Money Management

Car insurance premiums cost drivers thousands of dollars per year. But keep reading for a surprisingly simple way to reduce them. [[{“value”:”

The average annual car insurance premium was $3,017 in 2023, and that number will probably be higher in 2024. Things like maintaining a clean driving record and shopping around can help keep costs down, but that’s not always enough.

Fortunately, there’s another way to keep car insurance premiums manageable. It works with all insurance carriers and it only takes about 10-15 minutes. But it might not be the right move for everyone.

Paying now vs. paying later

Drivers face two main costs when taking out an auto insurance policy. The premiums are the payments drivers pay to keep their policy in force. Drivers can pay monthly or for the full policy period — usually six months — upfront. Paying in full often results in a small discount. Drivers have to pay their premiums regardless of whether they file any claims with their insurance during the policy period.

When drivers need to file a claim, they’ll also pay a deductible. This is a set dollar amount that the driver determines when purchasing their policy. Options usually range from about $100 to $2,000.

Low deductibles seem appealing because they reduce out-of-pocket costs after an accident, but this increases the risk that insurers will have to pay a larger sum to cover the claim. So they hedge against this by charging higher premiums.

This makes going with a higher deductible a fast and effective way to score cheaper car insurance. The Insurance Information Institute found that raising a policy’s deductible from $200 to $500 reduced premiums by 15% to 30%. And signing on for a $1,000 deductible reduced premiums by 40% or more. To put this in perspective, a 40% reduction would drop the $251 average monthly premium to $151.

Progressive reported similar findings in its own research. Interestingly, it found that the premium reduction was greater for lower-level increases. For example, raising the deductible from $100 to $250 reduced premiums by 29%, while raising the deductible from $1,000 to $2,000 only dropped rates by 17%. But either way, it’s still a substantial drop.

How to raise a car insurance deductible

Raising a policy’s deductible is pretty straightforward. But first, weigh the financial consequences to decide if it’s the right move. Drivers who cannot afford the higher deductible could find themselves in debt when they need to file a claim. It might be possible to avoid this by saving for the deductible in an emergency fund. But if this isn’t feasible, it’s probably safer to stick with a lower deductible.

Drivers who want a higher deductible just have to contact their insurance company and request the change. Many companies also enable drivers to make this change through their online account or mobile app.

It’s worth contacting the insurer to learn when this change will take effect if this isn’t clearly stated in its online account. It might not be until the next month’s payment or until the next policy period. Any claims filed before this change takes hold will have the old deductible.

Drivers should be able to see the effect this change will have on their premiums right away. If it doesn’t save that much, it’s worth shopping around with other car insurance companies. Every insurer weighs risk differently and some reward deductible increases more than others.

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

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CDs commonly offer higher rates than savings accounts. But that’s not the only reason to open one. [[{“value”:”

If it seems as if everyone you know is putting money into CDs these days, there’s a reason for it. CD rates are the highest they’ve been in years. But they may not stay that way for much longer.

CDs are paying so generously right now because the Federal Reserve spent much of 2022 and 2023 raising interest rates to help slow the pace of inflation. But the Fed is expected to start cutting interest rates at some point in 2024. And while that may not happen until the second half of the year, the point is that the CD rates you’re seeing right now aren’t going to stick around forever.

Now you may be aware that CDs tend to offer higher rates than regular savings accounts. Also, with a CD, your interest rate is guaranteed — whereas your savings account’s interest rate could fall at any time with market conditions.

But these aren’t the only benefits of opening a CD. There’s a lesser-known reason why putting money into a CD could be your ticket to meeting your next savings goal.

When you feel forced to keep your money in the bank

There’s a reason CDs pay more than savings accounts — you’re committing to keeping your money where it is for a preset period. And if you withdraw your CD before its maturity date, there can be a costly penalty involved, the extent of which will depend on your bank. Capital One, as an example, charges a penalty of three months of interest for an early withdrawal on CD terms of 12 months or less.

That penalty, however, could work to your benefit. That may seem counterintuitive, but here’s the logic.

