Money Management

Want to open a CD in 2024? Based on the Fed’s latest interest rate moves, here’s why there’s no need to hurry. [[{“value”:”

Just a few short months ago, most Wall Street experts were saying that the Fed was right on the verge of cutting interest rates. This expected interest rate cut helped spark a surge of curiosity about certificates of deposit (CDs), as savers looked to lock in a high APY before interest rates came down.

After all, if you open a CD right before interest rates go down, that can be a great financial move! You get to keep the higher interest rate on your CD, while everyone else has to settle for lower interest rates on bank savings accounts.

But based on recent developments in the economy, and a few other persistent drawbacks to CDs, opening a CD is not a slam-dunk “must-do” decision. Let’s look at a few reasons why you shouldn’t be in any big rush to open a CD.

1. The Fed keeps not cutting interest rates

Here’s the problem with Wall Street experts: they don’t always (or often) get it right. A few months ago, “everyone” thought that the Fed was going to cut interest rates, but the past few months of inflation data and economic performance have undermined that theory. Inflation is still too high, and the economy too strong, for the Fed to cut interest rates.

As of April 20, 2024, it appears that the Fed might not cut interest rates anytime soon. This fast-shifting conventional wisdom about interest rates is causing confusion and disorder in many investors’ strategies — from bond prices to stock prices, to the APYs on CDs and savings accounts.

If the Fed doesn’t cut interest rates in the next few months, this could make CDs a less attractive place to put your savings today. You can’t lock in a high rate if the high rates stay high.

What you should do instead of opening a CD: If you were trying to time the market on interest rates and waiting to open a CD until you could guess the Fed’s next move, you might be waiting a long time. If interest rates do not get cut, your locked-in APY on a CD might not be such a great maneuver after all. Instead of a CD, you might as well just use one of the best savings accounts — with APYs as high as (or higher than) the best CDs.

Keep in mind that bank savings account APYs are not fixed; if interest rates ever get cut, bank savings account interest rates will go down, too. But until or unless the economy goes into a shocking slowdown, the Fed seems to be holding steady on interest rates.

2. Are you really ready to lock up your money?

I’m not a big fan of CDs for a few reasons. Along with the debate about trying to outthink the Fed, there’s an even bigger downside to CDs: CDs require you to commit your money for a specific term of time. And if you have to take your money out, you will owe an early withdrawal penalty that can gobble up most (or all) of the interest income you’ve earned.

People often open a CD with a high degree of confidence that they won’t need that cash for the full duration of the term. But what if your situation changes, and you suddenly need that CD money as part of your emergency fund?

Bank savings accounts do not force you into these predicaments. With a savings account, your money is liquid and you can take all of it out any time (as long as you don’t exceed the limits on the number of monthly withdrawals). And you get to keep every dollar of interest that you earn (less taxes, of course).

What to do instead of opening a CD: Again, just put your cash into one of the best savings accounts or money market accounts. You’ll get an APY that’s almost as good (or better) than CDs, and without the early withdrawal penalties. Or if you find a great deal, choose a special type of CD called a no-penalty CD (but the APYs on no-penalty CDs might not be as good as what you’d get from a savings account or money market account).

3. What if interest rates go up?

It seems unlikely, but it could happen. If the Fed keeps on not cutting rates like everyone thought they would, if inflation gets hotter, it’s not inconceivable to think that rates (and APYs on CDs) could go even higher later in 2024. And in case interest rates go up in the next few months? Your patience in waiting to open a CD will be rewarded.

What to do instead of opening a CD: Just leave your cash parked in a safe, liquid, high-yield savings account or money market account. If interest rates go up in 2024, those accounts’ APYs will also go up. Again, even if interest rates go up, that still doesn’t mean a CD is the best choice. You have lots of good options for places to keep your cash.

Bottom line

Uncertainty about interest rates should make you hesitant to open a CD now. There’s no rush. In case interest rates stay at their current level, or even go up, opening a CD right now might not turn out to be the best financial decision. Instead, consider leaving your cash in a bank savings account or money market account that’s earning 5.00% APY (or higher).

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CDs are risk-free investments with generous interest rates. Find out how much you can earn over five years with $20,000 invested. [[{“value”:”

Savings accounts are great for money you want to earmark for emergency expenses and near-term goals, like saving for a car, vacation, or house. But if you’ve covered those bases and have more unallocated cash on hand, you’re left with an interesting problem — how to generate the best return on your money for the long term.

