Money Management

Struggling with your credit card balance? Relief may be in sight in the new year. Read on to see why. [[{“value”:”

If you owe money on your credit cards, you’re not alone. Experian reports that credit card debt is the most common type of debt in the U.S., with 45% of households carrying a balance.

Meanwhile, the Federal Reserve reports that as of August 2024, the average interest rate across all credit card accounts was 21.76%. If you owe $5,000 on your credit cards, at that rate, you’re looking at spending $1,211 on interest if it takes you two years to pay your balance off.

The good news, though, is that relief may soon be in sight. The Federal Reserve lowered its benchmark interest rate by half a percentage point in September. And that rate cut is likely to be the first of many. This means that come 2025, credit card interest rates could be a lot lower.

Lower rates could soon be upon us

The Federal Reserve doesn’t set consumer borrowing rates directly. When you sign a mortgage, for example, your lender determines what rate you can borrow at based on factors that include your credit score and existing level of debt. Similarly, when you sign an auto loan, your lender is the one to determine what rate you qualify for.

But when the Fed lowers its benchmark interest rate, known as the federal funds rate, it commonly leads to lower borrowing rates. The federal funds rate is what banks and financial institutions pay for overnight borrowing. When it’s less expensive for them to borrow, that savings tends to be passed along to consumers.

Meanwhile, the Fed is expected to keep cutting its benchmark interest rate in response to cooling inflation. That, in turn, is likely to lead to lower borrowing rates on a whole in 2025 — credit cards included.

How low will credit card interest rates go in 2025?

Without a crystal ball, it’s hard to say. We don’t know how aggressively the Fed will lower its benchmark interest rate.

But let’s be optimistic and say credit card rates will fall 2 percentage points on average from where they are today. That would still leave you paying close to 20% interest on your balances. So rather than sit back and hope for a lower interest rate on your debt, a better bet is to try to pay off your credit cards as quickly as you can.

You have a few options to pay down your credit cards. One is to do a balance transfer, which could give you a 0% introductory interest rate on your debt for a period. If you’re able to boost your income with a side hustle and pay off your balance before that introductory period ends, you might save a lot of money on interest and get your balance wiped out. Click here for a list of the best balance transfer offers.

Another option is to consolidate your credit card debt into a personal loan. A personal loan won’t give you a 0% introductory period, but you might lock in a much lower interest rate on one than what your credit cards are charging you, and you’ll have a set payoff date, too. Click here for a list of the best personal loans available today.

While there’s a strong chance credit card interest rates will fall in 2025 — and to a notable degree — your best bet is to try to shed that debt as soon as you reasonably can. Once you do pay off your balances, try to avoid racking up new ones.

Even if rates dip quite a bit in the new year, credit cards will remain an expensive borrowing option. It’s best to explore other ways to borrow when you need to, or to budget carefully to avoid debt altogether.

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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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Even if you’ve had a Costco membership for years, it’s okay to decide if it’s still right for you. Here are several reasons you may consider canceling. [[{“value”:”

Whether you’ve had a Costco membership for years or are a new member, nothing says that you must continue shopping at Costco if it no longer works for you. For a Costco shopper, it’s all about leaving more money in your checking account and enjoying the shopping experience.

Here, we dive into those (and other) reasons to take a closer look at your Costco membership and decide whether it’s still working for you.

1. You’ve given up your car

We may not all be wearing masks in public anymore, but we’re still experiencing fallout from the pandemic. One way the pandemic has hung around is through stubbornly high prices. While overall inflation has slowly cooled, the cost of some critical products and services has continued to climb. Auto insurance is the perfect example. Between July 2023 and July 2024, rates rose a painful 18.6%.

As more people have trouble finding affordable auto insurance, it’s fair to assume that many have (or will) simply stopped driving. If you’ve given up your vehicle due to costs or because you no longer feel safe driving, you may find that a Costco membership makes far less sense than it once did.

Although you can continue shopping on Costco.com, you’ll quickly learn that items sold online typically cost more than those sold in-store. While the base price may be similar, shipping and handling fees are factored into the online prices. According to the Krazy Coupon Lady, once those extras are factored in, the cost of a single item can be as much as 49% higher.

Unless you know someone willing to drive you to the warehouse store or you only buy enough to carry back home on public transportation, October might be a good time to cancel your membership and save some money.

2. You’ve grown frustrated with the membership-sharing crackdown

We’re all watching our finances closely these days. And for some folks, one way of saving money is by sharing a Costco membership card. Perhaps you loan yours to a relative, or a neighbor shares theirs with you. Either way, Costco has cracked down on the practice of membership sharing and aims to stop it by paying more attention to identification.

The retail giant recently announced that shoppers will have to start scanning their membership cards at the entrance of Costco stores instead of just showing them to an employee. You’ll need to scan your card to enter the store if you have an active membership.

