Money Management

CD rates are still pretty solid today. But read on to see why that may not be the case in a year from now. [[{“value”:”

Many savers clamored to buy CDs this year. For much of 2024, it was possible to lock in a CD rate of 5%, or even a little more. That’s a pretty great deal for a risk-free investment (provided your bank is FDIC-insured and your deposit isn’t above $250,000).

But at this point, the days of 5% CDs are pretty much gone. Savings account and CD rates have fallen in the wake of the Federal Reserve’s large cut to its benchmark interest rate. And since the Fed isn’t close to being done with rate cuts, savings account and CD rates are likely to keep falling — so much so that by this time next year, a CD may not even be worth it.

Why CDs won’t be as valuable in a year from now

Without a crystal ball, it’s impossible to predict what CD rates will look like in a year from now. But if the Fed keeps cutting the federal funds rate, which it’s expected to do, there’s a good chance CDs will fall well below the 4% mark, and possibly even below 3%, by the fall of 2025.

It’s one thing to open a CD at 5%, or close to it. It’s another thing to accept a 2.75% return. So if you’re interested in opening a CD, don’t wait around.

If you have the money now, consider shopping around for a CD and open one while rates are still strong. You can check out this list of the best CD rates today to earn a great return on your money while you still can.

A smarter move for when CD rates fall even more

You may not love the idea of opening a CD when rates are much lower. But don’t despair — even if CDs aren’t worth opening in a year from now, the stock market will absolutely be worth investing in.

Over the past 50 years, the S&P 500’s average annual return has been about 10%. This accounts for years when the market gained a lot of value, and also, during years when it did poorly. If a CD isn’t appealing to you next fall, you may want to open a brokerage account and put your money to work there instead.

You may want to forgo a CD now and invest your money right away. If you put $8,000 into a stock portfolio that pays you 10% a year, in 20 years, it’ll be worth about $54,000. But if you wait even one year to invest that money, assuming the same return, you’re looking at $49,000 instead.

Even if you were to put $8,000 into a CD paying 4.5% today, in 12 months, you’re looking at $360 in interest. That’s not enough to make up for the $5,000 you might lose out on by waiting a year to invest your money in the stock market.

It’s hard to know what CD rates will look like at this time next year. But it’s more than fair to say they’ll most likely be lower. It’s also more than reasonable to say that over time, you’re likely to do worlds better with a stock portfolio than CDs. So even though CD rates are still pretty strong, you may want to choose stocks this fall instead.

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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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Costco doesn’t tend to discount its membership fees. Here’s why retirees can benefit from joining regardless. [[{“value”:”

One of the nice things about growing older (besides the wealth of knowledge you might accumulate) is getting to enjoy a host of senior discounts, whether it’s early bird specials at restaurants or reduced fares at the movies. But if you’re a senior who’s thinking about joining Costco, here’s some bad news.

Costco, as a matter of policy, doesn’t offer discounted memberships. If you want to join, regardless of your age, you’re looking at paying $65 a year for a Gold Star membership or $130 a year for an Executive membership (this one gives you 2% cash back on your purchases).

At first, you might assume these fees aren’t worth paying if you’re a retiree on a fixed budget. But joining Costco could be a smart financial move even if you’re looking at paying full price. Here are some reasons why.

1. You can save big on gasoline

If you’re retired, you may not be putting as many miles on your car as someone with a full-time job and a long commute. But that doesn’t mean you’re homebound, either.

In fact, not having a job to report to could mean that your days are yours to enjoy. And that could mean driving all over the place for activities, whether it’s meeting friends for lunch, playing tennis, or checking out books from the library.

One huge benefit of joining Costco is the savings you can enjoy on gas. Costco’s fuel is often the cheapest in town. And it’s also high quality. It holds the TOP TIER designation, which means it’s formulated to clean your engine and help your car run smoothly.

So let’s say you use 10 gallons of gas per week and filling up at Costco — which you can generally only do if you’re a member — saves you $0.20 per gallon. That’s $2 in savings per week. If a basic membership costs you $65, even if the only thing you do at Costco is fill up your tank 50 times throughout the year, you’re still coming out ahead by $35.

