Money Management

CD rates are at their highest level in years, and you might be surprised at how much you could earn in one. Keep reading to find out more. [[{“value”:”

CD interest rates are near their highest level since before the 2008 financial crisis, making them far more attractive as an income investment than they were just a few years ago. In fact, it’s possible to find a 1-year CD with an APY of 5.00% or higher as of this writing.

If your goal is to max out your interest income, you might be surprised how much you can earn today. But the reality is that when it comes to CDs, yield is important, but it isn’t the only thing you should consider. Here’s a rundown of how much you can make by putting $5,000 in a CD today, and a few things to keep in mind before you do.

How much can you make with $5,000 in a CD?

Here’s the short answer. The highest-paying CD on our best CD rates list is a 1-year CD that has a 5.15% APY. If you have $5,000 to lock away in a CD, this means that you’d make $257.50 in interest during the CD’s one-year maturity term.

If you’re looking for a longer-term CD, the highest rate on a standard 5-year CD on our radar right now is 4.30%. (Note: There are a few with higher rates, but these are either brokered CDs that are only offered to clients of specific brokerages, or they require more than $5,000 to open.)

If you were to put $5,000 into a 5-year CD at a 4.30% APY and leave it alone for the entire term, you would have an ending balance of about $6,171.50 — so you’ll have made $1,171.50 in interest.

Caveats to keep in mind

Of course, there’s more to choosing CDs than simply finding the best yield and opening an account. Here are some of the important things to keep in mind before you decide on one.

Yield isn’t everything

First, it isn’t just about how much interest you can earn. You can absolutely open a CD with the highest interest rate you can find, but it might not be the best fit for your needs. For example, some of the highest-yielding CDs have large minimum deposits. Or they can be more of a hassle to move money in and out of. Check out our best CD page linked above, where you’ll find many different options — they all have different features and there’s no such thing as a one-size-fits-all “best” CD for every person.

APY assumes compounding

It’s also worth noting that a CD’s APY and interest rate are technically two different things. The stated rate is almost always APY (annual percentage yield). I’ll spare you the mathematics lesson, but the important thing to know is this assumes you’ll leave the money in the CD to compound over the entire term. In other words, if you withdraw the interest you receive — which some banks allow with CDs — your actual yield will be somewhat lower.

What happens after maturity?

Another factor to keep in mind is that there’s no guarantee that you’ll be able to get a CD with the same interest rate when yours matures. Sure, you can get a higher APY with a 1-year CD than a 5-year CD right now, but by the time your 1-year CD matures, the best rates could be in the 3.00% range or lower, depending on what happens with benchmark interest rates. Nobody knows for sure what will happen, but it’s entirely possible.

The bottom line

CD yields are at their highest levels in more than a decade, but the absolute maximum yield isn’t the only factor you should consider. It’s important to know what you’re getting into with a given CD and explore all of the options available to find the best fit for you.

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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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Looking at signing an adjustable-rate mortgage? Read on to make sure you’re not setting yourself up for financially disastrous results. [[{“value”:”

One of the most frustrating things about the real estate market today is that not only are homes expensive to buy, but mortgages have become expensive to sign. As of this writing, the average mortgage rate on a 30-year loan is 7.02%, per Freddie Mac. For a $250,000 mortgage, that has you paying $1,667 per month for principal and interest.

As such, you may be eager to do what you can to reap some initial savings on your mortgage. And signing an adjustable-rate mortgage, or ARM, could be a good way to do that.

As the name suggests, an ARM doesn’t offer the benefit of a fixed interest rate on your home loan. Rather, you start out with a certain rate that can then adjust over time with market conditions — either upward or downward.

The benefit of an ARM is that you’ll often be able to snag a lower interest rate initially than you’d get with a fixed-rate mortgage. And given how costly it is to borrow today, an ARM could make a lot of sense if it results in some initial savings on your monthly housing costs. But if you’re going to get an ARM, it’s important to follow one key rule.

