Money Management

In recent months, CDs have paid record-high APYs. If you cashed in on these high rates, here’s how much you’ll need to pay Uncle Sam. [[{“value”:”

Think back. Remember when CD rates hit historic highs? Oh wait, that was only weeks ago — before the Federal Reserve hinted that it would drop the federal funds rate, and banks lowered the amount they paid on CDs in anticipation.

While the days of high APYs may be behind us (for now), it’s essential to plan for the taxes you’ll owe on any money you’ve earned on CDs thus far this year.

Fortunately, you have several factors going for you.

You were able to take advantage of CD rates at their peak.Figuring out how much you’ll owe in taxes is a straightforward process.Although CD rates have slipped, it’s not too late to snag a higher-than-typical rate before they drop more.

How CDs are taxed

Interest income, like any money you earned on CDs this year, is taxed at the same rate as ordinary income. To figure out how much you’ll owe, you first need to know your tax bracket.

2024 tax brackets

For example, if you’re a single filer with an adjusted gross income (AGI) of $75,000, you fall in the 22% bracket. This means that the interest you earn on CDs is taxed at 22%.

Let’s say you put $10,000 into a 12-month CD. The CD offered an APY of 5.10%, and by the time it matured this year, you’d earned $523.

Because you’re in the 22% tax bracket, you’ll owe $115.06 in taxes ($523 x 0.22 = $115.06).

How to report CD income

By the time you file your 2024 tax return, your financial institution should have sent you a 1099-INT statement showing how much you earned on your CD for the year. You’ll include the interest shown on your 1099-INT on Form 1040, Line 2b of your federal income tax return.

If you opened a multi-year CD, your financial institution will generally report interest in increments at the end of each year the CD remains open. For example, if you opened a 5-year CD in 2024, you should receive a 1099-INT by the time 2024 taxes are filed. You’ll then receive another statement when it’s time to file 2025 taxes, and so on.

Whether you deposit the interest earned on your CD in a high-yield savings account or roll it over into another CD while rates remain reasonably high, a CD is one more dependable tool in your financial arsenal.

Why opt for a CD?

Here’s the truth: None of us knows precisely how often the Fed will cut rates in the next year or two. We can guess, but don’t know for sure. What we do know is that the rate you’re promised when you open a CD is the rate you earn as long as you don’t withdraw the money before its maturity date. In fact, interest paid on a CD is one of the few “sure things” a bank can offer its customers.

This makes CDs a good fit if you have a set timeline for your money (say, you’re using it for a house down payment in a year or two years), or you want to use the interest earned to cover bills (say, if you’re a retiree slowly withdrawing cash from a retirement account).

Sure, it’s nice to see consumer interest rates drop. What’s a little less nice is losing out on the sweet rates we’ve been earning on deposit accounts. When you’re not quite sure what will happen with rates, it is an excellent time to put money into a sure thing — and in this case, a CD is as close to a sure thing as you can get.

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.The Motley Fool has a disclosure policy.

“}]] Read More 

Want to enjoy the most Costco savings? Read on for some strategic moves to make this month. [[{“value”:”

Saving money is a big reason why so many people choose to join Costco. But in many cases, saving money boils down to using the right shopping strategies. With that in mind, here are some tips to maximize your savings at Costco this October.

1. Don’t go overboard on Halloween

At this point, Costco has had Halloween items, from decorations to costumes, in stock for a good number of weeks. And while you’ll find bulk candy at Costco all year, right now, there’s an even wider selection of junk food that’s perfect for trick-or-treaters.

But as tempting as it may be to spend big on Halloween since it’s a fun holiday that only comes once a year, you don’t want to bust your budget in the course of celebrating it. Remember, the winter holidays are right around the corner. And you probably want to reserve some funds for the many gifts you’ll no doubt need to buy.

