Money Management

The federal government received a report if you’ve ever withdrawn more than $10,000 from your bank account. Keep reading to learn why. [[{“value”:”

When Richard Nixon was in the White House, Congress passed the Bank Secrecy Act, requiring banks and credit unions to report large cash withdrawals and deposits. The goal was to crack down on money laundering. After 9/11, bank adherence to the law became even more critical.

The government still needed help from banks to identify money launderers trying to hide illegal activities like tax evasion and gambling. However, the feds were also on the lookout for those laundering money specifically to fund terrorists. And this is where the withdrawals you take from your savings account come into play.

What this means for you

Imagine that you’ve been saving to buy a used car and finally have the money you need. You find the perfect vehicle, negotiate a good price, and run by the bank to withdraw the necessary funds from your savings account. In total, you withdraw $10,100.

Your withdrawal is automatically flagged. Because it’s over $10,000, the bank is legally required to file a Currency Transaction Report (CTR) and file it with the Financial Crimes Enforcement Network (FinCEN).

Bank employees know you and don’t believe for a moment that you’ve done anything wrong, but failure to make the report could result in hefty fines for the bank and might even result in criminal penalties. They file a report because they are legally obligated to.

Here’s the truth of the situation: Since you’re not laundering money and haven’t done anything wrong, you’ll never even know a report has been filed. FinCEN understands that a tiny percentage of reports filed are due to illegal activity. The vast majority concern honest people carrying out everyday banking activities.

In other words, you have nothing to worry about.

Attempting to skirt the law

Let’s say you can’t stand the idea of a CTR being filed with your name on it. So, instead of withdrawing over $10,000 from your checking account at one time, you spread smaller withdrawals out over a couple of weeks. You withdraw $500 one day, and a few days later, you return to withdraw $2,000. You continue to do this until you have the $10,100 you need to purchase the car.

The practice is called “cash structuring,” and it’s illegal. It’s common enough that bank employees are trained to look for it. If a bank employee doesn’t pick up on your actions, transaction monitoring software will likely identify the activity.

The point is that it’s unnecessary to make a big deal about a large withdrawal, even though you know a CTR must be filed. As mentioned, you never have to worry about engaging in an honest bank transaction. Only those who are breaking the law ought to be concerned.

If you’re the nervous type

If you tend to worry about things that “could” happen, do yourself a favor by creating a paper trail. For example, in this car-buying scenario, you should request a written document stating the agreed-upon price before heading to the bank.

Later, after you’ve paid for the vehicle, be sure to get a signed receipt from the seller. In fact, gather any documents tied to the transaction, including receipts related to registering and plating the car.

The odds may be one in a million that anyone will ever question you, but if it makes you feel more secure knowing you’ve got a paper trail available, it’s worth the trouble.

In the meantime, pat yourself on the back for putting enough away in a savings account to pay cash and avoiding interest payments. As you focus on making smart financial moves, the government remains committed to keeping you (and your bank account) safe.

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Think you know all the ins and outs of Costco? Read on for a few rules that might surprise you — for better or worse. [[{“value”:”

Costco is an interesting business that operates differently from supermarkets and big-box stores. Specifically, it costs money to get access to Costco. A basic Gold Star membership will run you $65 a year, while an Executive membership costs $130 a year but gives you 2% cash back on your purchases.

You may be aware that you need to be a member to get into Costco, or that you need to tag along with a paying member for access to the store. You might also know that Costco has a generous return policy, allowing members to bring back most items at any time for a full refund.

But some of Costco’s rules may be less obvious, especially within the context of making returns. Here are three you may not be familiar with — but you should be.

1. There’s a limited window to return electronics

There are plenty of benefits to buying electronics from Costco. Aside from competitive prices and cash back with an Executive membership, you’re entitled to free tech support if you need help troubleshooting issues. You also get a free second-year warranty included with your purchase.

But you should also know that Costco electronics have a 90-day return window that strays from the store’s general “bring it back at any time” policy. This extends to items like laptops, tablets, TVs, cellphones, and major appliances.

The good news, though, is that 90 days is a reasonable amount of time to figure out if a given item is meeting your needs. So as long as you’re mindful of that return window, it shouldn’t come back to bite you.

2. Some purchases can’t be returned at all

Some of the items you walk out the door with at Costco may be items you’re stuck with for good. Costco will not accept returns for cigarettes or alcohol. And you may not be able to return products with a limited useful life expectancy, like batteries.

You should also know that event tickets purchased through Costco can’t be returned, and neither can gold bars or silver coins. Gift card purchases are non-refundable as well. And that extends to the gift cards you buy to redeem at outside retailers as well as Costco Shop Cards (which you use at Costco itself).

