Money Management

There are some important money moves to make before investing in CDs. Find out what tasks to check off your list first. [[{“value”:”

Certificates of deposit (CDs) can be good investments, especially right now when rates are higher than they’ve been since the 2008 recession. But just because they’re a good investment doesn’t mean they’re the right investment for everyone.

Before you even consider buying a CD, it’s worth completing a few other important financial tasks first. Here’s what to check off your to-do list before searching for the right CDs.

1. Save up an emergency fund

You shouldn’t open a CD until you have a complete emergency fund. Ideally, you should have three to six months’ worth of living expenses put away in a high-yield savings account.

There’s an important reason to do this: You face a good chance of surprise expenses popping up at any time. Pew Trusts data shows that about 60% of households experience a financial shock over the course of a year.

If you don’t have emergency money, you’ll have to find some way to cover those costs. If your money is tied up in a CD, you could be forced to decide between putting the surprise costs on a credit card or breaking your CD term early and incurring a penalty.

Why put yourself in position to lose money on your CD or get stuck with high interest charges? Save your emergency money first and keep it somewhere accessible so you’re ready for any financial surprises.

2. Max out your 401(k) match

If you work for a company that offers a 401(k) match, you should be contributing enough to your 401(k) account to earn the matching funds. Depending on your company match, you could miss out on as much as a 100% risk-free return on investment, which you’d be able to score if your employer matches 100% of the contributions you make.

When you pass up on your 401(k) match for a year by not maxing it out, you don’t get the chance to go back in time and get a redo. The free money your employer was going to give you for that year is gone forever. You are far better off claiming the matching funds than investing in CDs, no matter how high the rates are on certificates of deposit at the time.

3. Make sure you understand the opportunity costs

Finally, you should make certain you understand the opportunity costs of putting money into a CD before you open one.

Any money you put into a CD is money you aren’t going to do something else with. So, you should make sure the return on investment (ROI) the CD offers — which is likely somewhere around 5.00% — is a better return than the ROI you could earn elsewhere.

If, for example, you have credit card debt charging you 27% interest, you should pay it off before buying a CD because you’d get a 27% return by doing so, rather than a 5% return. And if you have a long enough investing timeline to await a stock market recovery in case you mistime your investments, then you should put your money into the market, where you can reasonably expect to earn 10% instead of the 5% CDs offer.

By thinking about what you’re giving up by buying a CD and making sure you’ve accomplished other key priorities first, you can feel confident you’re investing in certificates of deposit with money that belongs there.

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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 can throw a fabulous party and save money at the same time. Learn why Costco is your perfect party planner. [[{“value”:”

Planning parties can be fun, but it can also be stressful and quite costly. Enter Costco. While you might think of the retail giant as the king of providing endless streams of toilet paper, it should actually be a go-to spot for budget-savvy party planners to keep their personal finances in check. Between the numerous bulk goodies and surprising decor finds, Costco is your one-stop shop to make that party one to remember without breaking the bank. Here’s why.

1. Cost-effective alcohol selection

Alcohol is a must-have for some parties. But the price tag can quickly add up. Fear not! Costco offers a wide range of alcoholic beverages at unbeatable prices. In fact, one bride said she spent only $1,100 on a full selection of liquor, beer, wine, and champagne for her wedding. That’s major savings considering the average couple across the U.S. spends just under $2,800 on wedding booze.

By purchasing in bulk, you’ll save significantly compared to buying from other retailers. Imagine toasting with your favorite wine or champagne without breaking the bank. Cheers to that!

2. Delicious cakes without the hefty price tag

Who doesn’t love cake? Costco’s Cake Bake Shop has you covered. Costco’s 2-tier Special Occasion Cake serves 16-22 people and costs just $299.99. Or, opt for one of the retailer’s sheet cakes for $59.99 that comes pre-sliced for 14 people. That’s saving you time and money. Whether it’s a milestone birthday or a casual gathering, these cake options are both delicious and budget-friendly.