Make sure you can actually afford your mortgage as-is

A big reason mortgage rates are so high today is that borrowing costs are up in general following a series of Federal Reserve interest rate hikes. But in time, the Fed is expected to start cutting interest rates. And once that happens, mortgage rates should follow suit, at least to some degree.

This doesn’t mean we’re going to be looking at the record-low mortgage rates borrowers were getting back in 2020 or 2021. But will the average 30-year mortgage rate be lower than 7.02% come this time next year? There’s a good chance it will be.

As such, getting an ARM could make a lot of sense right now because you could pay a little less each month on your mortgage initially and then see your rate — and monthly payments — fall over time. But if you’re going to get an ARM, you must make sure you can afford your mortgage payments based on your initial rate — rather than bank on your rate going down.

As a general rule, your housing costs, including your mortgage payments, property taxes, and insurance, should not exceed 30% of your take-home pay. So if, based on your current mortgage payments with an ARM, you’re within that limit, you should feel fairly confident about being able to afford your housing expenses.

But what you don’t want to do is sign an ARM whose payments have you spending 40% of your income on housing at present. You may be convinced that mortgage rates are only going to fall from where they are today, and that may be a reasonable assumption. But still, you never know. And you don’t know how long it will take for mortgage rates to drop. So you have to make sure you’re signing up for payments you can afford now.

Shop around either way

Some people will tell you that an ARM is risky because while rates might fall in the coming years, they could very well rise again in the course of paying off your home. At that point, however, refinancing your mortgage could be an option, so an ARM you can afford is not necessarily a poor choice.

But if you’re going to get an ARM, shop around with different lenders. You never know which one will have the best offer for you until you put in an application. And since your goal in getting an ARM is probably to save money, you might as well do what you can to enjoy the maximum amount of savings possible.

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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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Cutting your fun spending out of your budget might seem like the best route to building your savings. See why this approach could sorely backfire on you. [[{“value”:”

Saving money is an unquestionably tough thing. And that may explain why 63% of Americans couldn’t cover a $500 emergency expense by tapping their savings, according to data from SecureSave.

But the reality is that you need savings to protect yourself from unplanned bills. If you were to lose your job or run into a major car repair, in the absence of savings, you’d likely have to fall back on credit card debt. That could cost you a boatload of money in interest and make your financial situation even more stressful.

If you’re without savings now or your savings need a sizable boost, you may be thinking about eliminating fun spending from your budget. After all, if you never spend money on anything non-essential, you’ve got to be able to free up some cash for savings, right?

It’s a good idea in theory. But here’s why it might sorely backfire on you.

When your approach to saving money isn’t sustainable

Saving money is something you should be doing consistently, year after year. So it’s important to find a system that works for you. And cutting all fun expenses out of your budget isn’t a great one.

Sure, you could deny yourself every enjoyable thing your money buys you, from takeout meals to store-bought coffee to concert tickets. But what kind of way to live is that? And how motivated are you apt to be to keep working hard if none of your money is being used to improve your quality of life?

That’s why cutting all fun spending from your budget isn’t a great approach to saving in general. Sure, it’s something you can do on a temporary basis. People implement no-spend weekends, weeks, or even months all the time. And if you want to give your savings a quick boost, then go ahead and tell yourself you won’t spend money on anything other than basic bills for the next 30 days. After all, there’s a light at the end of that particular tunnel.

But denying yourself fun purchases on a long-term basis just isn’t a wise bet. Not only might you make yourself miserable, but you may be more likely to just give up on building savings altogether.

Aim for a good balance and boost your income with extra work

It’s not really reasonable to never spend money on anything fun. But that doesn’t mean there’s no middle ground between your level of leisure spending today and spending $0 on fun stuff.

Maybe you currently spend $300 a month on streaming services, weekly dinners with your work friends, and other subscriptions. If you were to cut that figure in half, you’d still get to enjoy some fun purchases, but your savings would also grow. That sounds like a win.

Another option is to look for gig work and send the extra income into savings (though if you’re paid on a freelance basis, you’ll need to reserve some of your earnings for taxes). If you go this route, you may not need to cut back on fun spending at all.

