you, and you will now be taking care of 10 business parks in the region. Rather than handing over 35% of every dollar of profit you earn, it’s all yours.

3. Your credit standing improves

Each payment you make on your business loan is reported to the credit bureaus. As with your personal credit report, your business report shows whether payments were made on time or were delinquent. Here are some of the other things you’ll find on a business credit report:

How many credit lines you haveHow much credit you’re using (and how much you have available)Any bills that have gone to collectionsLiens, judgments, and UCC filingsYour business registrationYour industry classification

Unlike a personal credit report, your business report is available to anyone who requests it and pays a fee.

If you build your credit standing by paying your monthly loan payments on time, you never have to worry about potential clients checking your business credit report. In addition, the higher your credit score, the easier it will be for you to land another business loan if needed.

As a small business owner, you understand the importance of strategic planning. Ensuring that you’ll have the funds you need to make each monthly payment on time is critical to the success of your enterprise. If it sometimes feels like your business is your baby, you should have no trouble nurturing it while carefully guarding its credit.

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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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With interest rates dropping, even a small rate decrease can save you money. See how to calculate your break-even point and weigh the benefits before refinancing. [[{“value”:”

If you own a home, you might be wondering if now is the time to refinance your mortgage to take advantage of dropping interest rates. But is it worth it? The average mortgage rate for most of this year was in the high 6% to 7% range, but it’s now under 6.5% — and if you have great credit, you may be quoted lower rates.

But before you sign on the dotted line, there are a few things to consider.

What is your current interest rate?

The Federal Reserve recently dropped its benchmark interest rate by half a percentage point. While the Fed doesn’t set mortgage rates, this rate drop does influence them (along with a ton of other factors like inflation, loan term, and overall economic conditions).

But if the difference between your current mortgage rate and the refinance rate you qualify for is less than half a percentage point, refinancing might not be worth the effort.

For example, If you have a $240,000 30-year mortgage at 7.287%, your monthly payment is around $1,643 per month (with variances for insurance and property taxes, of course.) If you take out the same mortgage, with a 6.787% rate, your payment will be closer to $1,563, which is just an $80 difference. Consider whether it’s worth the decrease in payment compared to the costs.

But the lowest mortgage rates as of this writing are 5.875%, so that same $240,000 mortgage will put your payments at $1,420, saving you almost $200 per month. Not too shabby.

Considering refinancing? Check out the best refinance lenders.

What is your credit score?

Just because the average mortgage rate is lower now doesn’t mean you’ll be approved for a mortgage at a lower rate. If your credit score is at least between 670 and 740, you’re more likely to land competitive rates.

But if you’ve lost a few points or slid below the 620 credit score mark, you might not qualify for a lower interest rate loan. Before you weigh the pros and cons, make sure your credit score will get you there.

Calculate your break-even point

The break-even point refers to when the savings from the lower monthly mortgage payments offset the upfront costs of refinancing, such as closing fees. In other words, it’s the point at which you start actually benefiting financially from the refinance.

To calculate your break-even point, you first need to figure out how much it will cost you to refinance. There are application fees, home appraisal fees, and origination fees. You’ll also need to cover closing costs and title insurance. A good rule of thumb is to expect the refinance to cost between 2% and 5% of the loan amount.

So, math time! Let’s say you took out a $240,000 mortgage two years ago at 7.287%, and you now owe $234,000. Your refinance costs are likely to be around 3.5% of the loan amount or $8,000. If you save $200 per month in mortgage costs by dropping your rate, it will take 40 months to break even, or 3.33 years. That is your break-even point.

If you aren’t sure you’ll be in your home for four or more years, then it’s not worth it to refinance. But if it’s your forever home, then it is likely worth the cost.

So, is now the time to refinance? It depends

If you bought a home at the height of mortgage rates in 2023, it may be worth it to refinance now. But first, figure out how long it will take you to break even. Also, keep in mind that mortgage rates may continue to drop, so it might make sense to wait a little longer before refinancing if your break-even point is more than three years.

If you do refinance, consider putting that extra cash you’re saving into a brokerage account. Over time, investing a few hundred dollars a month can grow into a nice nest egg.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

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Click here to read our full review for free and apply in just 2 minutes.

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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Costco’s biggest competitor may surprise you. Read on to see which company the warehouse club giant aims to surpass. [[{“value”:”

Some retailers pride themselves on low prices. Others pride themselves on outstanding customer service. At Costco, it’s a combination of both.

Shopping at Costco can often lead to big savings on groceries, apparel, and more. And that’s due to the store’s competitive prices coupled with its commitment to customer service that extends to its return policy. Simply put, you can take almost any item back to Costco at any time for a full refund.