3. Perishable food can be returned if there’s a good reason

You might assume that perishable food falls under the list of purchases Costco won’t take back. But that’s not necessarily true.

Costco will accept fresh food returns if there’s an issue with quality. So if you buy a large carton of berries, bring it home, and wake up the next day to find that most of it is moldy, Costco will generally accept your return.

You can even bring back perishable items for a refund on the basis of having an issue with the way they taste. If you decide to give the store’s chocolate cake a try and you find it way too sweet to be edible, you may be able to get refunded. Or, if you buy a batch of blueberry muffins whose taste seems off compared to the usual taste, that, too, generally warrants a refund.

But to get your money back for perishable foods, you have to do a couple of things. First, you have to make your return within a reasonable window of time. This isn’t because Costco is going to try to re-sell your rotten berries, but rather, because if you bring them back 10 days later, it’s going to be hard to prove that they grew mold prematurely.

Second, you have to return at least 50% of the item you’re bringing back. So in the cake example, it’s fine to bring back a cake with a corner piece missing. If you bring back a cake that’s mostly gone, Costco is unlikely to give you a refund.

Chances are, you’re going to spend a decent amount of money at Costco as a member. It’s important to understand the store’s rules, especially as they pertain to returns and refunds. Familiarizing yourself with the points above could help you save money — or at least avoid wasting it.

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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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Mortgage rates have come down quite a bit from their 2023 peak, but how much further could they fall in 2025? Find out here. [[{“value”:”

Mortgage rates have fallen quite a bit since the late-2023 peak. According to the latest data from the Mortgage Bankers Association, the average interest rate on a 30-year fixed-rate mortgage is now 6.29%.

However, with the Federal Reserve widely expected to gradually cut the federal funds rate through at least the end of 2025, there’s a solid probability that prospective home buyers will get a chance to buy with even lower mortgage rates in the near future.

Nobody can predict with any degree of certainty what mortgage rates will be at any point in the future. However, we can look at future interest rate expectations and historical mortgage rate trends to take an educated guess — so let’s do that.

Expectations for Fed rate cuts

Let’s start with the latest expectations for the Federal Reserve’s rate cuts. As of this writing, the target range for the benchmark federal funds rate is set at 5.25%–5.50%. The Fed is expected to start lowering this for the first time since 2020 later in September, and to continue to gradually cut rates through at least the end of 2025.

Here are the latest expectations being priced into financial markets:

At the start of 2025, a federal funds rate target range of 4.25%–4.5%, or one full percentage point lower than the current range.At the end of 2025, a federal funds rate target range of 2.75%–3.00%, or 2.5 percentage points lower than the current range.

Now, there is no guarantee this will actually happen, and if history is any indicator, these probably won’t be 100% accurate, especially the projection for the end of 2025 (a lot can happen economically between now and then). But we’ll use those as a guideline.

Mortgage rate spreads

The next piece of the puzzle is the mortgage rate spread, which is the difference between mortgage rates and benchmark interest rates. There are several different benchmarks we could look at, including the federal funds rate. Some industry experts use the 10-year Treasury yield as a good mortgage indicator, as it tends to move up and down in tandem with the average mortgage rate.

The current spread between the 10-year Treasury yield and the average 30-year mortgage rate is about 2.6 percentage points. And while it has varied a bit, it has been fairly constant throughout the past couple of years.

While nobody has a crystal ball that can predict future Treasury yields, one example is that data from Statista projects a 3.39% yield on the 10-year Treasury at the start of 2025. A separate projection from the Financial Forecast Center projects that the falling interest rate environment discussed earlier will result in a 3.37% 10-year yield in January 2025, falling rapidly to about 2.11% by mid-year.

I tend to view the latter figure as rather aggressive, and personally see the 10-year gravitating toward the 2.5% range by the end of 2025, which is right around where it was in 2019 when the federal funds rate was at a 2.25%–2.50% target range.

The prediction: Where will mortgage rates be in 2025?

Let’s put it together. Based on the projected interest rate trajectory and my expectations for Treasury yields, as well as typical mortgage rate spreads, here’s what I predict for 2025:

In January 2025, I predict the average 30-year mortgage rate will be about 6%, not too far below where it is right now.By December 2025, I predict the average 30-year mortgage rate will fall to approximately 5.1%, which would make a big difference in the cost of homeownership.

Of course, while this is a prediction based on interest rate expectations and historical mortgage rate spreads, it’s important to stress that it is just my prediction. There’s no way to know for sure what mortgage rates will do, and there are other factors — such as overall loan demand and banks’ perception of economic risk — that can influence them.