You can benefit even more from a series of Costco fill-ups by swiping the right credit card. Click here for a list of credit cards with top gas rewards.

2. You might spend less on groceries

Just because you’re a senior doesn’t mean you don’t have a full house to feed. Maybe you’re part of a multigenerational household and have seven people living under your roof. Or maybe your grown kids live 10 minutes away and have a tendency to stop by for dinner during the week with your grandchildren in tow.

If you do a fair amount of cooking, you may find that it’s worth buying certain products in bulk. And in that case, you can reap big savings by stocking up on groceries at Costco.

3. You can save money on travel

If you’re retired, you may have more time to travel now than you did when you were working. As a Costco member, you get access to a host of travel packages that could not only save you money, but give you extra perks like resort credits or cash back in the form of Costco Shop Cards (the store’s version of a gift card).

If you think you’ll book one or more trips a year through Costco, then it pays to get the Executive membership. Although it costs $65 more than a Gold Star membership, it takes $3,250 in annual Costco spending to make back the upgrade fee at a rate of 2%. And it’s conceivable that you might book a single trip that gets you beyond that spending threshold.

Even if that doesn’t happen, if you book a $2,400 trip through Costco but go there once a month to stock up on groceries and household products, you might end up spending more than $3,250 in a year. So you might as well upgrade and earn a little money back.

You may find it bothersome that Costco won’t discount memberships for seniors. But there are still plenty of good reasons to join. And remember, if you end up unhappy with your membership, Costco will allow you to cancel and get a refund at any time. So there’s really nothing to lose by trying it out.

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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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You might pay less interest on a mortgage now than you would’ve earlier in the year. But read on to see why waiting to buy still makes sense. [[{“value”:”

If you’ve been keeping track of mortgage rates, you’re no doubt aware that in recent weeks, they’ve fallen to their lowest level since early 2023.

Granted, today’s mortgage rates aren’t low per se. You’re still looking at a rate a little over 6%, on average, for a 30-year loan. But seeing as how mortgage rates were close to 8% about a year ago, paying a little more than 6% doesn’t seem like such a raw deal.

You may be inclined to try to buy a home before the end of the year, given where today’s mortgage rates are sitting. But here’s why waiting a bit longer could be a much savvier financial move.

There could be a lot more relief in store

At this point, you may be able to lock in a mortgage rate you’re reasonably happy with — especially if you shop around for a home loan. But that doesn’t change the fact that home prices are still high.

Want to compare lenders and see how much you can expect to pay for a home loan? Click here for a list of the best mortgage lenders and rates.

In August, the median existing home sale price across the U.S. was $416,700, according to the National Association of Realtors. That’s a 3.1% increase from a year prior, and it represents the 14th month in a row that home prices were up on an annual basis.

Meanwhile, the average 30-year mortgage rate as of this writing is 6.12%. If you were to put 20% down ($83,340) on a $416,700 home, at that rate, you’d be looking at a monthly payment of $2,024 for principal and interest. And that doesn’t even include property taxes and insurance, which you’ll be on the hook for as well.

That’s why waiting until 2025 to buy a home could be a smart bet. There’s a very good chance home prices will fall in the coming months. If mortgage rates dip a bit more in conjunction with that, which is expected to happen as the Federal Reserve keeps lowering its benchmark interest rate, you might be looking at decent savings on a home.

Why might home prices come down in 2025? It’s simple. The reason a lot of people haven’t wanted to sell in the past couple of years is that they didn’t want to give up the mortgage rates they locked in around the time of the pandemic, when rates fell to record lows.

But as mortgage rates continue to come down, current homeowners will be more willing to sell their homes and sign mortgages again if rates aren’t so high like they were at several points last year and early this year.

Meanwhile, as sellers begin to list their homes and inventory increases, it should narrow the gap between supply and demand. That, in turn, should lead to lower home prices.

