Money Management

The Federal Reserve has signaled it wants to cut interest rates in 2024. Find out why opening a CD account might be a good idea. [[{“value”:”

Today, interest rates are very high, as the country’s central bank (the Federal Reserve) raised the benchmark rate 11 times between March of 2022 and July of 2023. Because interest rates are near record highs, it’s possible to earn a very competitive return on a high-yield savings account. In fact, some accounts currently offer rates above 5.00%.

The Federal Reserve has indicated it intends to reduce rates this year, as long as economic trends show inflation has cooled and that prices will rise at a more sustainable level. These rate cuts could even happen before summer, although the Fed has so far declined to cut rates during its 2024 meetings.

If rate cuts happen, then high-yield savings accounts are likely to offer lower interest rates to customers. These accounts have variable rates, and they aren’t going to keep offering the returns they provide today if market conditions change.

The good news is, there is something you may be able to do to keep your higher return without putting your money at risk.

Could this option help you to keep your high rate?

If you want to make sure you don’t lose the chance to earn competitive yields on your money, you may want to seriously consider putting some of it into a certificate of deposit (CD).

See, CDs are like savings accounts in an important way. They are FDIC insured, so you can’t lose your money (unlike when you invest in a brokerage account and buy stocks that could see prices go up or down). When you put money into a CD, you aren’t taking risks with it, so it’s a good place for funds you may need in the coming months or years.

But CDs are different from savings accounts in that your rate is locked in. You agree to a CD term, such as three months, one year, three years, or five years. During that time, you earn the returns you were promised upfront. So, if you open a CD now — and especially one with a longer term lasting several years — you can make sure you keep getting the highest return on investment (ROI) possible from this risk-free investment, even if the Fed does cut rates.

The downside, though, is that you have to agree to leave your money invested for the duration of the CD term. Otherwise, you’d face penalties often equal to several months of earned interest. So, you should look for a CD with a term length you are comfortable with. If you have money you’re saving for something you’ll need a year from now, for example, a 1-year CD makes sense.

Should you open a CD to keep your rate high?

Opening a CD can definitely help ensure your ROI on your savings doesn’t fall even if rates change across the board. But you should only put money into it that you are sure you won’t need to access until the CD term ends to avoid those penalties mentioned above. This means, for example, that a CD isn’t a good place for something like your emergency fund that you may need to access at any time.

You should also avoid putting money into a CD that belongs in the market. Even though CDs offer competitive yields, you can do better in an S&P 500 index fund if you’re a long-term investor. The S&P has consistently produced 10% average annual returns over the long term, which is higher than what CDs offer. So, if you won’t need the money for five years or more, it should be in a brokerage account, not a CD.

But if you do have the right timeline and funds you want to earn a good return on that you’ll need anywhere from three months to five years into the future, opening a CD with that money right now could be a good move. It’ll ensure you maintain access to today’s generous rates, even if the Federal Reserve takes action to lower them.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.

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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Don’t miss this StackSocial Costco membership deal. New members who buy a Costco Gold Star membership for $60 will get $40 to spend at Costco. Find out more. [[{“value”:”

Many Americans buy groceries and household goods at warehouse clubs to combat rising living costs. Shoppers can keep more money in their checking accounts by getting a discount on bulk buys.

Costco is one warehouse club to consider joining if you want to trim your spending when stocking up on everyday essentials. New members who invest in a Costco Gold Star membership can get a $40 Costco shop card. Here’s what you need to know about this deal.

Get $40 to spend at Costco when you become a new member

StackSocial is a deal website similar to Groupon. You’ll find discounts from companies you know and love. Whether you’re looking to buy the latest beauty products, electronics, software, online courses, or home goods, you can find deals to help you keep more money in the bank.

Now is an excellent time to join Costco if you’ve ever considered becoming a member. StackSocial has a Costco membership deal available. New members who purchase a one-year Costco Gold Star membership will receive a $40 digital Costco shop card. You can use the shop card to make purchases at Costco, both in person and online.

This deal is available to customers in the United States and Puerto Rico. You must be a new Costco member. If you were a previous member, your membership must have expired for more than 18 months to be eligible for this offer. This offer must be redeemed by June 16, 2024. StackSocial encourages those who purchase this deal to redeem it within 30 days.

How much is a Costco membership? Costco’s Gold Star membership costs $60 annually. One nice perk is that Gold Star members get a free household card for someone over age 16 who lives at your address. So, a family member can easily shop at Costco without you being present.

Is this deal worth it?

Should you take advantage of this membership offer? If you have considered joining Costco, this is a solid deal. You’ll pay $60 upfront to join and get $40 worth of shopping credit for free. Thanks to this deal, you can make a future Costco haul much more affordable.

Three tips to avoid overspending while shopping at Costco

Make a list: Before you walk into your local club, take some time to outline a shopping list. It can be tempting to buy things you don’t need if you don’t have a plan. Your list can help avoid unnecessary purchases and ensure you walk out with everything you need.

Shop the deals: Costco is known for its great prices, but you can save even more money by shopping for the best deals. Costco lists current deals on its website and mobile app.

Comparison shop: While many of the prices at Costco are fantastic, not every deal is the best. Compare prices for similar products sold elsewhere to get the best possible deal. Some similar products (even if they are a different brand) may be cheaper at other retailers.

Setting and following a budget can be helpful if you struggle with overspending. You can use one of the best budgeting apps to monitor your spending and stay on track with your goals.

Managing your money will be easier once you get more comfortable with your budgeting skills. For additional savings tips, check out our free personal finance resources.