Having said that, I’m quite confident that the most likely direction for mortgage rates between now and the end of 2025 will be downward, and many people who want to buy a home or refinance a high mortgage rate will have their chance.

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

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Some credit card perks don’t live up to the hype. Find out which popular benefits may be more trouble than they’re worth. [[{“value”:”

Credit cards are more than just an easy way to pay for purchases. There are all kinds of perks available with them, especially if you have good credit and qualify for the best credit cards.

But not every benefit is as amazing as it may seem. When you’re looking for a new card, it helps to know which features to look for and which ones don’t live up to the hype. After nearly a decade of writing about credit cards, here are what I consider the most overrated benefits.

1. Rotating bonus categories

Lots of credit cards earn bonuses in certain areas. For example, a cash back card could earn 3% on gas and groceries and 1% everywhere else.

Some cards have rotating bonus categories that change every quarter. The bonus rate is usually very high, with 5% being the most common amount. But you never know how useful the categories will be. It could be grocery stores and gyms one quarter, hotels and restaurants the next.

For most people, it’s better to get a credit card with bonus categories that already fit your spending habits. You could also go with a card that earns a flat 2% everywhere. The mystery box approach could work well during some quarters, but there will also probably be quarters where you barely earn any bonus rewards.

You also need to activate your bonus categories every quarter with these cards. While card issuers normally send you reminders to do this, it’s still inconvenient. And if you forget to do it, you miss out on the bonus rewards.

2. Spending credits

A spending credit automatically reimburses certain types of purchases. If a card has a $300 annual travel credit, then the card issuer will reimburse your first $300 in yearly travel purchases.

Spending credits can be useful, but they have a few drawbacks. Most of the cards that offer this benefit also charge hefty annual fees, so you’re not exactly coming out ahead. You’re getting back a portion of that money you paid for the card.

Some spending credits are also hard to use. They might be highly specific. Instead of covering travel as a whole, they could cover airline fees or bookings through the card issuer’s hotel collection. Or instead of yearly credits, a card may offer quarterly or monthly credits, such as a $10 dining credit at select restaurants.

If you’re looking at a card with spending credits, consider how well those credits fit into your everyday life. If they’re going to be a hassle to use, then they aren’t really going to benefit you.

3. Bonus rewards for using the card issuer’s travel portal

This is an increasingly common perk, as card issuers try to get more people using their travel portals. Many Chase cards earn bonus rewards for booking through Chase Travel, Capital One cards earn bonuses for booking through Capital One Travel, and so on. Some cards earn as many as 10 points per $1 this way.

The problem is that these travel portals don’t always have the best prices. Earning more back isn’t worth it if it will cost you an extra $100 or more.

Another reason I’m not a big fan of this perk is because I prefer booking directly with airlines and hotels. This is the safest option. Your reservation is less likely to get lost, and you can contact the travel company if there are any issues. If you book through a travel portal, you need to contact its customer service if anything goes wrong.

Those are the credit card perks that I’ve found least useful. It doesn’t mean cards with those benefits are bad, but you may not want to get a card based solely on those features.

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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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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Savers have gotten used to 5% CDs. Read on to see why they’re unlikely to be available much longer. [[{“value”:”

Inflation has been a major problem for all of us in recent years. So if you’re tired of paying more for groceries, utilities, and just about everything else, you’re not alone.

But one positive thing to come from inflation is that the Federal Reserve took action to fight it by raising interest rates. And while that’s led to higher costs for borrowers, it’s been great for people with money in the bank.

Ever since the Fed began its rate hikes, savings account and CD rates have increased. In fact, it’s been fairly easy to find a 5% CD for well over a year now. And that’s given savers a prime opportunity to score a great return on their money without much risk.

But if you’re hoping to see those 5% CD rates continue, here’s some bad news. The Fed is expected to start lowering interest rates in mid-September. And to be clear, we’re not talking about a one-time rate cut. Rather, the central bank will probably move forward with a series of interest rate cuts that extend well into 2025.

Just as the Fed’s interest rate hikes drove CD rates up, so too are cuts likely to bring CD rates down. If you’re interested in opening a CD, your best bet is to get moving now.

However, you should also know that there will be plenty of opportunity to lock in a good CD rate beyond September. There’s no need to panic if you’re not quite ready to commit to a CD.

What to expect from CD rates

It’s pretty reasonable to assume that 5% CD rates will be off the table soon. As it is, many banks have already lowered their CD rates ahead of the Fed’s expected rate cut announcement this month. And once that rate cut becomes official, CD rates could fall even more.