One option is to invest it in a certificate of deposit (CD) with a five-year term. While in the past, 5-year CDs had generally lackluster returns, today’s rate environment has made these deposit accounts far more lucrative. If you have a long time horizon and you want to earn a decent return on a safe investment, let’s see how much $20,000 could make in a 5-year CD.

How much will $20K be worth in five years?

Before we get to the math, let’s establish some ground rules. First off, the CDs mentioned below pay compound interest. That means, your CD rate not only applies to your initial deposit but also to the interest you’ve already accumulated. This is different from simple interest, which would just apply to your principal and not the interest you’ve already earned.

Secondly, we have to assume you won’t withdraw the interest early. While many banks will let you take out interest periodically, doing so reduces your balances and will thus result in slightly less interest earned overall. Keep in mind that withdrawing interest is different than removing your initial deposit, which is against the rules and will likely result in paying an early withdrawal penalty.

Thirdly, the rates mentioned below are current as of April 21, 2024, but they could change at any moment. Check with the bank itself to see what its current rates are.

Now that we got those assumptions out of the way, let’s take a look at how much you could earn with $20,000 in some of today’s top-paying 5-year CDs.

So, no matter which 5-year CD you choose, you’re going to earn between $4,000 and $4,700 on a $20,000 deposit at today’s best rates. Keep in mind, you have to pay taxes on CD interest, so your total return could be less. Still, this is a decent return for a relatively risk-free investment.

Should you open a 5-year CD?

A big reason to open any CD of any term is to freeze today’s high interest rates. To be sure, today’s best CD rates won’t be around forever; in fact, by many expert predictions, banks might start lowering CD rates later this year. While no one can predict when CD rates will change, it might be prudent to lock one in before rates begin to shift.

As far as 5-year CDs go, these longer terms best suit those who have extra savings in another bank account, like a high-yield savings or checking account, and don’t plan to use this money for the next 60 months or longer. Moving this money into a 5-year CD would entitle you to a decent return on your savings, one that could be substantially higher than what other bank accounts could pay over the same duration. It’s entirely possible that in two to three years, the best savings rate will be less than half what it is now.

Ideally, this money shouldn’t be already tied up in investments in a brokerage account, nor should it come from your emergency fund. Since 60 months is a long time to lock up your money, it should be savings you don’t have earmarked for short-term goals.

All things considered, 5-year CDs are paying out at super generous rates. If you can commit some of your savings to one of these accounts, you can establish a decent stream of passive income. However, if locking your money up for the length of a presidential term plus a year scares you, don’t sweat it — take a look at some of the top-paying short-term CDs (like 12-month terms) and see if they might suit your time horizon better.

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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.Ally is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.

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What makes women and men feel the most financial stress? See what a Laurel Road survey has to say about gender gaps in money stress. [[{“value”:”

Men and women face many of the same challenges when managing money and personal finances. We all have to figure out how to avoid credit card debt, build emergency savings, and invest for retirement. But there are a few key differences that cause men and women to feel financial stress — and it’s not just the gender pay gap.

A new survey from Laurel Road (part of KeyBank) found a few interesting insights about men and women’s biggest sources of stress in their everyday lives. Let’s take a closer look at what’s bothering men and women the most about money and life.

1. Personal finances (60% of men, 65% of women)

The Laurel Road Annual Survey of Women’s Personal Finances found that personal finances (such as managing daily expenses or working toward long-term goals) is the No. 1 source of stress for all people (62% of respondents). But there’s a slight gender gap here, too. Women were more likely than men to say that personal finances are their biggest source of stress: 65% of women felt this way, vs. 60% of men.

When you consider some of the extra financial challenges that women face, it’s no wonder that more women might feel stressed by their personal finances. Women have 17% lower pay and 68% less wealth than men, on average. No matter how clever you are at budgeting, it’s harder to start with a smaller paycheck.

2. Managing health (52% of men, 49% of women)

The second-biggest source of stress identified by the Laurel Road survey was “managing my health,” mentioned by 50% of respondents. Men were slightly more likely to say that health-related concerns are a source of stress for them.

There’s an old saying that “health is wealth.” Making time to go to the gym, working with a personal trainer or fitness coach, seeing a therapist, joining an exercise class, going for a bike ride, or even just going for a daily walk outdoors can be a priceless investment in your long-term health and well-being.

3. Taking care of family (44% of men, 41% of women)

The third-largest stress factor from the Laurel Road survey, mentioned by 42% of respondents, was “taking care of my family.” Men were slightly more likely than women to mention this stressor — 44% of men vs. 41% of women.

