Money Management

Interested in a CD? Now is the perfect time to get moving. Read on to see why. [[{“value”:”

Opening a certificate of deposit (CD) is a big commitment. You’re putting a sum of money into the bank and are basically cutting off access to it unless you’re willing to take a penalty for an early withdrawal. That’s why it’s important to make sure you’re ready for a CD before you dive in.

But if you’ve been waiting a while to open your next CD, you may want to take action in August. Not only are CD rates currently sitting at record highs, but August could end up being your last opportunity for a while to snag such a fantastic rate.

Why it pays to open a CD this month

CD rates have been strong for a while now, so you may not feel the need to rush into opening one in August. But you should know that the reason CD rates have been strong is that the federal funds rate, the Federal Reserve’s benchmark interest rate, is sitting at a 23-year high following a series of hikes in 2022 and 2023.

The reason the Fed raised interest rates in 2022 and 2023 was to combat soaring inflation. But now that inflation has cooled to a large degree, the central bank is making plans to start cutting its benchmark interest rate.

The Fed’s next opportunity to do that is during its Sept. 17–18 meeting. And based on a recently released jobs report that contained disappointing news (including a jump in the unemployment rate), it’s becoming more likely that the Fed will, indeed, take rate-cut action in September.

Once the Fed moves forward with its first rate cut, CD rates could start to fall pretty quickly. So could savings account rates, for that matter. This doesn’t mean that CD rates will plunge overnight, so there’s no need to panic if opening a CD is on your radar but you won’t be ready to do it for a good number of months.

But by late September, 5% CDs may no longer be available (or as widely available). So if you want that 5% CD, August is the time to sign up.

Make sure you’re set for emergencies first

While it pays to open your next CD in August and not beyond that if you can help it, before you tie any money up in a CD, you’ll want to make sure that you have enough money in a regular savings account to cover three full months of essential bills. That’s the minimum you should be aiming for in the context of your emergency fund.

Remember, taking an early CD withdrawal can lead to a penalty of a few months’ interest. The exact penalty you’ll face will depend on your CD term and bank — check the fine print for the account you’re considering to see how much you can expect to pay.

It’s silly to tie up money you might need for emergencies in a CD and risk that penalty. So if you’re not sure you can afford to part with your money, don’t. Instead, leave it in regular savings, where you can still earn a nice amount of interest.

But if you’re confident you’re all set as far as your emergency fund goes, then you might as well open your next CD in August while rates are at a high.

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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.
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Don’t want to pony up for an annual Costco membership? Read on to see how you can avoid that fee but still get access to Costco’s affordable inventory. [[{“value”:”

An annual basic (Gold Star) membership to Costco currently costs $60 a year. The Executive membership that gives you 2% cash back on your purchases costs $120.

And these prices aren’t going to last much longer. Starting Sept. 1, the cost of a basic Costco membership is rising to $65, while an Executive membership will cost $130.

These are by no means terrible prices to pay if you can benefit from regular Costco access. But if you don’t need to visit a warehouse club store every week, or even every month, then you may find it wasteful to join Costco and pay the membership fee.

If that’s the case, you’re not necessarily out of luck. Here are three ways you can shop at Costco without having to pay.

1. Shop online

Many people are surprised to learn that you can place an order on Costco.com without having a paid membership. However, you should expect to pay more for your purchases in that situation.

Costco imposes a 5% surcharge on orders placed by non-members. The only exception to this rule is for prescription drugs.

Remember, Costco uses its membership fees to offset its costs. If you’re not contributing to those fees, you’re going to be charged more.

However, if you only place the occasional order on Costco.com, then it could make more financial sense to pay the surcharge instead of a membership. For example, say you order from Costco four times a year, and each order totals $200. All told, that’s $40 in surcharges for $800 worth of products, which is cheaper than the basic membership.

Now that said, one other snag you might hit as a non-member on Costco.com is being barred from buying certain member-only items. But even in that case, there’s a potential workaround.

If you have a friend with a membership, just ask them to buy you the item in question and pay them back. It doesn’t have to be a deal-breaker if an annual membership doesn’t make sense for you.

2. Shop with a friend

If you live in a suburb, chances are, you know at least one person who pays for a Costco membership. And you should know that members can bring a guest along to shop. So if you don’t want to pay for an annual membership, just aim to tag along with a friend on occasion.

However, if you’re going to do that, pay attention to the products Costco has in stock and the prices. You may decide after getting a better sense of the store’s inventory that a membership could result in nice ongoing savings for you.

