Money Management

EVs have a lot of benefits, but they also come with a big price tag. Here are three factors to consider when deciding whether to buy a new one. [[{“value”:”

Electric vehicles (EVs) are becoming more popular, and dropping prices on new models are a big part of that. The average price of a new EV as of April 2024 was just $55,242, according to Kelley Blue Book. That’s just over $10,000 more than the average gas-powered vehicle.

That said, it’s still a lot of money, and it might not be the best investment for everyone, at least right now. If any of the following three conditions apply to you, a new EV might not be the right vehicle for you.

1. You don’t have a lot of money to spend on a vehicle

New EVs could still be out of reach for a lot of low- to middle-income car buyers, even with the federal tax credits that can shave up to $7,500 off the sale price. The long-term savings potential is great, but you won’t be able to realize it if you can’t stomach the sticker price.

Just because you can’t afford a new car doesn’t mean you can’t afford an EV, though. The used EV market is growing and buying one of these could lessen your carbon footprint without putting as big of a strain on your wallet. Some of these models are also eligible for used EV tax credits of up to $4,000. Again, you can take this directly off your sale price if you’re purchasing from a dealership.

Do some research to find out what’s in your area. You could also check online, on car sites like Carvana. Compare the used EVs available to new models to see how their features, ranges, and prices stack up.

2. You already have high car insurance premiums

Several factors influence car insurance premiums, including the driver’s accident history and the vehicle make and model. EVs are usually more expensive than gas-powered vehicles to insure because they cost more to start with and have more expensive components. If the car is involved in a crash, it takes more money and technicians who are familiar with EV technology to fix them. That drives up the bill the insurer pays to fix it and it passes that cost onto drivers in the form of higher premiums.

Drivers who can’t find affordable auto insurance to begin with due to a history of accidents, speeding tickets, or DUIs probably don’t want to make their situation worse by trying to insure a more expensive car right now. They may want to wait a few years until some of the negative marks fall off their driving record and their rates come back down.

Those determined to buy an EV regardless of increased insurance costs should shop around and compare rates from three to five top car insurance providers before purchasing a policy. They may want to specifically target companies that offer discounts to drivers of EVs and hybrids — though it’s important to note that more discounts may not always translate to lower premiums.

3. You live somewhere that’s not EV-friendly

You may have seen the news stories last winter about people waiting hours in line at EV charging stations because cold snaps were sapping their batteries faster than usual. Or you may have heard about people struggling to find charging stations or driving to one only to find it was broken.

Ideally, these issues will improve in time, but right now they’re real problems that prospective EV owners have to contend with. Before buying, consider the EV charging infrastructure in your area and how you plan to use your vehicle. Short trips around your city might be fine, but those who put in a lot of hours on the road could run into some of these challenges.

If you’re worried about running into problems with charging your EV, a hybrid might be a better option for you. You’ll still be lowering your carbon footprint, but you’ll also have the option to fill up your gas tank and go anywhere when you need to.

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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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Believe it or not, your best move when buying CDs right now isn’t to chase the highest rate. Read on to learn more. [[{“value”:”

A friend of mine who’s always shied away from buying CDs opened their first one about a month ago. The reason? They realized it was silly not to take advantage of today’s amazing CD rates.

CDs can be a risk-free investment when you follow some basic rules:

Only put in money you know you won’t need for the duration of your CD’s termOnly open a CD at a bank that’s FDIC-insuredLimit your deposit to $250,000 (not an especially hard thing, am I right?)

But if you stick to these rules, you have a prime opportunity to earn a 5% return on your money, since that’s what many CDs are paying today.

However, I don’t think chasing a 5% CD is your best move right now. I’d encourage you to not snag the highest rate for one big reason.

Why longer-term CDs make sense right now

If you’re looking at a CD with a term of 12 months or less, then you may be able to get 5% on your money today. And I can see why you’d be inclined to snag the best CD rate you can get.

However, that’s not the best strategy for opening a CD right now. If you ask me, the best strategy is to lock in a CD for as lengthy a term as your bank offers. In many cases, that will be 60 months, though it’s possible to find CDs with longer maturity dates if you look around.