So put some thought into your Halloween purchases at Costco. If you don’t tend to get a lot of trick-or-treaters visiting your house, maybe buy one sack of candy instead of two. And while it’s fun to decorate your lawn with zombies and witches, if you’re trying to conserve funds, get creative and decorate with items you already have. For example, old white sheets do an amazing job of doubling as ghosts.

That said, being strategic with the credit card you use on your Halloween purchases at Costco could also result in savings in the form of cash back and other perks. Click here for our list of top credit cards that offer big rewards at Costco.

2. Don’t go when it’s the most crowded

Shopping at Costco when the store is jam-packed with people isn’t just unpleasant — it could also lead to poor financial decisions.

When you’re feeling stressed because you can’t comfortably access the aisle you need, you may be inclined to rush through it and miss out on a sale that could save you money. And on the flip side, if you’re itching to get out of the store because you’re overwhelmed by the crowds, you might grab items off the shelf quickly without checking the expiration dates, leading to wasted food and money.

A better bet? Visit Costco when it’s less likely to be filled to capacity. For the most part, that means staying out of the store on weekends and shopping on a weekday if you can swing it. And if your schedule is really flexible on weekdays, aim to go early in the morning or in the evening, as you may find the crowds to be pretty thin by then.

3. Say no to the free samples

Free food samples are generally considered a major perk of shopping at Costco. But they also have the potential to lead to impulse buys.

Say you’re going about your shopping when you’re offered a sample of aged cheddar cheese. It may not be something you’d normally buy. But if that bite is delicious, you might grab a block of it on your way out of that aisle. That may be good for your taste buds, but not your wallet.

If you want to save money at Costco this month, you’ll need to steer clear of impulse purchases. And since the store’s free samples can easily lead to those, you may want to say no to those as well.

Saving money at Costco this month could set you up with more spending cash for the winter holidays or give you more breathing room in your budget in general. So it pays to employ these tips all month long — and, where applicable, beyond October as well.

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.

“}]] Read More 

Does your bank make keeping your money secure a top priority? Read on for a few ways to tell you’ve found a safe bank. [[{“value”:”

Ideally, the bank you use pays you decent interest on your high-yield savings account, makes it easy to pay bills, and allows you access to your balance anytime by phone, website, or mobile app. But perhaps the most important reason for a bank’s existence is to keep your money safer than it would be as cash under your mattress.

Let’s take a closer look at a few signs the bank you’ve chosen is a safe place for your cash.

1. It has FDIC insurance

Don’t put your money in a bank that isn’t a member of the FDIC (or in the case of a credit union, the NCUA, which serves the same purpose). This protects you against a bank failing and all your money going with it.

The Federal Deposit Insurance Corporation is a government agency that was created in 1933, a few years after the major stock market crash that spurred the Great Depression and runs on banks. One big silver lining to this low period in American history was the wave of banking protections enacted to protect consumers’ money.

The standard level of FDIC (and NCUA) protection these days is $250,000 per depositor, per insured bank, per ownership category. Some banks offer higher levels, and if you have a lot of money in the bank, it’s worth ensuring that all of it is protected, whether by opting for a bank with more insurance or splitting your deposits between banks. Ensure your bank is FDIC-insured by using the BankFind Suite tool — as of this writing, 4,545 banks are insured.

Ready to boost your savings? Check out our list of the best high-yield savings accounts to find the right fit for you.

2. It’s invested in security features

Beyond just FDIC/NCUA insurance, our favorite safe banks and credit unions have other security features that can keep your money safe. To learn what a prospective bank offers, take some time to read reviews and dig into its website.

Ideally, you’ll find that it has two-factor authentication to log into your account (meaning you might need to enter a code sent via email or text in addition to your name and password) and debit cards with EMV chips (safer than old magnetic stripe cards). You should also be able to opt in for text or email alerts of suspicious transactions, like a debit card purchase made in a store many states away from where you live.

Some banks offer extra features, like single-use card numbers, which can make shopping online safer (they keep your actual card number away from the prying eyes of scammers), and debit card blocking (which lets you freeze your account if your card goes missing).