Of course, you may already work pretty long hours and don’t want to give up more time. But working a side hustle can be temporary. If you’re able to earn $100 a week from a second gig, after a year, you’ll be more than $5,000 richer. From there, you may be able to quit the gig economy for good and focus strictly on your main job.

Giving up every single fun purchase is not an okay way to live. So don’t do that to yourself on an extended basis. Instead, figure out how to strike a balance and look to the gig economy for an income boost so you’re not constantly saying no to conveniences and social plans that truly bring you joy.

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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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I was shocked to find out I was denied for a Chase credit card recently. Learn how my experience went with Chase’s reconsideration line. [[{“value”:”

For several years now, my credit score has been my pride and joy. It temporarily even sat at the oft-chased mark of perfection: 850. While my credit score is no longer perfect following a new card application last year and a new auto loan earlier this year, it’s still in the 840s. Close enough, right?

Wrong, apparently. I was shocked when I recently applied for a Chase travel card (to take advantage of its generous new limited-time welcome bonus), only to find out I was denied.

I wasn’t ready to give up so easily, however. So I decided to take a page out of The Ascent’s credit card handbook and try my luck with Chase’s reconsideration line.

But first: Why was I denied?

Before contacting Chase, I decided to wait and see what reasons my denial letter would provide for Chase’s decision. That letter was uploaded to my Chase account documents online just a couple days after I applied.

To be honest, the letter didn’t say much. The only negative thing it was able to pull from my credit report was a history of some recent inquiries, which didn’t seem reason enough to me to deny my application.

I had my own suspicions for why I was denied, though. See, I already have a handful of Chase credit cards with credit limits that are quite high. And while evidence suggests that Chase doesn’t restrict the number of credit cards consumers can have (as long as you don’t exceed Chase’s 5/24 rule), it does restrict the total amount of credit it will extend based on your credit score, income, and other factors. I suspected I might already be at my Chase credit line maximum

Making the call

Armed with my denial letter and my own theories, I dialed the Chase reconsideration line at 888-270-2127. This is what happened.

Facing the automation

The line started out as an automated call, asking me to enter my Social Security number. After that, there was a recording telling me my application was being processed and I should receive a decision within seven to 10 days. This confused me, because I knew my application was already denied. So I did what every frustrated consumer calling an automated line does when they want to speak to a person: I pressed “0.”

Appealing to a real human

I was transferred to a line answered by a real-live customer service agent. I quickly explained the reason for my call. The representative was sympathetic to my issue and placed me on a brief hold to “discuss with his team.” He soon arrived back on the line to let me know he was going to transfer me to someone who could assist me further.

Appealing to a second real human

The second human I spoke to was ready to get into the nitty gritty. She explained that she’d be happy to take another look at the application and went over all of my personal information with me (my address, employment status, annual income, etc.) to verify it was correct before moving on. She also mentioned the recent credit inquiries on my account; I explained I had opened a new card last summer, and then my fiance and I had been shopping for an auto loan at the beginning of this year. She noted my response.

At this point, I tried explaining I had recently closed another Chase card that I no longer used, hoping that would clear up some credit limit for me to be approved for the new card. The rep advised that because I had done it so recently, the closure wasn’t yet showing up on my credit report, and Chase is only able to use that current data to make its credit card application decisions.

Suddenly, it all made sense: Chase was still factoring in my recently closed account and the $30,000 line of credit attached to it when making its decision not to extend me more credit. That gave me an idea!

Making my offer

With this new information, I decided to tell the representative that I’d be happy to move some credit line from one of my other Chase accounts to the new card in order to open it. It turns out, those were the magic words. She kept me on the line just another couple minutes to go over what other credit limits I had available and how much I wanted to move to the new card. And voila! I was congratulated on my new Chase card and told I should receive it in the mail in just one to two business days.