If your card doesn’t include a photo of you, you’ll also need to provide a valid photo ID. Shoppers without a membership card can only enter Costco with an active member.

In other words, the days of using your father-in-law’s card without him present are almost over. If you’ve always been able to justify paying for a membership because of the number of people you could share it with, it may be time to rethink whether you want to be a member.

3. You can save more money elsewhere

Not everyone saves money at Costco. For example, if you find yourself throwing away produce you’ve purchased in bulk or allowing over-the-counter medication to expire because you couldn’t use it up fast enough, you may be wasting money.

There’s also the issue of credit cards. Today’s credit cards do far more than allow us to buy something immediately and pay for it later. For example, the best cash back cards also refund a percentage of our spending and offer some pretty sweet perks, like purchase protection.

One way we’ve found to save money on groceries and gasoline is to use a credit card with cash back rewards to make purchases. Click here to see our list of recommended cash back credit cards to apply for one today. We may not save upfront, but each purchase puts a little more into our credit card account — and that’s cash we can use when we need it most.

Let’s say you regularly use a credit card at restaurants, grocery stores, and gas stations. Fortunately, you find a card that rewards you with 5% cash back each time you swipe it in one of those places. Spending an average of $150 weekly on groceries at Costco would net you $390 yearly ($150 x 52 = $7,800, and $7,800 x 0.05 = $390).

Putting $35 into your gas tank at a Costco gas station each week would add another $91 to your cash back total ($35 x 52 = $1,820, and $1,820 x 0.05 = $91). Consider what you can do with an extra $481. You could cover the cost of your annual membership, buy three weeks’ worth of groceries, or save it for a big purchase you’ve had in mind.

With roughly 128 million members worldwide, Costco will be OK regardless of what you do. The only thing that truly matters is doing what’s right for you and your household.

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.

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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.Dana George 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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In over 20 years of actively using credit cards, I’ve never closed an account. Here are my reasons for keeping all my cards open. [[{“value”:”

I’ve been using credit cards for a long time, and my go-to credit cards have changed quite a bit over the years. But there’s one common consumer behavior that many people are surprised that I’ve never done, and that’s canceling a credit card and closing my account.

There are a few reasons why I haven’t closed any of my cards. For one thing, I only have a few with annual fees, and I don’t see any real reason to cancel no annual fee cards. And as I’ll discuss here, canceling a credit card can have an adverse impact on your FICO® Score, and I’ve generally made a point to avoid any negative credit behavior.

Just to clarify

When I say I’ve never closed a credit card account, I’m not talking about cards I’ve canceled due to fraud. I’ve had my credit card information stolen and I’ve lost a card and had to cancel it and get a new one.

It’s true that I’ve never picked up the phone and closed a credit card account entirely. However, that doesn’t mean that I’ve never had an account closed due to inactivity.

In many cases, banks monitor account activity and decide to cancel unused credit card accounts. In my adult lifetime, I’ve had about a half-dozen credit cards closed simply because I didn’t use them often enough to make the bank happy.

Sometimes you’ll get a notice that says something to the effect of “unless you use your credit card within 30 days of this letter, your account will be canceled for inactivity.” But in other cases, the bank will simply close your credit card account and let you know afterwards. This is more common with no annual fee credit cards — after all, many banks are happy to let you continue to pay a fee for a card you aren’t using.

Canceling a credit card can hurt your score — in a few ways

It might seem counterintuitive, but getting rid of a credit card — especially one that you don’t use regularly — can cause your credit score to drop. To be clear, it isn’t likely to trigger a major plunge, but it can certainly make a difference.

The short explanation is that canceling a credit card affects several areas of the FICO credit scoring formula.

First, and most importantly, 30% of your FICO® Score is based on the “amounts you owe.” This includes your credit card balances relative to your total credit limit, a concept known as your credit utilization ratio.

Here’s why it matters. Let’s say that you have one credit card with a $1,000 balance and a $4,000 limit, and another credit card with no balance and a $1,000 limit. Currently, you’re using 20% of your available credit ($1,000 out of $5,000 in total limits). But if you were to cancel the smaller, unused credit line, your credit utilization would immediately jump to 25%.

If you’re looking to establish a new credit card relationship, check out our list of the top credit cards right now.

In addition, 15% of your credit score comes from the length of your credit history. This category considers several time-related factors, including the average age of your open accounts and the ages of your individual credit accounts. Closing a credit card (especially one you’ve had for a while) can hurt you here. In a nutshell, the FICO formula rewards you for letting your accounts age.

Should you cancel your old credit cards?

Of course, like any personal finance decision, what works for one person doesn’t necessarily work for someone else. There are certainly some good reasons to cancel credit cards.

For example, if you have a travel credit card with an annual fee, and you don’t feel like you’re getting enough value from it, it can be smart to cancel. In situations like this, it can also make sense to downgrade to a lower-fee card from the same issuer so you won’t have a closed account on your credit report.