3. It offers 24/7 customer service

If you have a problem with your bank account or notice a suspicious transaction, you need to get in touch with a fellow human who can help ASAP. Find out how easy it is to get in touch with your bank’s customer service at any given time. You should be able to call any hour and reach someone who can help you.

Some banks offer multiple ways to reach customer service. You might be able to chat online in addition to over the phone, or even message a social media account that’s staffed 24/7. One of my favorite things about my online bank is the fact that I can see on its website how long I might have to wait on hold to speak to someone if I call. It’s very handy.

The safety of your cash should be a top priority when you choose a bank. Focus on these signs to determine whether a given financial institution is worth your time.

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.The Motley Fool has a disclosure policy.

“}]] Read More 

An unused credit card can still do some good for your finances. Read on to find out when it’s worth hanging on to an account you don’t use. [[{“value”:”

It’s worth checking out the best credit cards because they offer a lot of benefits for consumers. They’re one of the safest ways to pay for purchases since they’re not directly connected to your bank account the way a debit card is. They let you earn cash back and other rewards on your spending. Some even come with perks like airport lounge access, streaming service credits, and more.

But you might have a credit card in your wallet or sock drawer you’re not using at all. Is it a good idea to keep this card around — or should you close the account? Let’s discuss this from both sides and learn why (or why not) to keep an unused credit card.

Keep the credit card open

First, let’s take on the reasons to keep your credit card account open even if you’re not using the card.

Improving your credit utilization ratio

What’s the credit limit on that unused credit card? Depending on that number and how many other cards you have (and their credit limits), the unused card could be boosting your credit score.

In the case of revolving debt (where the amount you owe changes from month to month), your credit score is impacted by your credit utilization ratio. This is the amount of credit you’re using relative to how much you have, and it accounts for a whopping 30% of your FICO® Score — the second-most important factor, after payment history. To avoid credit score damage, it’s best to keep this number under 30%.

Let’s say you have three credit cards — one with a limit of $9,000, one with a limit of $7,000, and one with a limit of $4,000. That gives you a total credit limit of $20,000. You have a balance of $2,500 on your $9,000 card, a balance of $2,500 on your $7,000 card, and a $0 balance on the $4,000 card, which you’re thinking about closing.

Right now, you have a credit utilization ratio of 25%, since you’re using $5,000 of your $20,000 total available credit. But if you close that $4,000 card, that number goes up to 31%. In this instance, it’s a good idea to keep that unused card open until you pay down those balances.

Extending your credit history

Depending on how old that unused credit card account is, it could be improving your credit score in another way. Length of credit history is also part of your credit score — it makes up 15% of your FICO® Score.

It makes sense that this would be important to creditors — they want to see that you can manage credit successfully over a long period. In the case of a credit card, having a long-standing account that you use and pay off every month is a good way to boost your credit score.

If that unused credit card has been in your life for 15 years and you’ve moved on to cards with higher credit limits or better benefits, it’s still contributing to your overall credit history. Closing it could make a noticeable impact on your credit score.

Close the credit card

And now for the opposite case — when you should close the account.

Paying an annual fee

This is the reason I closed my oldest credit card account not too long ago. I was paying an annual fee for the card, which didn’t offer benefits worth that fee.

If you’re paying an annual fee for a card that doesn’t fit your spending or just doesn’t offer benefits or rewards you can use, close it. You can also ask the card issuer if it’s willing to waive the annual fee, but don’t assume it will say yes — especially if you’re not using the card at all.

Temptation to spend

Sure, you might not be using that credit card now — but maybe you’re feeling tempted to use that credit limit. Credit cards can be dangerous because they make it really easy to spend money you don’t have. And then they charge high interest rates on your balance, which can make it grow fast over time — the longer you carry a balance, the more you’ll pay.