3. Shop with a Shop Card

A Costco Shop Card is the store’s version of a gift card, and it’s something only members can buy. However, there’s nothing to stop someone you know who’s a member from buying a Shop Card and giving it to you.

Once you have a Shop Card in hand, all you need to do is show it at the door, and you’ll be let right in to shop at Costco by yourself. If you want occasional access to Costco and don’t want to be tethered to a friend’s schedule, ask a member you know to buy you a few Shop Cards and pay them back. That gives you the freedom to shop at Costco at your leisure.

While a Costco membership offers a lot of benefits, it may not be worth paying for if it’s something you don’t expect to use often. Luckily, you can shop at Costco regardless.

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

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

Click here to read our expert recommendations for free!

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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Most card issuers don’t want to close your account. Read on to find out the handful of reasons why they might do so anyway. [[{“value”:”

Credit card companies are usually eager to get new customers to sign up for their cards or convince existing ones to apply for another card.

After all, the more credit cards being used, the more money the card issuers make from accruing interest and swipe fees.

But there are a handful of times when a credit card company might cancel your card. Here are five of the most common.

1. You’re not using your credit card

One day, I got a letter informing me that my credit card account, which I had for years, was being closed. I was shocked; I had no idea credit card companies closed accounts. I always figured they wanted to keep them open!

As I read further down the letter, my credit card company said the account was being closed due to inactivity. Apparently, credit card companies only make money from cards if you use them. Who knew?

To avoid getting your credit card account closed, use the card at least once per month. If you need an extra incentive to keep using it, check to see if you earn cash back rewards. If you think you’ll forget to use the card, put a recurring bill, like your monthly internet service, on the account to make it automatic.

2. There was a significant drop in your credit score

Just because you were approved for a credit card in the past doesn’t necessarily mean you’re entitled to keep using it. Credit card companies check your credit accounts regularly to see if you’ve been keeping up with your other payments.

They do this to assess how risky you are, and, in some cases, they may cancel your account if you’re behind on too many of your accounts or if your credit score has dropped significantly.

The good news is that these regular checks can also work in your favor. I paid off a credit card balance recently, and my credit limit and score went up as a result.

3. The credit card company is reducing its own risk

I don’t want to have to say it, but sometimes, it’s not all about you. Credit card issuers may cancel your card because they need to reduce risk.

A few months into the COVID-19 pandemic, credit card issuers closed accounts and reduced credit card limits for 70 million cardholders. The disruption to businesses and the potential for a large reduction in people’s wages caused card issuers to turn off the credit spigot for some borrowers.

4. The card is no longer offered

It’s possible for your credit card to be canceled simply because the issuer no longer offers it. In some cases, you may still be able to use the card or switch to a different card, but not always.

If you find your card is no longer offered, and your account is being closed, contact the company to see if there’s a different card you can apply for. You may also want to reach out to learn what will happen to your credit card rewards, such as travel miles, once your account is closed.

5. If you stop making payments

Unsurprisingly, if you stop making payments on your account, your credit card company may close it. This is often called a “charge-off” and it typically happens if you’re 120 to 180 days late on your payments.

But keep in mind that your card issuer could also close the account if you’re not meeting the minimum monthly payment required. Once the account is closed, your debt could be sold to a collection agency.

If you need to catch up on your payments, contact your credit card company immediately to see if you can work out a repayment plan.

If you use your card regularly and make payments on time, there’s a good chance your account won’t be closed. If you want to keep your account in good standing but don’t want to rely on using the card too much, set up one or two automatic bills each month.

And, take it from me, if you get a letter from your credit card company telling you they’re about to close your account, and you don’t want that to happen, pick up the phone right away!

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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With the right strategy, you can save big at Costco this month. Read on to see how. [[{“value”:”

Shopping at Costco is a great way to spend less on the essentials you need, as well as special one-off purchases, like a new TV or camera. If you’re looking to save serious money this month, here are some key moves to make.

1. See what back-to-school items you can snag

This time of the year tends to be bittersweet for parents of school-aged children. It’s when it’s time to start winding down summer and focusing on back to school. And that could also mean racking up quite a large credit card bill.

Families with school-aged children expect to spend an average of $874.68 on back to school items this season, according to the National Retail Federation. And don’t worry — that doesn’t just mean pencils and paper. It includes everything from clothing to school-related electronics. But either way, it pays to see what items Costco has in store at a great price.

One thing you probably won’t find at Costco is actual classroom supplies, though. The warehouse club giant isn’t known for its vast selection of notebooks, pens, pencils, and binders. Rather, Costco is a great place to look for necessities like clothing, sneakers, and sports equipment and gear.