Some people feel big financial pressure to earn a high income and be the breadwinner for their families. But taking care of a family doesn’t always involve money. The everyday stresses of taking kids to soccer practice and getting dinner on the table can build up over time. People who are not parents can also have family stress, for example, if you’re caring for a loved one who is having a health problem, or helping care for aging parents.

There’s no single right answer for how to balance your family’s needs and your needs as an individual. Being a caregiver can be hard, sad, and exhausting, even when you’re glad to do it. But try to keep investing in your own health and wellness (and your own retirement accounts) along the way, so you can stay strong and energetic for the people in your life. Just like the airline safety instructions: “Put your own oxygen mask on first, before helping others.”

4. Chores, errands, and household tasks (30% of men, 42% of women)

The fourth-biggest source of stress in the Laurel Road survey also had one of the biggest gender differences: 36% of respondents said that “chores, errands, and other household responsibilities” were a source of everyday stress — but only 30% of men felt this way, and 42% of women did. This is a sign that women are still doing more of the everyday housework within their homes and domestic relationships.

“Time is money,” and if you’re spending extra time doing chores that your kids or life partner aren’t doing, that makes it harder to earn more money! Fixing the household chore gap could also help solve the gender pay gap.

5. Jobs and careers (40% of men, 27% of women)

The No. 5 stressor on the Laurel Road survey, mentioned by 34% of respondents, was “my job/career.” But this one had the biggest gender gap of all: 40% of men said their job/career was a source of stress, compared to only 27% of women.

But this survey data doesn’t mean that women don’t care about their careers as much as men. A recent McKinsey report found that women are more ambitious than ever: As of 2023, 80% of women want to earn promotions to the next level of their careers, compared to 70% in 2019. These numbers are even larger for young women and women of color.

Bottom line

The gender gaps in who’s feeling the most stressed about chores vs. who’s feeling the most stressed about their jobs could be kind of a holdover from traditional attitudes about gender roles. If you’re part of a traditional man-and-woman married couple where the man has a much higher salary, it might make economic sense for the man to work longer hours while the woman handles more of the chores.

But not everyone needs (or wants) to live like a 1950s sitcom template of a sole breadwinner husband with a stay-at-home wife. (And even in the 1950s, more than 33% of women worked outside the home.) The future of work and home is becoming more complex and varied, with (hopefully) better opportunities for women and men to get more of what they need from their lives. This could be good news for us all.

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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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Business class can cost double the points of a main cabin ticket. Find out some of the reasons it’s worth the extra cost. [[{“value”:”

Even when you know all the tricks, collecting enough credit card rewards to earn free trips can take some effort. So you want to make sure all that effort is rewarded with the best trip possible.

A lot of the rewards success stories involve scoring high-value redemptions for international business class. Part of the appeal, I think, is the “deal.” It feels good (and gets upvoted) when you can redeem rewards for $0.03 (or more) per point.

But bragging rights aren’t the only reason so many folks use their rewards for business-class travel. It’s also because business class offers a ton of perks that can simply make your trip better. Here are some of the reasons I always upgrade to business class.

1. Pre-flight priority perks start you out right

Depending on your home airport, flying business class could unlock all sorts of perks well before you hit the gate. For instance, many airlines offer dedicated check-in lanes for first and business class passengers. This can save you a ton of time if you’re checking bags.

Oh, and speaking of bags. Most business class tickets come with at least two free checked bags.

Your upgrade could also get you through security faster. Some airlines offer priority security lines at select airports that could cut your wait significantly.

2. Airport lounge access gets the vacation rolling

Once you’re through security, head to your airline’s lounge. Most international business class tickets will get you access to the lounge (or a partner lounge, if the airline doesn’t have its own).

This means free food, drinks — including alcohol (hey, you’re on vacation) — and far more comfortable surroundings than a crowded airline gate. You can also get status updates on your flight, access to staff who can answer any questions, and bathrooms without (major) lines.

If you’re someone with a premium travel rewards card, you might think you don’t need this perk with your ticket. To that I say: Some airlines have lounges that aren’t part of the programs most credit cards offer. Your ticket may actually grant you access to lounges you wouldn’t normally get into, which potentially means those lounges are less crowded than more easily accessible ones.

3. Early boarding cuts the time in the herd

This can seem like a small thing, but business class passengers are among the first people to board. This means you can be comfortably settled into your seat — and sipping champagne — while everyone else shuffles through the queue.

Depending on your airport and flight, you may even be able to skip the regular boarding lines altogether. A few airlines and airports allow international first class passengers to board the plane directly from the lounge!

4. Lie-flat seats make flying comfortable

Alright, so this is arguably the meat-and-potatoes of international business class: the lie-flat seats. These are seats that, you guessed it, lie all the way flat into a nice bed.