My advice for calling a credit card reconsideration line

If, like me, you’ve recently applied for a credit card and didn’t get the result that you wanted, I’m here to say that calling a credit card issuer’s reconsideration line can be the solution. Take the time to have your reasoning prepared about why you want that particular card and include any other information that may be helpful to your case, such as recent developments that aren’t on your credit report and rebuttals for any negative information that was found. Be prepared to negotiate, like I did.

There are no guarantees, but the process is relatively painless, and you just might come out on the other side with a brand new credit card and the opportunity to earn a hefty welcome bonus.

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

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The cheapest hybrid trucks on the market combine power and fuel efficiency. Read on to find your perfect hybrid truck and save. [[{“value”:”

Hybrid trucks are becoming more popular as they offer the best of both worlds: the power and capability of a truck with the fuel efficiency of a hybrid. With gas prices on the rise, these vehicles provide a cost-effective solution for your driving needs. If you’re in the market for a hybrid truck that won’t break the bank, you’re in luck. Here are the five cheapest hybrid trucks you can buy right now.

1. 2024 Ford Maverick: $23,815

The 2024 Ford Maverick is the most affordable hybrid truck packed with features. Starting at just $23,815, this compact truck offers impressive fuel efficiency and a comfortable ride. Whether navigating city streets or heading out for a weekend adventure, the Maverick is a versatile and economical choice.

2. 2023 Ford Maverick: $24,190

The 2023 Ford Maverick is $24,190 — just a bit more expensive than its newer sibling. This model year still offers great value with similar fuel efficiency and features. It’s a solid option if you’re looking for a slightly older but still reliable hybrid truck.

3. 2024 Toyota Tacoma: $31,500

The 2024 Toyota Tacoma is a bit pricier at $31,500, but it’s known for its durability and off-road capabilities. This hybrid version maintains the ruggedness of the Tacoma while giving you better fuel economy. It’s perfect for those who need a reliable truck for both daily driving and weekend escapades.

4. 2024 Ford Ranger: $32,670

At $32,670, the 2024 Ford Ranger hybrid offers a good balance of power and efficiency. It’s a midsize truck that’s great for both work and play, with enough towing capacity and cargo space to handle most tasks. Plus, the hybrid engine means fewer stops at the gas station.

5. 2024 Ford F-150: $36,770

The 2024 Ford F-150 hybrid is the most expensive on our list at $36,770, but also the most powerful. Known for its capability and advanced features, the F-150 hybrid doesn’t compromise on performance while offering improved fuel efficiency. It’s a fantastic option for those who need a robust truck for heavy-duty tasks.

Tips for saving on your hybrid truck

Investing in a hybrid truck is a great way to save on fuel costs, reduce your environmental impact, and boost your personal finances. To maximize your savings and get the most out of your purchase, consider these helpful tips:

Research incentives: Look for federal or state incentives for purchasing hybrid vehicles. These can sometimes save you a significant amount of money.Consider your needs: Make sure to choose a truck that fits your needs, whether it’s towing capacity, off-road capability, or daily commuting.Shop around: Prices vary between dealerships, so it’s worth shopping around for the best deal.Keep it maintained: Regular maintenance is key to keeping your hybrid truck running efficiently. Make sure to follow the manufacturer’s maintenance schedule.

Don’t forget about auto insurance

Typically, insuring a hybrid truck can be more costly than a standard gasoline-powered vehicle. However, this isn’t a rule set in stone, and rates can vary significantly between models and insurers.

Why might hybrid trucks cost more to insure?

Hybrid vehicles, including trucks, are generally equipped with complex technology that can be expensive to repair or replace, especially in electrical drive system accidents. Furthermore, the cost of these components and the specialized labor required for repairs can lead to higher insurance premiums. For instance, a study has indicated that hybrid vehicles can be around 7%-11% more expensive to insure than their gasoline-powered counterparts.

