Money Management

High-yield savings accounts have variable interest rates. Learn why expected rate cuts in 2025 may make it a good idea to move some money from savings to CDs. [[{“value”:”

If you have a lot of money in a high-yield savings account, you’ve likely been earning pretty great rates lately. Some accounts are paying APYs upwards of 5.00%, which is a really competitive rate for money in an FDIC-insured account that you can’t lose.

However, while you may be getting a really good return on your account right now, you should seriously consider moving some money out of savings before 2025 arrives. Here’s why.

Your high-yield savings account probably isn’t going to keep paying such competitive rates for long

There’s a really simple yet important reason why you may want to start moving some money out of your savings account. Even the best high-yield savings accounts paying the most competitive rates are probably not going to keep offering such great rates into 2025 and beyond.

That’s because these high-yield accounts have variable interest rates. Banks make no promises to you that they’ll keep paying you the rates they’re paying you today on the money you have in savings. If market conditions change, they can drop their yields immediately and the APY you’re getting could decline dramatically.

And market conditions are almost inevitably going to change. The U.S. central bank, the Federal Reserve, has made it very clear that it’s eager to reduce the benchmark interest rate. That’s the rate at which banks borrow overnight from each other. If the benchmark rate is cut, banks are likely to respond by lowering the yields they are offering on savings (and other deposit) accounts.

The Federal Reserve raised the benchmark rate in response to the post-COVID inflation surges that have occurred and driven up prices. However, in 2024, while inflation is still higher than the Fed’s target of 2.00% (the latest numbers show it’s currently sitting at 3.3%), it’s lower than it was in 2022 and 2023.

Fed policy makers also believe inflation is likely to continue getting closer to the benchmark, and officials have indicated they’d like to cut rates once in 2024 and another four times in 2025.

While there’s no guarantee that this will happen, there is every reason to believe that rates are going to go down next year — and that your bank account yields are going to fall quickly when they do.

Move some money into CDs before it’s too late

Since the interest rates offered by high-yield savings accounts are likely to start declining by the end of this year and continue going down into next year, you should seriously think about moving some of your money out of savings and into a certificate of deposit (CD) instead.

CDs are different from high-yield savings accounts. They are offering similarly competitive rates right now, with many paying yields in the mid-4.00% range and a good number paying above 5.00%. However, unlike savings accounts, these rates are guaranteed to last for the duration of the CD term.

If you buy a 5-year CD, you are guaranteed to get the rate that you’re offered today for the next half-decade. So, even as interest rates start to decline, you will keep getting a great return on your investment.

Now, the catch is you have to commit to not taking the money out of your CD until the term ends or you could face what’s known as an early withdrawal penalty. But, if you have some money in savings you aren’t going to need for a while, moving it out of savings and into a CD can be a smart choice.

CDs come with different term lengths, with many banks offering CD terms ranging from three months to five years. Many also have no minimum deposit requirements or low minimum deposit requirements. So, take a look at what money you have in savings. If there’s some of it you won’t need for a while, think seriously about moving it into a CD before 2025.

When rates start to decline but you still get to earn well above 4.00% on your invested cash for the foreseeable future, you’ll be glad you did.

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Are you stuck wondering if you should apply for your own credit card? Here’s what to consider so you make the best decision. [[{“value”:”

When you’re standing at the crossroads of credit, deciding whether to apply for your own credit card or become an authorized user on someone else’s account, the choice might feel a bit like deciding between ordering the usual at your favorite café or trying that intriguing new drink everyone’s been raving about. Both options have their perks and quirks, and the best choice depends largely on your personal financial situation and credit goals.

Getting your own credit card

Venturing into the world of credit with your own card is like getting behind the wheel for the first time. It’s exciting, a bit nerve-wracking, but ultimately a huge step toward financial independence. Here are some major pros and cons of getting your own card to consider.

Pros:

Building credit history: Every on-time payment is a gold star on your credit report, helping to build a strong credit history. This is crucial when it comes time to apply for loans, mortgages, or more credit cards.Rewards and perks: From cash back to travel points, owning a credit card often comes with a suite of benefits that you can tailor to your spending habits and personal preferences.Financial autonomy: Having your own card means you have full control over your finances. You decide your spending limits, track your expenses, and manage payments without having to rely on anyone else.

Cons:

More responsibility: With great power comes great responsibility. Missed payments or high credit utilization can negatively affect your credit score. Plus, poor financial management could lead to debt.Harder to qualify: If you’re a newbie to the credit game or your credit score isn’t stellar, getting approved for a credit card with favorable terms can be tougher.