The flight attendants will come around with sheets and pillows. The little amenity kit you receive when you board will include socks and an eye mask. Some airlines even offer pajamas.

When not in bed mode, these seats are effectively reclining lounge chairs. They’re wide, comfortable, adjustable, have ample foot room, and they’re typically a very generous distance from your neighbor. In my eyes, 10/10 — would recommend to anyone who doesn’t like the “stuck in a tin can” feeling of air travel.

5. Chef-curated meals aren’t “airplane food”

You hear a lot of jokes about how bad airplane food is, but I’ve never really understood them. That’s because the few international trips I’ve taken, I flew in business class (on points, I’m not made of money!). And in business class, the food is excellent.

Meals usually consist of a starter, a main, and a dessert. Most international flights of six hours or so will typically serve two meals (dinner and breakfast on overnights). Plus, you usually have access to a variety of snacks and drinks throughout the flight.

The cherry on top? The business-class cabin will have a dedicated crew, so service is much faster than it is in larger cabins with a higher passenger-to-staff ratio.

6. Being first off and first up saves so much time

You know how, as soon as the plane lands, everyone stands up and mills in the aisles hoping to get off the plane ASAP? You know who actually gets off the plane ASAP? That’s right, business class.

A lot of larger planes board a little toward the middle, with the business class cabin to one side and the main cabin to the other. In most cases, the main cabin won’t even start to deplane until the business class cabin has made its way out.

Another part of this perk is that your luggage also typically comes out first at baggage claim. This can shave a lot of time — and headache — waiting for your bag at the carousel with hundreds of your new besties.

Shut up and take my miles!

I’ve never flown in the main cabin on an international trip, so I can’t say with certainty that it’s awful. But I do know that business class is awesome, and it has spoiled me for anything else. So long as my miles hold out, that’s where I’ll be spending my journey. If you can spare the points, I think it’s well worth 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.Brittney Myers has no position in any of the stocks mentioned. The Motley Fool recommends Flow. The Motley Fool has a disclosure policy.

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Want to bank some extra cash this month? Read on to see how. [[{“value”:”

If you’ve been struggling to save money this year, you’re not alone. Higher than average inflation continues to make it difficult for a lot of people to have spare money at the end of the month.

But now’s actually a great time to save money and capitalize on today’s higher interest rates for savings accounts and CDs. So if you’re eager to free up some cash in May, here are some tricks to try.

1. Have a low-key Mother’s Day celebration

Mother’s Day spending is expected to reach a whopping $33.5 billion this year, according to the National Retail Federation, with the average spending per person celebrating the holiday coming in at about $254. But if you’re able to cut your Mother’s Day budget to, say, $54, you’ll potentially have an extra $200 to bank.

To that end, instead of buying expensive gifts for your mom this year, do something simple. Pick out a novel you think she’ll enjoy, or frame a nice family photo for her to put on display.

Or, give a gift that doesn’t cost anything. Offer to clean her house so she doesn’t have to, or to do her cooking for a week so she gets a break.

As for your Mother’s Day celebration, there’s no reason to spring for an overpriced brunch. Pick up delicious bagels from your local shop and a few nice spreads, or bust out your cookbook and whip up a nice frittata, quiche, or casserole. As is the case with celebrating any milestone, if money is tight, it’s really the thought that counts.

2. Stay local rather than travel over Memorial Day weekend

Many people tend to jump at the chance to travel over a long weekend. But you can pretty much count on airfare and lodging being more expensive when there’s a holiday involved. And while you might spend less on a road trip, that’ll largely depend on where gas prices are sitting.

Instead of escaping town this Memorial Day weekend, consider staying local and doing activities you’ve never tried before. Explore a new hiking trail, or check out the new exhibit at a museum nearby. You might even really appreciate the opportunity to catch up with friends in the area you haven’t seen in a while over a backyard barbecue.

3. Give up restaurants and takeout for one month

Dining out and ordering in can be delicious and convenient. But these habits can also be costly.

Giving up restaurant meals forever may not be feasible. And frankly, you shouldn’t commit to permanently forgoing an indulgence you love.

But if you’re eager to boost your savings in May, try committing to a single month where you do all of your own cooking. You may find that following that, you’re able to scale back on ordering food and enjoy a continued financial benefit.

Remember, May is a great time to open a CD if you have the cash — or at least put money into savings while interest rates are higher. So banking even a few hundred dollars this month could go a long way. And employing these tactics could help your cash reserves grow quite nicely.

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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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