Also, don’t overlook some less-obvious school supplies your local Costco might carry. You may be able to find a quality backpack or laptop bag if your child needs one. You might also find lunchboxes for your kids, as well as insulated water bottles.

2. Create a system that helps you avoid impulse buys

Shopping at Costco can open the door to lots of temptation. You could go in to buy a bunch of groceries and walk out with a supply of skincare products you didn’t really need or a new sweatshirt that’s cozy in its own right, but an unnecessary addition to your already-stuffed closet.

Avoiding impulse buys at Costco could save you big money, so to that end, pledge to make a list before you hit the store. More so than that, pledge to stay out of aisles that don’t contain a list item. And that means no, don’t go wandering around for free samples if it means accessing corners of the store you’re supposed to be avoiding.

3. Get a membership before prices rise on Sept. 1

For years now, Costco has maintained the same membership pricing — $60 a year for a basic (Gold Star) membership, and $120 for an Executive membership that gives you 2% cash back on your purchases. But starting Sept. 1, 2024, these fees are rising to $65 and $130, respectively.

If your Costco membership has lapsed but you know you want to join again, be sure to sign up at some point in August. Similarly, you may want to upgrade to an Executive membership before it starts costing more to do so.

With a little planning, you can eke out some big savings this month at Costco. But remember, the second tip above doesn’t just apply to August. It’s a good idea to stick to a list and stay out of needless aisles any month you shop at Costco to avoid extra spending that hurts your budget.

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

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

Click here to read our expert recommendations for free!

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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If your CD has a rock-bottom rate, is it worth withdrawing for a new CD contract? Here’s how to do the math for yourself. [[{“value”:”

If you locked into a certificate of deposit (CD) a couple years ago, you might be looking at today’s rates through teary eyes. The national average 12-month CD rate in August 2022 was about 0.31% APY, according to the Federal Deposit Insurance Corp, while the current rate is almost six-times that (1.85%). And that doesn’t even come close to the APYs on top-paying CDs, which are still above 5.00% for some terms.

That might lead you to ask a compelling question: If you have a CD with a very low rate, should you break your contract to get a CD with a higher APY? Let’s take a look.

Breaking an old CD contract will cost you in penalties and opportunity costs

Unless you have a no-penalty CD, you’ll pay an early withdrawal penalty to break your old CD contract. Most penalties are equal to a certain number of days’ worth of interest (like 90 days) and will be deducted from the interest you’ve already earned. If your earned interest doesn’t cover the full penalty, the rest will be deducted from your principal.

You also have to think about opportunity costs; in this case, the interest you would have earned had you kept your old CD contract intact. In general, if the forfeited interest and early withdrawal penalty are significantly less than the interest to be gained on a new CD, breaking your contract is worth it.

For example, let’s say you put $15,000 in a 3-year CD in August 2022, when the national deposit rate was 0.47%. At this point, you’ve earned roughly $141 in interest and stand to earn about $71 more. Let’s also assume that this CD’s early withdrawal penalty is one year of simple interest. This would be about $71, rounding up.

The total cost of breaking this CD, then, would be $142: $71 in opportunity costs and $71 in penalties.

Now, let’s say you’re looking at another 3-year CD being offered now. Let’s say it’s a CD offering a superb 4.40% APY. If you were to put $15,000 into this CD, you would stand to gain about $2,068 over the life of your CD. I’m no mathematician, but earning $2,068 seems like a lot better deal than finishing your current CD’s term to retain $142.

The math doesn’t always work in your favor

If your situation is similar to the example above, your path forward is clear: Break the CD contract and get a new one. Things get more complicated, however, when the interest you stand to gain isn’t meaningful.

For example, let’s say instead of 0.47%, your 3-year CD has a 3.50% APY. With the same conditions as above, you’ve earned about $1,068 in interest and stand to gain another $562 if you finish out your CD contract. The early withdrawal penalty is the same (one year of simple interest), but since your APY is higher, you’re going to lose $525. Now, breaking your CD would result in a loss of roughly $1,087.

In this case, you would still come out ahead if you broke this CD to open a new 3-year CD with a 4.40% APY. But your earnings wouldn’t be as lucrative as, say, breaking a CD with an APY of 0.47%.

Then again, you’re still earning more money than keeping your old contract. Ultimately, that’s what matters — coming out ahead financially. Check the math for yourself and see if it’s worth the effort to break your old CD contract for one of today’s best rates.

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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.

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