Becoming an authorized user

Being added as an authorized user on another person’s credit card account is like being invited to an exclusive club. You get many of the privileges without being the main member. Here are a few pros and cons.

Pros:

Credit building with a net: If the primary account holder has a solid track record of timely payments and low credit utilization, your credit score can benefit. You’ll inherit some of their good credit habits on your own credit report.Less financial risk: As an authorized user, you’re not legally obligated to pay the credit card bill — that responsibility falls to the primary account holder. This can be particularly appealing if you’re still learning the ropes of financial management.Ease of approval: No credit check is required to become an authorized user. This makes it an excellent option for young people or anyone looking to repair their credit history.

Cons:

Dependent on another person’s habits: Your credit fate is partially in someone else’s hands. If the primary account holder misses payments or maxes out the card, it could negatively impact your credit score.Limited financial independence: While you can use the credit card, you don’t have control over the account. You won’t be able to change the account, request a credit limit increase, or take advantage of certain cardholder benefits.Potential for conflict: Money can strain relationships. If issues arise about spending or payment responsibilities, it could lead to awkward conversations or worse.

Making the right decision

Deciding between getting your own credit card or becoming an authorized user boils down to your individual financial situation and your comfort level with taking on credit responsibilities.

If you’re young, just starting out, and looking to build credit with a safety net, becoming an authorized user could be the way to go. It’s like learning to swim with floaties. However, if you’re ready to dive deep into managing your own finances and want the benefits (and rewards) that come with it, applying for your own card might be the better choice.

No matter which path you choose, remember that the goal is the same: building a healthy credit history that opens doors to your financial dreams. Whether you go solo or join forces with a trusted partner, smart management and regular monitoring of your credit will keep you on the right track. So, whether you order that tried-and-true latte or go for the flashy new summer special, make sure it’s a decision that aligns with your long-term financial goals.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Looking to upgrade your furniture? A Costco membership could help you save on this purchase. Here’s why you should buy your furniture at Costco. [[{“value”:”

Many savvy shoppers become warehouse club members to get great deals on groceries and everyday essentials. But with a Costco membership, you can save money on purchases beyond food, drinks, and toiletries.

One example is furniture. If you plan to invest in new furniture soon, consider joining Costco to take advantage of the best deals. Ready to upgrade your furniture? I’ll share some of the top benefits of buying furniture from Costco.

1. You’ll get a great deal

Costco has various furniture options, so you can find what you need regardless of your budget. The best part about purchasing furniture from this retailer is that you’ll get a great price. Costco members can score member-exclusive deals.

The retailer also runs extra sales that can provide additional savings, so check current promotions before you buy. By shopping at Costco, you can get quality furniture and keep more money in your checking account.

2. Costco has a generous return policy

Furniture is a significant investment, so you want to ensure you’re happy with what you buy. Costco has a generous return policy, so if you purchase furniture that doesn’t meet your needs, you can return it and get your money back.

The retailer offers a satisfaction guarantee on every product it sells, which is a major win when making a sizable purchase like this.

3. The furniture is durable

Like other retailers, Costco sells various products from different manufacturers, so you’ll notice plentiful furniture options online and at your local club. The exact quality of each item can vary, but overall, most members rave about the quality and durability of furniture sold at Costco. You can feel confident you’ll get furniture that looks great and lasts a long time.

Costco tips for success

Before buying furniture, explore what’s available at Costco.com or through the Costco mobile app. You can read reviews from other shoppers to get a better feel for an item’s quality.

You can also review the description and specifications before you order to ensure you’re ordering a piece of furniture that meets your needs, including sizing and material.

If you prefer to look at furniture before you buy, head to your local club to see what’s available. Costco has some furniture on display to help you make a decision.

Is a Costco membership right for you?

You may wonder whether investing in a Costco membership is right for you. Becoming a member costs money, so consider your budget before investing in an annual membership. It costs $60 to $120 yearly to join, but always comes with a money-back guarantee if you’re not satisfied with your membership.

You should also consider your shopping habits and any big purchases you plan to make soon to determine whether Costco can help you get what you need at a great price. If you like Costco’s products and love a great deal, you may benefit from becoming a member.

Our best strategy for saving money at Costco is to pay for your purchase with a rewards credit card. You can earn rewards when you swipe your card to maximize the savings you receive. Check out the best credit cards for Costco to learn more about your options.