It can also make sense to cancel a credit card if you find you have too many cards open to effectively keep track of, or if the account terms or benefits change in a way that makes the card undesirable to you.

But the key takeaway is that there are drawbacks of canceling a credit card, so keep those in mind before you do.

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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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CDs and savings account rates are starting to fall. Read on for a better option for your cash. [[{“value”:”

There’s a reason savings accounts and CDs have been so popular over the past couple of years. Following a series of federal funds rate hikes on the part of the Federal Reserve, savings account and CD rates soared, allowing people with money in the bank to earn a fairly large, risk-free return.

But now that the Fed has begun lowering its benchmark rate, savings account and CD rates are expected to drop. And they’re already lower than they were just a month or so ago, before the Fed’s big September rate cut.

Now if you’re looking to earn a nice return on your money on a short-term basis, savings accounts and CDs aren’t a bad option. And if you lock in a CD now, before the Fed’s next rate cut, you might end up with a return you’re happy with. Click here for a curated list of some of the best CDs today.

But on a long-term basis, savings accounts and CDs are not great tools for growing wealth. So you may want to put your money somewhere else.

Don’t settle for 4% returns

Savings accounts and CDs are still paying in the 4% range following the Fed’s September rate cut. And you may be able to lock in a CD at 4% or more through the end of the year.

But these rates are expected to fall. And even if that somehow doesn’t happen, you should know that over time, a 4% return on your money isn’t super impressive.

Sure, it’s a decent return. But why settle for 4% when you could possibly get 10% instead?

Over the past 50 years, the S&P 500’s average annual return has been 10%, accounting for years when the market did great and years when it utterly tanked. If you have money you’re looking to grow on a short-term basis, then investing can be risky, because you need time to ride out market downturns.

But if you have a roughly seven-year window or more to grow your money, then investing it makes sense. Click here for a list of the best stock brokers so you can open an account and start investing today.

The numbers don’t lie

There’s definite risk involved in owning stocks, more so than sticking to savings accounts and CDs. But the reward is just so much higher.

Let’s run some numbers to highlight the difference between a 4% return on your money over time vs. a 10% return — keeping in mind, of course, that even 4% isn’t the norm with savings accounts and CDs in the long run.

Imagine you have $5,000 available today and have 30 years to grow it into a larger amount of money. At a 4% yearly return, you’ll end up with about $16,000. At a 10% return, you’ll end up with around $87,000.

That’s a difference of $71,000. And to give that difference some context, as of 2022, the median retirement savings balance among Americans aged 65 to 74 was $200,000, per the Federal Reserve. With $87,000, you’re almost halfway there. With $16,000, you’re not even one-tenth of the way there.

To be clear, a savings account is the best place to put your emergency fund. And a CD is a good place for your money on a short-term basis.

In the long run, though, a stock portfolio could make you worlds richer. So it’s worth getting started on building one as soon as you can. And if you’re new to investing, check out this list of the best investment apps for beginners.

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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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Buying a TV at Costco comes with a whole bunch of perks, including a new way to purchase one. Read on to learn more. [[{“value”:”

Even though Costco has a loyal fan base, the warehouse club giant is constantly looking for new ways to innovate and offer members additional value.

On a recent earnings call, Costco announced a change to the way it makes its TV inventory available to customers. And it might make the process of buying a TV through Costco even better.

The benefits of buying a TV at Costco

There are several good reasons to buy a TV at Costco. First, you might snag a lower price compared to a different retailer — though you’ll need to shop around based on the specific model you’re looking for to make sure Costco’s price is the best.

Next, with an Executive membership, you can rack up 2% cash back on a TV purchase at Costco. And if you combine that with the right credit card, you can potentially pocket even more cash back. Click here for a list of the best credit cards for Costco shoppers.

Also, when you buy a TV from Costco, you get free tech support included. If you run into problems setting it up, you don’t have to tackle them alone.

Costco also offers a free second-year warranty on electronics purchases, TVs included. This gives you more peace of mind.

And some TV purchases at Costco come with Room of Choice Delivery. This means you won’t have to be the one to haul a giant TV into your living room or basement or wherever you want it.

A new option for buying a TV from Costco

Although Costco carries TVs in its warehouse club stores, you may find an even wider selection online. The downside of ordering online, though, is having to wait for delivery.

But that may not be an issue much longer. Costco is rolling out the option to purchase a TV online and pick it up same-day at your local store.

During the company’s most recent earnings call, CFO Gary Millerchip explained, “The rollout of buy online and pickup in warehouse for TVs in the U.S. market was also completed in Q4. This allows same-day pickup of a new TV for members who prefer not to wait for delivery.”

Now, you may be wondering if this option will soon extend to all Costco purchases. Unfortunately, it probably won’t.