Of course, Costco isn’t the only major retailer that tries to offer great prices and service. But you should know that Costco’s aim is to be the best in the business. And you may be surprised to learn what Costco considers its biggest competitor to be.

Setting high standards

You might think Costco’s biggest competitor would be a similar warehouse club store, like Sam’s Club, or a big-box giant, like Walmart or Target. But actually, Costco’s biggest competitor is none other than itself.

During the company’s most recent earnings call, CFO Gary Millerchip said, “The key thing for us is we’re our own biggest competitor…we want to be the first to lower prices and the last to raise prices. And at every one of our regular budget meetings, we’re talking about how can we find ways to do that.”

Millerchip also went on to add that Costco’s strategy is to lower prices before competitors do so, as opposed to lowering prices in response to what other retailers are doing.

“The majority of our price investments are proactive, not that we’re reacting,” he said. “But of course, we’re always watching and staying very close to competition.”

What this should tell you is that Costco clearly takes customer satisfaction seriously. If you’ve been on the fence about joining, you may want to give Costco a try.

More Costco benefits than you might realize

Most people know that it’s possible to save money on groceries and toilet paper by stocking up at Costco. But a membership offers numerous benefits beyond savings on everyday purchases.

First, there’s savings on gas. Not only are Costco’s gas prices some of the cheapest in town, but Costco fuel is TOP TIER certified, which means it’s designed to lead to better performance. And if you use the right credit card at the pump, you can save even more. Click here for a list of the best credit cards for gas rewards.

Joining Costco could also help you maintain and improve your home. Costco’s home installation services run the gamut from window treatments to HVAC systems to standby generators, which are a great investment for people in areas prone to outages.

And there’s much, much more beyond these perks. You can save money on prescription drugs at Costco’s pharmacies, get affordable glasses through the store’s optical center, and snag extended warranties and free tech support on electronics.

The Costco membership guarantee

Costco also stands behind all of its memberships and will let you cancel at any time for a refund. So if you join this October and realize in early 2025 that you’ve only been to the store once and it somehow didn’t meet your expectations, you can cancel and get your money back.

Chances are, though, you’ll not only want to keep your membership, but you’ll increasingly enjoy surprising perks you didn’t know existed. And if you use the right credit cards to do your Costco shopping, you can potentially save even more. Click here for a list of credit cards that offer extra rewards for Costco members.

Top credit card to use at Costco (and everywhere else!)

We love versatile credit cards that offer huge rewards everywhere, including Costco! This card is a standout among America’s favorite credit cards because it offers perhaps the easiest $200 cash bonus you could ever earn and an unlimited 2% cash rewards on purchases, even when you shop at Costco.

Add on the competitive 0% interest period and it’s no wonder we awarded this card Best No Annual Fee Credit Card.

Click here to read our full review for free and apply before the $200 welcome bonus offer ends!

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

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Should you invest in CDs? CD rates currently outpace inflation, offering a safe, steady return. Here’s why you should consider building a diverse portfolio. [[{“value”:”

CDs (certificates of deposit) may not be the most exciting investment, but they are relatively safe. But between rising inflation and the Fed recently dropping the benchmark interest rate, you might be wondering if they are even worth buying right now. The answer is yes. Maybe. It depends.

In general, CD rates remain a solid, steady investment choice. But it also depends on how much you put in them, along with your overall investment strategy. Here’s what you really need to know about CDs right now.

CDs are currently net positive against inflation (but barely)

CD rates have dropped, but on average, are higher than inflation. In September 2024 (the most recent month we have data for), the U.S. inflation rate was 2.4%. While CD rates vary based on the length of the term and which bank you use, the average is sitting around 4.5%, with some short-term rates as high as 5%. Which means, if you’re looking for a place to protect your money from inflation, CDs are a solid choice.

Let’s take an example: if you invest $5,000 in a 12-month CD earning an APY of 3.75%, at the end of the term, you’ll have $5,187.50. With inflation at 2.4%, the purchasing power of your original $5,000 would only decrease. Which means, your CD investment not only protects your money from inflation but also provides growth, however modest.

Comparing CD rates? Check out our selection of some of the best CD rates available now and open one today.

Considering your other options: HYSAs and brokerage accounts

CDs often get a bad rep for being boring. And while they aren’t as exciting (or as risky) as penny stocks and don’t have the growth potential of index funds, there’s something to be said for protecting at least some of your cash from market fluctuations. If CDs don’t fit your investment strategy, there are two other traditional savings options: high-yield savings accounts (HYSAs) and brokerage accounts.

If you choose a HYSA, you can withdraw your money at any time. Unlike CDs, you won’t have to wait for the term to expire. HYSAs held at most banks are FDIC insured, which means up to $250,000 (per depositor, per account ownership category) is insured by the federal government, even if the bank shuts down. HYSA rates are also a bit higher, ranging between 4.10% and 5.30% currently for the accounts on our curated high-yield savings account list.