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.Natasha Gabrielle 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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CD rates are starting to fall, but there’s still time to lock in a high APY. Here’s what you need to know. [[{“value”:”

CD rates have been exceptionally high over the last few months, especially for CDs with terms of a year or less. But with Federal Reserve rate cuts expected in the latter half of the year and into 2025, many banks have already begun gradually reducing their APYs.

This can be worrisome if you hoped to lock in a high rate on your savings for the next few months or years. But there’s still time to claim above-average CD rates. Below, we’ll talk about which types of CDs may be best right now and whether a CD is a good fit for you in the first place.

Choosing the right CD for you

CDs break down into two broad categories: short-term CDs have term lengths of a year or less while long-term CDs have term lengths longer than one year. Choosing the right term length is critical because it affects your access to your cash and your interest rate.

Long-term CDs tie your money up for a longer period. If you open a 5-year CD, you’re agreeing to leave your cash alone for five years. Early withdrawals trigger penalties. But in exchange for that longer term, you usually get a higher interest rate than you would with a short-term CD.

The current interest rate environment is unusual. With inflation having been so high, banks have offered the best rates on short-term CDs. These maxed out around 5.00% APY. Long-term CD rates are still high, but have been a little lower at around 4.00% APY. The best CD rates in both categories have fallen a little off these highs in the last couple of months.

You might be tempted to go with a short-term CD to capitalize on the higher rates, and this could be the right move if you don’t want to tie up your cash for too long. But if you open a 1-year CD, for example, and then hope to reinvest in a new 1-year CD when the initial term ends, you’ll probably end up with a lower rate on your second CD.

Longer-term CDs may have slightly lower APYs, but they could generate greater interest for you over the long term. That’s why long-term CDs are generally more popular when interest rates are falling. You can secure a higher rate now that’s guaranteed to last for years.

Alternatives to CDs

CDs are a great choice if you want a guaranteed return and you’re comfortable locking your money away for the specified term. But if you don’t want to do this, a high-yield savings account is probably a better fit for you. Your interest rate will rise and fall over time, so it’s difficult to predict how much you’ll earn in a year. But you’ll be able to withdraw your cash whenever you need. This makes savings account a great home for your emergency fund and short-term savings.

If you’re trying to decide where to keep long-term savings, investing could be a better choice than a long-term CD. There’s a risk of loss, but you could also grow your wealth much faster than you could with a CD. A lot depends on your risk tolerance and investment horizons, though.

If you’re unsure which option is the best for you right now, you could always spread your money around. Keep your emergency fund in a savings account, invest money you don’t plan to spend in the next five to seven years in a brokerage account or retirement account, and toss the rest into a CD. This can give you the best of both worlds by enabling access to the cash you need while allowing for significant growth to your long-term savings.

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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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You have funding options for your startup. Read on to learn more about VC, crowdfunding, and small business loans. [[{“value”:”

Starting a small business or launching a startup is an adventure filled with excitement and challenges, one of which is securing the necessary funding to turn your big ideas into reality.

Whether you’re looking to innovate in technology, open a cozy cafe, or launch a sustainable fashion line, funding is the fuel that powers your business dreams. Here, we’ll explore three practical ways to secure that crucial start-up capital.

1. Venture capital: The big-league booster

Venture capital (VC) isn’t just for tech giants and Silicon Valley startups. It’s a viable option for various businesses with high growth potential. Securing venture capital means partnering with investors who provide funding in exchange for equity, or shares, in your company. This is not just about money; it’s about forming strategic partnerships that bring experience, mentorship, and networks to your business.

Making the pitch

To attract a venture capitalist, you’ll need a rock-solid business plan and a pitch that not only shows your passion, but backs it up with hard data. Demonstrate clear paths to profitability, a deep understanding of your market, and a unique selling proposition that sets you apart. Remember, VCs are all about high returns, so you’ll need to show how your business can scale significantly and efficiently.

Pros and cons

The upside? Access to substantial amounts of funding and invaluable guidance from industry veterans. The downside? You’ll likely give up a portion of your company and some control. Decisions will now be made jointly with your investors, who will have a vested interest in how your business is run.

2. Crowdfunding: Power to the people

Crowdfunding platforms like Kickstarter, Indiegogo, and GoFundMe have opened up new avenues for business funding driven by the very people who are your potential customers. This method involves setting up a campaign to raise a specific amount of money, where individuals contribute small to large amounts in exchange for perks, products, or equity.

Crafting a compelling campaign

The key to a successful crowdfunding campaign is engagement. You’ll need a compelling story and clear communication about your business goals, how the funds will be used, and what contributors will get in return. Videos, blogs, and regular updates can help personalize your campaign, making it more likely to resonate with potential backers.