3. Convenient paper goods for easy cleanup

Nobody wants to spend hours cleaning up after a party. Costco’s paper goods are a game changer. From sturdy plates and napkins to disposable cups and utensils, Costco’s got it all. Plus, you can buy themed bundles with plates and napkins for 100 people. The savings compared to traditional party supplies are impressive. For example, a graduation party bundle at Costco for 100 people is just $28.99, compared to Party City’s bundle, which is $40 for the same number of people (and that’s after a discount). So go ahead, enjoy the party, and leave the cleanup worries behind.

4. Hassle-free goodie bags

Goodie bags add a fun touch, especially for kids’ parties. Costco’s Popcornopolis Ultimate Classic Assorted Tall Cones are a hit! With 24 cones in various flavors, you’re all set. No need to assemble individual treat bags — just grab a cone and spread the joy. Of course, there are also giant bags of candy, gummy candies, and more you can fill the goodie bag with. Your wallet will thank you too!

5. Pre-arranged food options for stress-free hosting

Food is the heart of any gathering and time is money. Items like Costco’s Best of Italy Cheese & Meat Variety Box makes that a breeze. It includes salami, Piave cheese, Ubriaco cheese, Asiago cheese, and Pecorino with truffle. It’s perfect for creating a charcuterie board or serving as appetizers. Your guests will be impressed, and you’ll save time and effort.

As you can see, Costco is your cost savings pal when it comes to planning a party. So, if you’re looking to throw an epic bash without blowing your budget, the retail giant has you covered. Now, go ahead and bring that Gatsby-esque aesthetic to life — affordably.

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

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It’s not uncommon for U.S. consumers to have various debts. Read on to find out how to conquer yours. [[{“value”:”

As everyday living costs increase, many U.S. households are facing financial struggles. Unfortunately, many Americans have significant debt, which continues to grow. It may shock you to know how much debt the average American has. To better understand the problem, let’s review some debt stats. I’ll share some tips on what you can do to eliminate your debt sooner.

Americans carry a combined total of nearly $18 trillion in debt

Recent research by The Motley Fool Ascent explored the average American household debt. The study examined data from Experian, the Federal Reserve, TransUnion, and the U.S. Census Bureau.

Unfortunately, debt is a problem for many Americans. Data shows that in the first quarter of 2024, Americans had $17.987 trillion in debt. Sadly, consumer debt has continued to grow in recent years. Total consumer debt has increased by more than $2.5 trillion since 2020.

That’s an alarming amount of overall debt, but how much does the average American have? In 2023, the average American household had $104,215 in total debt. This included various accounts, like auto loans and credit card debt.

Here’s how much Americans are spending on debt

Many Americans want to pay off their debt, but it can be difficult to do that quickly. Rising living costs make it harder for the average American to afford to prioritize debt payoff.

The Federal Reserve tracks household debt payments based on a percentage of disposable income. In the fourth quarter of 2023, Americans’ debt-payment-to-income ratio was 9.8%. This figure shows that Americans spend nearly 10% of their monthly income on debt payments.

Tips for eliminating debt faster

If you have outstanding debt, you’re not alone. If you’re concerned about the amount of debt you have, here are some tips that can help you tackle your debt sooner.

1. Establish a debt payoff plan

It’s understandable if you’re feeling overwhelmed about your debt. It’s a scary feeling to owe creditors while also keeping up with your household bills. The best thing you can do is be honest about your debt. It’s worthwhile to start by outlining all of your debts.

Write down the total debt amounts, the interest rates, and the minimum payment amounts due each month. This will give you a clear picture of your debts and help you formulate a plan to pay them off. Your options include snowballing your debt (focusing on paying extra toward your smallest balances first) or creating a debt avalanche (focusing on the debt with the highest interest rate first). If you need help following your plan, one of the best debt payoff apps may help.