Brokerage accounts do leave your money at risk of market fluctuations. While the S&P 500 had an overall return rate of around 10% over the last 50 years (or 6.8% accounting for inflation), that can change — and past performance doesn’t guarantee future returns. But investing in stocks generally (but not always) results in higher returns than a CD.

Here’s the difference in growth over time starting with $10,000:

Your final balance for a CD after 20 years would be $21,357.10, while investing the same $10,000 in the stock market (assuming 10% average return) would result in a final balance of $73,280.74. That’s a pretty significant difference.

Consider a balanced approach

If your money is currently sitting in a traditional savings account, earning less than 1% interest, you’re losing buying power to inflation. CD rates right now are higher than inflation and protect your investment from market fluctuations, making them a better choice than a traditional checking or savings account.

But you may earn higher interest rates in other investments. Consider taking a balanced approach and keep some money in CDs, some in high-yield savings accounts, and some in brokerage accounts. That way, you’re protected from inflation and lower your overall risk.

HYSAs are ideal for funds you might need in the near future, like your emergency savings. Use brokerage accounts for long-term investments, like for retirement or long-term wealth preservation.

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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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Kohl’s has more stores than any other department store in the U.S., but it’s not for everyone. Here’s how you can know it’s time to take a break. [[{“value”:”

With nearly 1,200 stores nationwide, Kohl’s has more locations in the U.S. than any other department store. If the long weekend checkout line isn’t enough to convince you of how popular the retailer is, annual revenue of more than $17 billion might.

Famous for its popular “Kohl’s Cash,” the Wisconsin-based retailer has long been known for saving shoppers money that might be better spent elsewhere or put in a savings account. That’s not to say Kohl’s is suitable for everyone, though. Here are four signs that you may want to avoid the popular store.

1. You tend to get caught up in the excitement

As someone who doesn’t enjoy crowds and doesn’t like in-person shopping, it’s odd that I get a small thrill every time I walk into a Kohl’s store. Kohl’s is like cotton candy. I love the stuff, but I feel a little sick when I overindulge — and it can be challenging to leave Kohl’s without overindulging.

I find it difficult to avoid getting caught up in the treasure-hunt atmosphere, so I often stay longer than I should and buy more than I need. If you feed off the atmosphere of a crowd and make less-than-stellar decisions in high-energy situations, avoiding Kohl’s — at least for a while — may be an excellent idea.

2. It’s becoming difficult to pay off your credit card

Managing personal finances can be tricky when you’re surrounded by so many buys that appeal to you. Suddenly, you can’t live without that carrot peeler you didn’t even know you needed, and the dog bed you just picked up for your pup seems logical. That’s all fine as long as you have no trouble paying the bill and have enough left over to pay your other financial obligations.

However, if it’s become increasingly difficult to pay your credit card off in full each month, that’s a good sign that you’re spending too much time there.

One trick to make large purchases is to use a credit card with a 0% promotional rate — click here for our picks for the best cards with 0% intro APRs. These cards typically offer 12 to 21 months to pay in full — and you won’t be charged a cent of interest.

3. You walk out with things you don’t need

I purchased the dog bed mentioned above, only to learn that my little guy would rather sleep directly on the floor beside my desk. To be honest, I’m not even sure where that bed is right now.

Only you can decide if you’re buying things you don’t need simply because the deals seem too good to pass up. Buying something when it’s on sale feels more like saving than spending. Saving makes sense when you actually need something and will put it to good use, but buying for the sake of saving a few dollars is like tossing your money into a bonfire.

I’ve known people who love the thrill of buying and routinely make purchases they know they’ll return for a refund. That makes zero sense. In addition to the fuel required to drive back to the store, constantly returning items uses up precious resources like time and energy.

4. You consider it a loss if you fail to use Kohl’s Cash

During periodic shopping events throughout the year, shoppers are given a coupon for $10 worth of Kohl’s Cash for every $50 they spend after all discounts and before paying sales tax. Each coupon indicates the redemption period for when the cash must be spent.

Say it’s the holiday season, and you’ve spent $300 on gifts and decor. One week later, you’ve got $60 in Kohl’s Cash, burning a hole in your pocket. You can’t think of a single thing you need but feel you’re losing money if you don’t return to Kohl’s to use it.

If you spend less than $60, it’s a pretty great deal. However, if you walk back into the store and it’s buzzing with great deals and excitement, you may just find yourself buying things you don’t need.

Kohl’s has a lot going for it. The stores tend to be laid out well, customer service reps are almost always nice, and you truly can snag some bargains. However, it’s all about doing what’s best for you and your checking account. If you sometimes feel a little sick from overindulging, it may be time to limit your trips.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

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.Dana George 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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