Tips for finding the best insurance deal for your hybrid truck

Utilize the following tips to compare and locate the best auto insurance for your new hybrid vehicle:

Compare quotes: Drivers shouldn’t settle for the first quote they get. Shop around and compare different insurance providers to find the best rate for a hybrid truck.Look for hybrid discounts: Some insurance companies offer discounts specifically for hybrid vehicles. These discounts can be for the vehicle’s better fuel efficiency and lower emission rates, which some insurers see as indicative of responsible behavior.Increase the deductible: Drivers who want to lower monthly premiums can consider increasing their deductible. This means a higher out-of-pocket cost to make a claim, but it can significantly reduce monthly costs.Bundle policies: Drivers with other insurance policies, such as home or life insurance, can consider bundling these with auto insurance. Many insurers offer discounts for multiple policies.Maintain a good driving record: A clean driving record can significantly lower premiums. Most insurers offer better rates to drivers who avoid accidents and traffic violations.Review your coverage annually: As a vehicle ages, its value decreases. Review insurance coverage annually to see if coverage can be reduced, or if new discounts or changes in the market might benefit you.

By keeping these tips in mind, you can ensure that you not only secure a hybrid truck that meets your efficiency and performance needs, but also find an insurance deal that protects your vehicle without breaking the bank.

Hybrid trucks offer a great combination of power and efficiency, and they’re becoming more affordable. Whether you choose the budget-friendly Ford Maverick or the powerful Ford F-150, there’s a hybrid truck out there to suit your needs.

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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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There’s one CD strategy that can help you maximize your income. See why income investors should use it. [[{“value”:”

As of this writing, the highest-paying CDs on our radar have maturity terms of one year. If your goal is to simply maximize the amount of income you get today, the best course of action is to simply buy the CD with the highest rate.

The problem with that is that once the initial one-year term is up, there’s no guarantee you’ll be able to roll the money into a new CD that pays as much. In fact, if interest rates start to fall, it’s entirely possible that 1-year CD yields could fall by 1%, 2%, or even more by the time your CD renews. And many people who want to use CDs to create a passive income stream (as opposed to compounding their money over the long run) need income for many years — retirees, for example.

On the other hand, there are drawbacks to simply buying the highest-yielding long-term CDs you can find as well. Doing so sacrifices financial flexibility. And for the time being at least, 5-year CDs — the longest standard term — pay significantly less than short-term CDs.

With all of that in mind, a CD ladder could be the ideal way to blend maximum income with financial flexibility and income visibility.

What is a CD ladder?

In simple terms, a CD ladder involves dividing your money into equal amounts and using it to buy a series of CDs with staggered maturities. While there’s more than one way to create a CD ladder, if you had $10,000, here’s what it might look like:

$2,000 in a 1-year CD$2,000 in a 2-year CD$2,000 in a 3-year CD$2,000 in a 4-year CD$2,000 in a 5-year CD

By setting it up like this, one of your CDs will mature every year. At that time, you’ll roll it into a new 5-year CD. Eventually, you’ll have a portfolio of nothing but 5-year CDs that pay long-term interest rates, but with some of your money maturing each year.

It’s also worth noting that CDs generally renew automatically upon maturity unless you act. So you’ll need to manually close your maturing CDs and use the money to open a new 5-year account. Otherwise, your 1-year CD will roll over into another 1-year CD.

A trifecta of passive income qualities

When you create a CD ladder, you might not get the absolute highest level of current income that is possible. But you get a great blend of three features that solid passive income sources should have:

High income: By rolling all of your maturing balances into new, 5-year CDs (which historically pay higher rates), you’ll be putting yourself in a good position to have a high income stream over time.Financial flexibility: With a CD ladder like the one described earlier, one-fifth of your money will mature every year, so you can assess whether you need to use some of it, or if it is best to reinvest it all.Income visibility: The biggest benefit to only one-fifth of your CD ladder reaching maturity each year is that it prevents sudden income shocks if rates rise or fall. Think of it like this: Even if interest rates collapse after you start a CD ladder, after one year, four-fifths of your CDs are still paying the same higher rates. By setting up a CD ladder, you’ll be positioned to take advantage if rates rise, but can avoid massive income declines if they fall.

The bottom line is that if you rely on your CDs for income to cover your day-to-day expenses, a CD ladder can be a great way to get a high level of income with the predictability that is such a must-have.

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

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