Sitting tight could work to your benefit

If you’ve been waiting a long time to buy a home, you may be eager to take the leap sooner rather than later. But remember, mortgage rates started trending downward before the Fed’s first interest rate cut in September. And they’re likely to continue falling as the Federal Reserve moves forward with more rate cuts. By the midpoint of 2025, we may find that home prices are significantly lower than they are today.

In fact, let’s say the median home price falls to $390,000 by June, while the average 30-year mortgage rate falls to 5.9%. (We may see steeper declines, but let’s be conservative.) In that case, with a 20% down payment of $78,000, you’re looking at a monthly mortgage payment of $1,851 for principal and interest, as opposed to the $2,024 we calculated above.

That’s a difference of almost $2,100 a year. So while being patient isn’t always easy, and especially not when it comes to your housing situation, right now, it could pay off in a very big way.

Plus, if you wait to buy a home, you have an opportunity to improve your credit, which could set you up for an even better mortgage rate. And you can also sock away extra money for either your down payment or the cost of moving into your new home.

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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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When you’re booking business class, getting the best deal is important. Watch out for these mistakes that could end up costing you. [[{“value”:”

For most people, flying business class is a rare treat. It’s often much more expensive than economy, after all. A round-trip ticket could easily cost $3,000 to $5,000, although there are ways to get better deals.

Since the typical traveler doesn’t have much experience booking business class, they may not know how to find those better deals. They could also make costly mistakes during the booking process. To help you save time and money, let’s take a look at five business-class mistakes, starting with using the wrong credit cards.

1. Not using travel credit cards

The best way to book business class usually isn’t paying in cash — it’s paying with airline miles. To give you an example, I recently booked business-class airfare with Air France. The cash price was $2,365. Or, I could pay 35,000 Flying Blue miles plus $260.80 in taxes and fees.

I was able to book with miles because I pay for most of my expenses with travel credit cards. All my cards earn travel points, and I can transfer these points to airline partners, including Air France’s Flying Blue program. If you aren’t using travel cards, you’ll need to pay cash for your airfare, which tends to be much more expensive.

Want to save big on business-class flights? Check out our curated list of top travel rewards cards and apply for one today.

2. Booking at the last minute

As you may have heard from a few professors over the years, it’s never a good idea to wait until the last minute. That’s true when you’re writing a paper, and it’s true when you’re trying to buy a business-class ticket.

Going, a flight deals site, says that the best time to shop for international airfare is two to eight months in advance. While there are sometimes last-minute deals available, this isn’t always the case. And the closer it gets to your travel dates, the more pressure there will be to book whatever you can find.

3. Picking a longer flight to save money

Flying generally gets cheaper the more stops you add to your journey. If you want to book cheap business-class airfare, you might be tempted to pick a flight with two or three stops to save some money.

As nice as business class can be, do you really want to spend more time on a plane and less time at your destination? And keep in mind that every additional stop brings the chance of a complication. Your baggage could get lost, or a mechanical issue with the plane could lead to a lengthy flight delay.

4. Being inflexible about travel dates

Flight prices can vary quite a bit depending on when you’re traveling. Sometimes it’s because of demand, or it could be because the airline has special promo fares on certain days. I’ve seen business-class flights that cost $1,800 one day and $1,200 the next.

This is why it helps when you’re not locked into specific travel dates. The more flexible you can be, the easier it is to find a good deal. Many airlines have low-fare calendars you can use to quickly check which dates have the cheapest business-class prices.

5. Spending too much time looking for the perfect deal

There’s a ton of advice out there for booking flights. Clear your browser’s cookies before going to the airline’s website, or use an incognito window. Compare prices between airlines and online travel agencies. Set up flight alerts. Book on the right day of the week.

I’ll be honest with you: I don’t do any of this. When you’re trying to save on airfare, it’s easy to fall into the trap of over-optimizing. You spend hours and hours comparing prices and looking for ways to carve out extra savings.

You can certainly shop around, set up flight alerts, and use whatever other tips and tricks you like. But don’t let flight booking consume too much of your life, because your time is valuable, too.

With the right strategy, and ideally some travel points, you could book business-class airfare at an affordable price. Just watch out for these common mistakes, so your flight search doesn’t cost you too much money or 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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