As of May 2024, the average interest rate on credit card accounts that are charged interest (as opposed to those with a 0% intro APR) was 22.76%. Ouch. So if that unused credit card is weighing on your mind, teasing you with its available credit, cancel it. You’ll eliminate a potential source of financial pain.

Ready to start paying down balances and save money? Check out our list of the best balance transfer credit cards to find the right fit for you.

Closing an unused credit card isn’t always a slam dunk for your finances — but neither is keeping one open. The choice is yours, so weigh your options and decide which is best for your peace of mind and wallet.

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.The Motley Fool has a disclosure policy.

“}]] Read More 

If you’re a Gen Xer (or any age) and you’re burned out on your job, consider starting a business. Here’s how entrepreneurship can help you save for retirement. [[{“value”:”

When you think about investing for retirement, you probably think of 401(k) plans, IRAs, and buying stocks. But what if you could invest for retirement in a unique way — by starting a business?

A surprisingly high percentage of Gen Xers are looking to the future and seeing entrepreneurship as the key to a comfortable retirement, according to a new survey from ZenBusiness.

Let’s look at why starting a business can be the best way to save for retirement — and have more fun along the way.

40% of Gen X have started a business (or are thinking about it)

A recent survey from ZenBusiness found that Gen X is redefining retirement planning. Instead of just buying stocks or maxing out their 401(k)s at work, 40% of Gen Xers say they’ve already started a business or are considering doing so. The biggest reason? Retirement.

Here are a few examples of how small business ownership can be a bigger part of your retirement plans.

45% of Gen Xers surveyed said small business ownership is “a path to retirement stability.”43% said entrepreneurship is “a way to maintain financial independence.”Nearly 50% of Gen Xers aren’t sure if they can retire by age 65.

Whether it’s a side hustle or a new full-time gig, starting a business can be a great way to increase your income and save more money for retirement. But putting an extra few thousand dollars into your Roth IRA isn’t the only reason to start a business. Becoming an entrepreneur can help you redefine your path to retirement in powerful ways.

Starting a business can improve your retirement plan

As people get older and advance in their careers, they tend to make more money and figure out what they’re best at — what core skills they do best, how they like to collaborate with others, what industry or type of company they like to be part of, and more. But traditional corporate employers don’t always turn out to be the best fit for experienced workers.

If you’re a Gen Xer who’s feeling frustrated by your job, if you need to be around to take care of your family in ways that don’t fit a nine-to-five corporate schedule, if you don’t see good opportunities for advancement at your day job, or if you fear becoming a target for age discrimination, here are a few good reasons for Gen Xers to start a business.

1. A flexible schedule

When you’re running your own business, you control when, how, and where you work. You can burn the midnight oil when you have to or duck out early for doctor appointments and kids’ soccer games. You can work from home, a hotel, a coffee shop, or an office space.

2. Control over your career

If you’re feeling stifled in your job or worry that your career has plateaued, starting a business can help you learn new skills and take your career in new directions. You can bring your experience, expertise, and insights to a new playing field and open up new opportunities.

Easy-to-use business marketing software and online tools can help you build a website, create a brand, find customers, and more.

3. You can make more money

Being in business for yourself might sound risky if you’re used to the safety net of a steady paycheck. But when you own a business, there’s also no ceiling on how much you can make. What if you could double your income? Or what if you could make just enough to be happy and prosperous while enjoying a flexible schedule and more relaxed, creative way of life?

4. You can save more for retirement

Don’t assume that your day job’s 401(k) plan is the only way to save for retirement. If you’re a small business owner, you could qualify for other ways to save for retirement, like a SEP IRA.

Some small business owners can save more for retirement than employees can save in a 401(k). Get the same great tax benefits for saving for retirement, but without the stress and hassle of having a regular job!

Bottom line

ZenBusiness’s recent survey on Gen Xers and entrepreneurship shows why starting a business can be a powerful tool for retirement planning. When you own a business, you can make more money, invest more money, and control your career destiny in ways that many late-career working professionals would love.

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

“}]] Read More