As the Fed continues to cut rates, CD rates are likely to follow suit. So it’s fair to say that we may reach a point in 2025 when CD rates fall below 4%.

At the same time, any decline in CD rates that comes down the pike is likely to be gradual. So while you may be looking at 4.50% CDs in the coming months, there’s a good chance that CD rates will manage to stay at or above the 4% mark for a good part of 2025. Rather, it’s that as the new year progresses, there’s the risk of CD rates going below 4%.

That said, it’s important to recognize that today’s CD rates are notably high. It’s hard to wrap your head around the idea of a 3% return on a CD when it’s been possible to get 5% for such a long time. But historically speaking, 3% isn’t actually a bad rate. That’s something you’ll want to keep in mind as rates begin to slide.

The news isn’t all bad

It’s disappointing to imagine the days of 5% CD rates coming to an end. But remember, once the Fed starts lowering rates, it’s not just CD rates that are likely to fall. Borrowing rates should fall as well.

This means that by this time next year, it could be a lot cheaper to sign a mortgage or finance a car purchase. What you might lose in the form of a lower interest rate on a CD, you could gain in the form of lower loan payments.

Of course, if you have the money on hand to open a CD, then you might as well do so as soon as right now to take advantage of where rates are today. But remember that there should still be opportunities to score a decent return on a CD for many months beyond September.

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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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Choosing the right legal structure for your business can make the difference between success or failure. Explore the pros and cons of your four options. [[{“value”:”

When starting a business, there are many factors to consider. What will you name the business? What service or products will you be selling? Will you be hiring employees (45% of all workers work for a small business). What will your online and marketing strategy be?

And while those are all important, vital even, it’s safe to say that some of the seemingly more mundane issues that need attention should take precedence over those more interesting, and dare I say, fun, decisions.

As an attorney who spent many years helping entrepreneurs start and dissolve businesses, I admit I may be a bit biased. But to me, maybe no decision you can make when starting a new venture is more important than what legal form the business will take. Make the wrong choice and it could, at some point, mean the difference between success and failure.

You essentially have four choices for how you will legally form your business. Here’s what they are, and why two of them are way better than the other two.

Sole proprietorship

This is the choice most new small businesses choose, at least at the beginning of the venture. And it is easy to understand why. A sole proprietorship is simply when you hang out a shingle and start selling something. Yes, there are a few hoops to jump through, but they are simple, affordable, and fast — and that is why this is a popular choice for startups. All you need do is:

Pick a name and register it with your city, county, and/or stateGet a business licensePreferably, though not a legality, open a business checking account

In this scenario, you and the business are one and the same. If something goes wrong at the business and it gets sued for example, you personally are the one on the hook.

See? Not a great choice.

Partnerships

A partnership is essentially the same as a sole proprietorship, but shared by two or more people. The legal issues and potential liability are the same, so no, we don’t like this option much either. In addition, know that with a partnership, one partner can take on a debt or liability, or sign a contract in the name of the business, and both partners are liable for it.

I once represented a partnership where the VP of Marketing signed a $75,000 contract for a SkyMall ad, without asking his other partners if that was OK or even a good idea. The ad flopped. So did the business. I represented them in a bankruptcy proceeding.

The next two options are much better and I will lump them together, as they are very similar.

LLC or S corporation

An LLC and S corp are separate legal entities, and one of these is the better choice for your business. Whereas a sole proprietorship or a partnership are the same as the owner, legally speaking, these two are new legal entities, separate and apart from the owner. Steve Strauss Content is the same as Steve Strauss. Steve Strauss Content, Inc. is a unique legal entity unto itself.

And that’s the legal magic. If something goes wrong with your LLC or S corp, it is the business that is on the hook, not you personally. Your home, savings, investments, everything, is legally protected.

LLC stands for Limited Liability Company. And an S Corporation is, well, a corporation. They are similar in that an LLC legally is almost exactly like an S corporation, only the rules of running it are a bit more lax. With an S corporation, there are corporate minutes to keep, officers to name, and other requirements.

While these formalities may seem cumbersome, they really are not. By using an online, do-it-yourself legal site like LegalZoom or Rocket Lawyer, you can create an S corp or an LLC yourself for a couple of hundred bucks.

You may be asking, well, is an LLC or S corp better? It depends on a variety of factors. S corps are subject to different tax requirements, for starters. As such, making the choice is best done by consulting an attorney who knows your specific and particular situation.

The bottom line is that while sole proprietorships and partnerships are fairly easy to create, S corps and LLC are almost always a better choice for most small businesses.

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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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