As Millerchip said, “While buy online pickup in warehouse isn’t cost-effective for us on lower-priced items, for high-value items with high shipping costs like TVs, the freight savings more than offset the added labor required in warehouses to fulfill those orders. We’re now testing a similar program on laptops.”

If you like the idea of making a purchase on Costco.com and picking it up at a store, you should know that you may have the option to do that for specific items, including tablets, watches, cellphones, and certain types of jewelry. This gives you access to more shopping choices without having to wait for delivery.

Should you buy your Costco TV online and pick it up in the store?

It’s a good thing that Costco is rolling out the option to purchase a TV online and grab it from the store that same day. But while that eliminates the wait time, you may be better off sitting tight and getting your TV delivered.

For one thing, if you have a smaller car and are buying a larger TV, transporting it yourself may not even be feasible. And even in a roomier car, you run the risk of your TV getting damaged in transit. If you have Costco deliver it, Costco takes on that risk.

Similarly, if your TV is eligible for Room of Choice Delivery, why not have someone else deal with getting it up or down the stairs at home? This could not only reduce the risk of your TV getting damaged, but also spare you from potential injuries.

That said, it’s nice to have choices if you’re buying a TV. And it’ll be interesting to see if Costco adds more products to its list of items that can be purchased online and picked up from a store later that day.

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 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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Foodies, rejoice! Costco offers European chocolates, caviar, and more. Learn why it’s worth checking Costco for these items. [[{“value”:”

Ah, Costco. Where else can you find a new small kitchen appliance, a cozy set of pajamas, and a whole beef tenderloin for sale under the same roof? Turn to Costco.com, and you’ll find even more items that aren’t sold in stores. And among those items is a truly great selection of gourmet food.

I’m a bit of a foodie (so much so that I was unreasonably excited to get one of the best credit cards for groceries a few years ago), and I’m also a new Costco member. Costco’s selection of gourmet meat, cheese, chocolate, and more is very intriguing to me — and it might be to you, too.

Here are three perks of checking Costco the next time you ache for a taste of luxury in the form of food.

1. Low prices

On my last trip to Costco, I eagerly perused a display of gourmet chocolates and couldn’t resist dropping $12.99 on a 23.8-ounce box of Merci chocolates. Thankfully, that box is huge and I expect to still be eating these several weeks from now. But I’ve really got to cheer about the price. This same selection would cost me $27.97 from Amazon.com.

Want something even more luxurious? I’ve never had caviar in my life, but Costco sells it, so maybe one of these days, I’ll give it a whirl. Costco’s offering of Tsar Nicoulai Estate Classic White Sturgeon Caviar is priced at $199.99 for three 2-ounce jars. Go straight to the source (Tsar Nicoulai, that is), and you’ll pay $124 for just one of those jars.

If you need something fancy for a party, or even just a random Tuesday evening, it’s worth checking Costco’s prices on the food you’ve got your heart set on. You might just find a deal. And if the idea of cash back on your Costco caviar sounds good to you, check out our curated list of the best credit cards for Costco.

2. The return policy

The idea of returning opened food comes off a bit “May I see your manager?” to me, but Costco allows it. This warehouse giant’s return policy is second to none — you can return nearly anything at any time. There are a few exceptions, but gourmet food products (other than alcohol in some states) are not among them.

So if you buy that caviar (or Wagyu beef, or smoked salmon, or a Best of Spain Variety Box of cured meats and cheese), and you find it isn’t quite up to snuff, you can return it for a full refund.

Just aim to do so quickly (don’t force a Costco employee to deal with your rotten leftovers) and aim to return at least 50% of whatever the food is. That way, you can make the case that the item was spoiled or you just didn’t like it — and back it up with evidence. You could end up with a black mark on your membership if you fall into the habit of returning items just for the heck of it, rather than a legitimate reason.

3. Possibly, cash back

This last perk of buying your gourmet food at Costco is dependent on your membership type. Personally, I live an hour away from my nearest Costco store, and with the exception of bulk nonperishable items and paper goods, I have great places to source the rest of what I buy. So I opted for the basic Gold Star membership, which costs $65 per year. But for double that, you can get an Executive membership.

This tier comes with lots of perks, such as additional savings on Costco home services and extra benefits when you book trips through Costco Travel. But the big reason to go Executive is to enjoy 2% cash back on most Costco purchases. This is good on up to $62,500 worth of purchases, for a top level of $1,250 back.

If you think you’ll be spending a lot on caviar, chocolates, fancy beef, or even just normal, everyday purchases, it’s worth considering the upgraded membership.

Ready to maximize your Costco membership? Hop on over to Costco.com or visit your local warehouse for delicious gourmet foods for less.

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.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool has positions in and recommends Amazon and Costco Wholesale. The Motley Fool has a disclosure policy.

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