With a regular savings account, there’s no penalty for raiding your funds. So if you’re tempted by an impulse purchase, you may be inclined to take your money out. With a CD, you may be a lot less inclined to remove your money ahead of schedule knowing your bank is going to take some of it away in penalty form.

To put it another way, the way CDs work may be just the thing to keep you from straying from your savings goals. There’s just a lot more mental and financial pressure to leave a CD alone than there is for a savings account. And that might work to your benefit.

A CD ladder is also a good idea

The more restrictive nature of CDs could make it possible to meet your savings targets. But it’s also not necessarily a great idea to put all of your money into a single CD. You never know when you might need access to cash sooner than expected.

First, figure out how much money you need to cover three full months of essential bills and leave that sum in a regular savings account you can access penalty-free at any time. From there, you may want to take your remaining funds and set up a CD ladder. This effectively has you opening different CDs with varying maturity dates, allowing your funds to free up regularly during the year, giving you a bit more flexibility to use the money or open another CD.

The benefits of CDs are pretty clear — higher interest on your money, and the guarantee of your rate for a period. But you may want to consider this underrated perk of CDs when deciding where to put your money.

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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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We all make our share of financial blunders. Read on to learn about some of my mom fails. [[{“value”:”

Since I write about personal finance, some of my friends tend to incorrectly assume that I’ve never made any big money mistakes in my life. But that’s not true at all.

For one thing, I waited a few years to contribute to a retirement account and lost out on years of compounding returns as a result. I also went super-cheap when I bought my first car and ended up not getting my money’s worth due to having to replace it within months of purchasing it.

But some of the blunders I’ve made in my day are child finance-related. Here are three mistakes of mine you can learn from.

1. Buying nice clothing for my kids

When my kids were young and we’d have a special occasion, I’d spring for a nicer outfit and shoes to match. That’s something I sorely came to regret.

Not only do very young kids (meaning, toddler age) tend to outgrow their clothing and shoes in short order, but they also tend to utterly destroy it. So once I realized I was flushing my money down the toilet, I stopped that practice and instead started asking friends with older kids for hand-me-downs. To this day, it’s a practice I employ for all things clothing- and sports equipment-related.

2. Throwing expensive birthday parties

I’m actually quite ashamed to admit this, but I once spent upward of $1,000 on a birthday party at a local bounce place. To be fair, I have twins in separate classes at school and didn’t want to exclude anyone, so I invited roughly 50 children and pretty much every single one (and some siblings) said yes.

But other birthday parties I’ve thrown have only been marginally cheaper. It cost me $700 a few years back to rent a room in a video arcade for my son’s party between the initial fee, pizza, goody bags, and cake. And even an inexpensive spa party at my house for my daughters cost almost $400.

At this point, my kids know I’m done busting my budget on birthday parties. Now, the rule is that each child gets to invite a few friends to dinner or to participate in an activity. Sorry, but no more “whole class” invites. I feel bad not being more inclusive, but I refuse to fall short on my savings goals in the course of treating several dozen kids to a couple of hours on trampolines.

3. Not getting more help with child care when my kids were younger

When my daughters were in preschool and my son was in kindergarten, I often did not work a full day because I had limited child care coverage. My girls’ preschool ended at 2:30 p.m., and my son had to be picked up from his school just one hour later. From there, I was generally on full-time mom duty until my kids went to bed. And by the time they did, I was often too tired to go back to my desk for more than 30 minutes or so.

What I should’ve done back then is more aggressively tried to find afternoon babysitters. Yes, I would’ve been paying them an hourly rate that would’ve eaten into my earnings. But I still would’ve benefited financially from more working hours since I had a lot of projects going on at the time and frequently had to turn work down due to having limited hours available.

Nobody’s perfect, and as a mom, I’m fully aware that it’s easy to end up in a situation where you’re spending more than you should in an effort to make your kids happy. But I’m sharing these mistakes in the hopes that others will learn from them — and, ideally, steer clear in the first place.