2. Consider a balance transfer credit card for credit card debt

If you have a sizable amount of credit card debt, you may want to explore getting a balance transfer credit card. These credit cards promote an introductory 0% APR on balances transferred from another card for a set time.

As long as you pay the transferred debt off within the time period, you’ll avoid additional interest charges. Keep in mind that you’ll likely pay a balance transfer fee of around 3% to 5%, but stopping interest growth could make it possible to pay off your debt faster.

3. Explore ways to boost your income

Eliminating debt quickly can be difficult when you have limited income. You may want to explore ways of boosting your income. Options could include asking for a raise, starting a side hustle, or looking for a better-paying job while continuing to work in your current role.

It can take time to increase your income, but a boost could afford you the ability to put more money toward your debt. The sooner you pay down your debt, the less interest you’ll pay.

Don’t give up hope

No matter how much debt you have, remember that you’re not alone in your financial struggles. Any progress that you’re making is worthwhile. As you continue your debt payoff journey, give yourself credit for all your hard work. And most importantly, don’t give up. You can do 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.The Motley Fool has a disclosure policy.

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Have you gone through a bankruptcy? Do you have bad credit? Want to build credit and earn cash back rewards? Use a secured credit card. See how! [[{“value”:”

Do you have less-than-perfect credit, bad credit, or no credit history? You might want to try a special kind of credit card that can help you build credit, called a secured credit card.

Many people might not know about secured credit cards or might feel like a secured credit card is “worse” than regular unsecured credit cards. But you shouldn’t feel bad if your credit score is not what you want it to be. You have options, and you can make progress to improve your credit score. Using a secured credit card can help make your life better in powerful ways.

Let’s look at a few ways that your personal finances — and personal life — can get better with a secured credit card.

1. Secured credit cards help you build credit

This is the biggest, most important reason to get a secured credit card. Unlike typical credit cards where you have to apply and get approved based on your credit score, secured credit cards can help people who have a low credit score — or no credit history at all. Many of the best secured credit cards don’t require a credit check or don’t require a credit score to apply.

So if you’re recovering from a bankruptcy or other financial trouble that has hurt your credit, a secured credit card can help you get back on your feet. Or if you’re new to the U.S., just getting started in your career and adult life, rebuilding credit after a divorce, or otherwise needing to build credit history, a secured credit card can help you get your foot in the door with the financial system — and put you on track for better times ahead.

2. Secured credit cards often have lower fees

If you’re trying to build credit, you might be nervous about signing up for a traditional credit card. Many people worry about late payment fees, interest charges, and other unexpected costs of using a credit card.

In general, secured credit cards come with lower risks for your bank account. The best secured credit cards often have cash deposits, so you cannot spend more than the amount of cash you put on your card upfront. This helps you avoid the usual credit card drawbacks of running up a big balance and getting charged interest. And unlike some of the best travel credit cards, most secured credit cards do not charge annual fees.

Secured credit cards can still charge interest if you don’t pay off your balance in full before the payment due date. But the amount you can rack up might be smaller with a secured credit card — some will let you open an account with a cash deposit of as little as $200.

3. Some secured credit cards pay rewards

Would you like to get in on the fun and cost-savings of reward credit cards? Some of the best secured credit cards even pay rewards on spending, like 1.5% unlimited cash back on all purchases, extra cash back on restaurants and groceries, or bonus cash back on travel purchases.

Secured credit cards don’t have to feel like a punishment or a limitation. You can have fun with these cards and earn valuable rewards, just like with an unsecured rewards credit card.

Bottom line

Don’t feel bad about needing to use a secured credit card. It might be just what you need right now to get your credit back on track. Putting in some time and effort on a secured credit card can help your credit score get back to the level you want. The best credit card companies can even support you along the way with free credit scores, credit monitoring tools, and “graduation” to an unsecured credit card if you qualify.

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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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