Why am I pushing longer-term CDs? It’s simple. CD rates are up right now because the Federal Reserve is coming off of a series of interest rate hikes that were supposed to cool inflation. The Fed’s strategy has worked to a large degree, so now, the central bank is expected to start cutting rates this year.

Once the Fed begins cutting interest rates, CD rates are likely to fall. And we don’t know to what extent they’ll fall over the next few years.

The way I see it, you could snag a 5% APY on a 12-month CD today. A 60-month CD might only give you a 4% APY. But that 4% is then guaranteed for the next five years.

Perhaps 12-month CDs will only be paying 3.5% at this time next year, and 2.25% at this time the following year. So all told, if you can afford to part with some of your money for five years, you might come out far ahead financially with a 60-month CD despite the lower interest rate.

Shop around for the best rate

Of course, the one reason not to open a 60-month CD is if you’re not sure what your financial goals entail over the next five years, and you’re not sure you can afford to tie up money in a longer-term CD because of that.

But let’s say you’re about five years from retirement and want some of your money in a safer asset than stocks. That would be an optimal situation for opening a 60-month CD.

Similarly, maybe you’re not close to retirement age, but you’re in the home stretch of saving for your child’s college education and you don’t want to take on the risk of investing in stocks. In that case, a 60-month CD makes sense if it will come due in time to start paying those tuition bills.

No matter what CD term you choose to pursue, make a point to do some research so you can snag the best rate. But don’t just just fixate on the best rate available today. You may come out a serious winner if you give up the best rate in favor of a rate that’s almost as good and has a lot more staying power.

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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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If you’re not sure you can scrape together a down payment, moving to a small town might be a solution. Check out USDA loans and what they offer. [[{“value”:”

It’s no wonder that home buyers, particularly first-timers, are having a hard time. The median sales price for a home was over $420,000 as of the end of the first quarter of 2024. Plus, average 30-year fixed interest rate mortgages are hovering around 7%, per the Federal Reserve.

With fierce competition and five-figure down payments (even the low ones), there’s little leeway for a huge portion of potential first-time home buyers.

Except…

If you’re not too picky about the home and willing to make a few sacrifices, the USDA Rural Development mortgage could help. We do not give enough credit to this loan product that can get you into a home with little to nothing out of pocket.

Introducing the USDA Rural Development mortgage

If you’re trying to buy a home in your favorite city, but can’t quite make the numbers work, check out the Rural Development program. Run by the Department of Agriculture, it’s open to a range of home buyers who need financial assistance. There’s a catch, though, and it’s a deal-breaker for some: The home you buy has to be in a community of under 20,000 people (in a few cases, this extends up to 35,000).

There are actually a few catches, but that’s the hardest one to fulfill. A lot of people don’t love the idea of buying outside the area they know. Plus, many don’t want to accept the perceived downgrade of a smaller town. Even if that small town is well within easy commuting distance of the same city center they’ve known all their lives.

But if you’re ready to leave the city for good, or at least for now, a USDA RD loan could be the solution you’ve been searching for.

How hard is it to get a USDA RD loan?

If you’re willing to buy outside of a city, it isn’t actually all that difficult to qualify for a USDA RD loan. The program has a great deal of flexibility built in to help encourage people to get out there and occupy those smaller population centers. There are income guidelines, with some loans limited to very low or low-income borrowers, and others limited to moderate-income borrowers (up to 115% of the median household income for the area)

However, before you call your favorite lender to get the best mortgage rate on a USDA loan, make sure you understand the rigorous appraisal process. When I was a Realtor, the strict appraisals meant I only dealt with a handful of these loans, even though pretty much all the area immediately outside of my city’s limits qualifies.

Much like the FHA, the USDA looks at more than just the value of the home. The USDA generally requires homes to be between 400 and 2,000 square feet. The living standards requirement may also be difficult for older homes to meet.

Where I live, at one point it was hard to get a USDA loan on a house that wasn’t originally built to USDA standards. This is because of the mismatch between local building standards and codes and USDA quality standards. So, if you’re considering going this route, a good real estate agent experienced in USDA loans will be key.