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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 a reason it pays to open a CD sooner rather than later. Read on to learn more. [[{“value”:”

Certificates of deposit (CDs) have become such a popular savings tool in 2024. The best CD rates savers are enjoying today are among the highest rates we’ve seen in years, with many CDs paying upward of 5%. That’s a great deal when you consider that putting money into a CD is a pretty risk-free endeavor, provided you choose a bank that’s FDIC insured.

But there’s reason to believe that the CD rates we’re seeing today won’t be available for that much longer. Specifically, recent economic data indicates that CD rates might start to slip sooner than expected.

Why CD rates might soon fall

The reason CDs are paying so generously these days is because the Federal Reserve implemented a series of interest rate hikes in 2022 and 2023 as a means of slowing the pace of inflation. The Fed’s efforts worked to a large degree, and living costs have risen at a more moderate pace in the past year than they did in 2022.

But now that inflation levels are getting closer to where the Fed wants them to be, the central bank is gearing up to start cutting interest rates. And once that happens, CD rates are likely to follow suit.

The reason the Fed has yet to implement any interest rate cuts this year is that inflation, though much improved from 2022, is still stuck at an elevated level, fueled by a strong economy. But recent unemployment data tells us that this trend may be somewhat short-lived.

For the week ending May 9, first-time unemployment benefit applications rose to their highest level since August. Meanwhile, April’s recently released jobs report showed that only 175,000 new positions were added that month — a number that fell short of the 245,000 jobs economists were expecting.

None of this is a reason to panic about the economy. Generally speaking, 175,000 new jobs in a given month is not a poor showing. But these two pieces of data do point to a slightly less strong economy than what we’ve seen in recent months. And that could lead the Fed to move forward with interest rate cuts sooner rather than later.

Once that happens, CD rates could start to fall. So you may want to open a CD now, before the Fed has a chance to lower interest rates.

It pays to take action in May

The Federal Reserve is scheduled to have a two-day meeting on June 11–12 to discuss its interest rate policies. At that meeting, the central bank may decide to move forward with its first rate cut in years, especially in light of recent economic data. So if you have the money on hand, you may want to look at opening a CD in May, before rates become less favorable.

Of course, before you open a CD, you should make sure you’re happy with the state of your emergency fund, and that you don’t have any near-term expenses you need the money for. But otherwise, now’s a really good time to put money into a CD.

Even if the Fed doesn’t lower interest rates in June, it’s expected to do so before the year is over. So either way, the sooner you open a CD, the greater your chances of snagging a truly excellent rate.

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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 are higher than they’ve been in years. Check out why one writer still doesn’t have one. [[{“value”:”

The rates for certificates of deposit (CDs) have risen to the highest point in more than a decade, and it’s great to see. As you’d expect, lots of people are pushing CDs as the place to put your savings. And yes, that includes me; I’ve written about CDs quite a bit over the last year.

RELATED: Best CD Rates

Despite all of this, I don’t personally have any of my money in CDs. It’s for the same reason I point out as a consideration in most of my CD pieces: CDs lock up your money.

I like my money to stay accessible

The type of CD you get dictates its maturity length. For example, a 6-month CD matures after six months. You need to leave your money untouched in that CD until it matures, or you’ll face a big, giant fee.

How much you lose depends on the specific CD, but it can be up to all of your interest earnings. For instance, Citi charges 90 days of interest as an early withdrawal penalty for 3-month to 12-month CDs.

I’ll be honest — after buying a house last year, my non-retirement savings balance is a lot less impressive than it used to be. I do have some funds that could live in a CD and probably not be needed. But potentially losing a significant portion of my interest earnings on a “probably” just doesn’t suit me. It makes an otherwise low-risk investment markedly more risky.

What about no-penalty CDs?

Some banks and credit unions will offer no-penalty CDs that don’t charge early withdrawal penalties. Sounds like the perfect solution, right?

Eh, not so much. The vast majority of no-penalty CDs that I’ve seen have offensively low APYs. Sticking with the Citi CD example, its 12-month no-penalty CD has a rate of just 0.05%. That’s just sad.

If you can find a no-penalty CD with a competitive rate (in the 5% range), then good on you. I have yet to do so.