Pros and cons

Crowdfunding not only raises capital but also validates your business idea through public interest. It’s less risky in terms of debt and doesn’t require giving up equity — unless you opt for equity crowdfunding. However, the success of crowdfunding is not guaranteed, and it requires substantial marketing effort to reach your target amount.

3. Small business loans: The traditional route

When more traditional methods are preferred, small business loans from banks, credit unions, or community-based lenders are a go-to. These loans are specifically designed to meet the needs of small businesses, offering lower borrowing amounts with feasible repayment terms.

Additionally, the Small Business Administration (SBA) offers a variety of loan programs that assist small businesses in securing loans from $500 to $5.5 million through guaranteed backing by the SBA, which makes lenders more willing to take a risk.

Navigating the loan landscape

Prepare to face rigorous scrutiny when applying for a business loan. Banks will examine your business plan, credit history, financial projections, and preparedness to ensure the risk they’re taking is minimal. The better your preparation, the higher your chances of approval.

Don’t forget to explore community-based lenders who may have more favorable terms or greater interest in supporting local businesses. SBA loans can also be a fantastic route due to their lower interest rates and longer repayment terms, making them especially attractive to new entrepreneurs.

Pros and cons

The advantage of a small business loan is clear: you get the funds you need without giving up any equity in your business. You maintain full control. On the flip side, these loans can be hard to qualify for, especially if you’re a new business owner without financial history. Plus, failing to repay the loan can negatively impact your business and personal credit scores.

Securing funding for your startup or small business involves weighing options, strategic planning, and a bit of courage. With the right approach and a little persistence, you’ll find the funding you need and build a solid foundation for your business’s financial future. Remember, the most successful funding journey is the one best aligned with your business goals and values.

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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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CD rates remain highly competitive, but that doesn’t mean they’re right for you. Here’s how you know if it’s the right time to invest in a CD. [[{“value”:”

Certificate of deposit (CD) rates have remained near historic highs for months, offering consumers the opportunity to grow their money in a risk-free environment. While earnings can be impressive, CDs aren’t for everyone. If any of the following four scenarios accurately describe your situation, you may want to rethink whether now is the right time to put money into a CD.

1. Your emergency fund is lacking

It’s safe to assume that emergency situations are the primary reason people withdraw funds from their CDs before they have time to mature and earn interest. There’s an easy fix for that.

Before investing in a CD, make sure you have enough money in an emergency fund to cover new brakes for your car, a visit to a medical specialist, or any other “surprise” situation that might arise. You may not be able to anticipate every issue, but if having an emergency fund prevents you from having to pay a penalty to withdraw money early from the CD, it’s worth building the emergency fund first.

Whether you tuck the money away in a high-yield savings account or money market account (MMA), you never know when you might need it.

2. You’re carrying high-interest debt

As tempted as you may be to jump into a CD while the rates are still attractive, now is not the right time if you’re carrying high-interest credit card or personal loan debt. In fact, if you’re carrying any debt with an interest rate higher than the rate of interest offered on the CD, you’re losing money.

Instead, give yourself the time you need to pay off your existing debt before you invest.

3. Your income is irregular

The tricky part of irregular income is budgeting to ensure you’ll have all the money you need to pay bills each month. If you own a business or work a seasonal job, that may be easier said than done. After all, as mentioned above, surprise situations pop up. If the issue that pops up ends up being expensive, it could lead to withdrawing funds from your CD before it matures and before you have the opportunity to earn interest.

That’s not to say that you should ignore CDs if you’re self-employed, work a seasonal job, or are in sales and receive periodic commission checks. Rather, pad your checking account so you have enough money to cover everyday expenses as you wait for periodic earnings to come through.

4. You could enjoy better returns elsewhere

If you’re serious about investing your money, look around to see what else is available before buying a CD. Even a CD carrying a 5.00% APY can’t compare to the long-term annual rate earned in the stock market. For example, historical data shows that investments in the S&P 500 have produced an average annual return of 12.6% over the past 15 years.

Every year won’t be a winner, but if you have the time and patience to sit tight during a market downturn, you can find more impressive returns in the stock market. After all, it’s during downturns that you pick up the most deeply discounted stocks and expand your portfolio.

CDs may have a lot going for them, but first things first. Make sure you have the money you need set aside to take care of emergencies, you’ve gotten rid of high-interest debt, and you’ve explored other investment options before settling on a CD.

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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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