How does the rate on a USDA loan compare?

There are a couple of different kinds of USDA RD loans, but for the sake of argument, let’s talk about the one that doesn’t have a subsidized interest rate, as this is open to most borrowers. There are subsidized USDA loan rates, but your income has to be very low to qualify.

The interest rates on USDA RD loans are very similar to other 30-year fixed mortgage loans. On June 6, 2024, the week’s average rate for USDA mortgages was 6.712%, according to the Federal Reserve Bank of St. Louis. An FHA mortgage rate for that same period was at 6.703%. It’s not terribly surprising that these two programs are similarly priced, since they’re both government programs designed to make first-time borrowing easier.

By comparison, the 30-year fixed rate mortgage average in the U.S. for the week of June 6, 2024 was 6.99%. Not a huge difference, but a difference. Here’s the total principal and interest you’d pay for each of these loans, assuming you borrowed $250,000 at the rates above:

Ask about a USDA RD loan

There are a few different programs that will help you get a home with low or no down payment. Your favorite mortgage lender may be more likely to suggest an FHA mortgage, but don’t be afraid to ask about a USDA RD loan. They’re very similar to an FHA mortgage but can be a path to zero down if you just can’t scrape up a down payment.

Living in a small town can really have its perks.

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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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Costco offers great deals on more than just bulk groceries. While many people may not be aware of these deals, see why they’re worth checking out. [[{“value”:”

When you think of shopping at Costco, your mind probably goes to giant packages of toilet paper or industrial-sized jars of peanut butter. Buying these household items there is great, because you can save money and have a large stockpile at your house so you won’t run out.

But Costco offers much more than just deals on the basics. In fact, some of the best savings the warehouse club provides can be found on products you might never think to purchase there. Just check out these three items from Costco that you’re probably not buying, but that could offer you amazing bargains.

1. Gift cards to other merchants

Gift cards are really easy to overlook in the huge warehouse club, but if you don’t check them out regularly on your Costco visits, you’re missing out. As of June 22, 2024, you can get some amazing deals, including:

A $500 Southwest Airlines gift card for only $449.99$100 in Spafinder gift cards, valid at salons and spas nationwide, for $79.99$100 in Domino’s Pizza gift cards for $79.99

These are just a few of many bargains to be had at Costco. By checking out the gift cards regularly, you can keep your credit card bills down by getting deals even outside the warehouse club. Just be mindful of the occasional limits Costco puts on gift card purchases — for example, each member can buy up to five Southwest Airlines gift cards in one transaction.

2. Prescriptions

Costco offers great deals on prescription medications, for both you and your pet. You can take part in the Costco Member Prescription Program if you don’t have insurance to cover medications. This would save you as much as 80% on prescription drugs. Costco’s pharmacists will even work with you to find the cheapest deals.

Even if you do have insurance coverage, Costco still offers cheaper deals with lower coinsurance costs. For example, the blood pressure medication metoprolol tartrate (a generic of Lopressor), costs $13.99 for 180 25-mg tablets from Costco, while the same medication is $24.99 from Walgreens.

If you take prescription medications, there’s very little reason to overpay for them when you can check Costco’s pharmacy and most likely get a great deal.

3. Vacations

Costco offers awesome vacation deals that can save you a ton of money. For example, it’s possible to get a vacation package deal at Waikiki Beach Marriott Resort & Spa. The price from Costco for an ocean-view room with two adults comes in at $2,036.84 to stay July 21 to July 26, 2024, and it comes with:

A $120 Digital Costco Shop CardA $150 resort credit per room per stayThe $50 mandatory daily resort fee included

The same room costs $2,145 when booked directly with the hotel, and it doesn’t come with the resort credit or Costco shop card. And if you’ve signed up for Costco’s Executive membership, you’ll also get 2% back on your trip — so you end up saving even more.

As you can see, if you aren’t buying prescriptions, vacations, and gift cards at Costco, you’re leaving money on the table. Fix that by checking out these items next time you visit the warehouse.

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.

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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. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and JPMorgan Chase. The Motley Fool recommends Marriott International and Southwest Airlines. The Motley Fool has a disclosure policy.

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