Where I keep my money instead

Since I don’t want to risk fees if I suddenly need access to my funds, I can’t use a CD to grow my money. Instead, I rely on high-yield savings accounts for my longer-term savings. I also have a money market account to house my emergency fund.

Why the two different types? I like keeping my emergency fund in a money market for accessibility. (See a trend?) If I have an actual emergency, I may need cash in a hurry, and most high-yield savings accounts don’t offer ATM access or checks.

The rest of my savings — the part that isn’t invested in my IRA — lives in the best high-yield savings accounts I can find at the time. I move money around as I qualify for new account bonuses or as interest rates change.

Don’t get me wrong, CDs are a great place to grow your money with minimal risk if you’re sure you won’t need to touch it while the CD matures. They just don’t happen to be the right tools for me.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. Brittney Myers 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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Want to reap massive savings at Costco? There’s one strategy it pays to employ. Learn what it is here. [[{“value”:”

There’s a reason 73 million consumers are willing to shell out money for a Costco membership. While you’ll pay $60 for a basic membership or $120 for an Executive membership that offers cash back on your purchases, you might more than make up for those fees in the form of savings during the year.

You’ll often hear that the best way to save money at Costco is to take advantage of its bulk offerings. But here’s the real trick to actually saving money in the course of your Costco shopping.

Make sure not a drop of what you buy goes to waste

If you buy strawberries in bulk at Costco for $0.80 less per pound than what your supermarket charges, you’re saving money in theory — provided you actually eat every single strawberry in that carton before it goes bad. But often, Costco shoppers don’t do that. They buy items in bulk but end up tossing out a portion of their haul, thereby negating their savings to at least some degree.

If that’s something you’ve been known to do with Costco food purchases, then you’re really not maximizing your savings the way you should be. So it pays to employ some tactics to help cut down on or, ideally, eliminate your food waste.

How to avoid wasting food from Costco

If you get good use out of your Costco grocery purchases, you can potentially enjoy a huge amount of savings. So how do you avoid having items go to waste? Here are some ways to start.

1. Plan meals ahead of time

If you’re buying meat like chicken, beef, or fish at Costco, you should know that they have a very limited shelf life. Make sure you’ve mapped out your meals for the week so you’re able to use up your purchases.

And remember, you can always get creative. If you’re buying chicken thighs for a pasta dish for dinner, you can use leftovers to make chicken salad sandwiches for lunch.

2. Look at expiration dates

When you’re buying a large quantity of a single item, it’s really important to check the expiration or best-by date. This holds true even for non-perishables.

In fact, the concept of items being non-perishable is really a bit bogus, because while eating cereal or crackers a year after the sell-by date may not make you sick, you might have a truly bad experience due to the staleness factor. So always dig around Costco’s shelves before adding a given item to your cart. And also, don’t be shy about asking a store employee if there’s fresher stock you can buy that just hasn’t hit the shelves yet.

3. Return unneeded food items

Did you know that Costco allows you to return food — even perishable items? It’s true.

Of course, one thing you shouldn’t do is buy something like ground beef, keep it in your fridge past its expiration date, and then attempt to take it back. That may not fly. But if you buy two large bags of salad for an upcoming barbecue and find out it’s canceled a few hours after the fact, you may have no problem returning those unopened bags the next day.

4. Look at freezing part of your haul

The perishable items you buy at Costco don’t always have to be consumed in short order. If you’re strategic about making freezer space ahead of those purchases, you can enjoy the savings without the waste.

For example, a box of Costco’s 12 jumbo muffins is a great deal, but one can only eat so many muffins in a three- or four-day span. But since those muffins tend to freeze well, you can store part of your haul away for the future.

5. Split bulk items with neighbors

Maybe you don’t need a two-pack of Costco sandwich bread, but rather, a single loaf. If the price at Costco is appealing, see if your neighbor wants to split a two-pack with you. That way, you can each enjoy savings without having to waste the portion of that pack you wouldn’t normally need.

There are multiple strategies you can employ to save money at Costco. But making sure none of your food purchases go to waste is a great way to put extra cash in your pocket and enjoy your membership to the fullest.

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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.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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