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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.Natasha Gabrielle 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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Are you “doom spending” out of fear, or making “YOLO economy” decisions based on love of life? Here’s how to strike the right balance. [[{“value”:”

Americans have been spending a lot of money lately, and not everyone is happy about it. The post-pandemic era of “revenge spending” and “doom spending” has been called the “YOLO economy” by some experts.

The attitude of “You Only Live Once” can sometimes go too far. We can’t all live like carefree spendthrifts, especially if you have people in your life that you need to provide for, responsibilities to maintain, and mortgages and auto loans to pay. But it’s understandable that so many Americans want to keep traveling the world, spending money, and living life, after the pandemic era of isolation and dread.

I would argue that “YOLO” is a better approach to personal finances than the opposite extreme: what I’ll call “YNLAA” (“You Never Live At All”). Let’s see why the “YOLO economy” is not such a bad thing — and how you can better enjoy your money and your life.

Does saving or spending bring you more joy?

Some people struggle to save money, while other people are naturally frugal and sometimes struggle to spend — even when they have plenty of money. Both of these attitudes can be “problems,” based on what you need in life and how you feel about money. Here’s a question to ask yourself: “Are you making your money decisions out of fear, or out of love?”

If you’re saving money, are you doing it because you love the feeling of being thrifty and you’re joyfully saving for important goals? Or are you saving money because you’re afraid of running out of money, afraid of being unemployed, afraid that no one will care about you unless you have money?

People who save too much money based on fear and insecurity are at risk of “Never Living At All.” If you never enjoy your money and your good health and your moments of good fortune, if you’re always working, saving, planning, and worrying about the next catastrophe to strike, you might look back on your life and realize that you never fully lived it.

Money can’t always buy happiness, but investing in relationships and making memories are two good ways to try.

How to do “YOLO economy” spending the right way

If you’re spending money in a “YOLO” way, are you doing it out of love and joy? Are you spending that money in ways you really care about — treating your friends to dinner, buying concert tickets to see your favorite musicians, taking vacations to places you’ve dreamed about? Or are you spending money based on negative “doom spending” emotions: spending because you’re afraid of running out so you might as well spend the money faster, spending to try to impress people, or spending to try to cover up for low self-esteem?

“YOLO” spending can be a good thing for your personal finances if it helps you consciously focus your spending on responsible, high-priority areas, not just spending out of boredom or disregard. “YOLO” can help you buy more time and create happier memories. If you’re saving “too much” money, you might need a “YOLO” reminder — you can’t take the money with you, and you need to try to enjoy your life while you’re living it, along with planning and investing for the future.

We survived a generational trauma

The pandemic gave all of us a rare moment to take a deep look at our personal relationships with money and think about what we would do differently, given the chance. All those months of isolation gave us a chance to reflect on how we would rather be spending our time (and money) — and what’s worth spending on. Sometimes “more money in the bank” doesn’t feel as good as you thought it would.

For example, in 2020-2021, I saved more money than I’ve ever saved in my life — but 2020-2021 was also the worst year of my life. Everyday life generally felt bizarre and awful. Even though I’m incredibly privileged and fortunate and didn’t lose any relatives to COVID-19, I still felt like a big, possibly-permanent hole had opened up inside my brain from all the anxiety, stress, and grief. The pandemic felt like life was being slowly stolen from me, with no new memories to show for it.

I know everyone’s tired of talking about COVID-19, but the fact remains: We all just lived through a generational trauma. That can make things like “Do you have exactly six months of expenses in an emergency fund?” feel pretty insignificant. If now is not the time for “YOLO” spending, when is the right time?

It’s natural for people to want to celebrate being alive, and want to experience more of life — especially after seeing how fragile life can be. I’m not going to scold people for trying to live a little, and spend their money, even if they’re not always “responsible” about it.

Bottom line

If you want to dial back on your spending and regain control of your monthly budget, that’s great. If you feel like your spending is not bringing you happiness and you want less financial stress, that’s totally valid.

But if you still feel the urge to go on vacation and meet friends at restaurants even if you don’t have enough emergency savings, even if you have some credit card debt, and your retirement investments are not on track — well, that’s OK too. Try to keep living life and buying happier times, instead of looking back with regrets that you didn’t live 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.The Motley Fool has a disclosure policy.

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Juggling credit card balances? Before you rush to do a balance transfer, consider some alternatives. Here’s why. [[{“value”:”

As of 2024’s final quarter, Americans owed $1.05 trillion on their credit cards, says TransUnion. And you may be in the process of trying to pay off multiple balances yourself.

Juggling multiple credit card balances is no fun. Not only can it be stressful, but you run the risk of missing a payment accidentally and having your credit score take a big hit because of that.

As such, you may be inclined to do a balance transfer if you owe money on multiple credit cards and are looking for a way to consolidate your debt. A balance transfer might also mean getting to take advantage of a 0% introductory rate for a limited period of time, which could make your debt easier to pay off.

But while you might assume that a balance transfer is your best option in this situation, that’s not always the case. In fact, you may be much better off consolidating your debt into a fixed-rate loan and paying it off over time.

Why a balance transfer may not work for you

A balance transfer usually allows you to enjoy a limited period of time of no interest accruing on your debt. The problem, though, is that once that introductory period comes to an end, the interest rate on your balance has the potential to skyrocket.

Furthermore, most balance transfer offers limit that introductory period to under two years. You may get lucky and enjoy 21 months of no interest, or 18 months. But that may not be nearly enough time to get your balance whittled down to $0.

Also, there can be costly fees associated with doing a balance transfer. In fact, 3% is pretty common. But if you owe $10,000, you’re looking at paying $300 to do that transfer. Ouch.

Also, there can be limits on balance transfers that may not work for you. If you can’t move over all of your credit card debt, for example, then a balance transfer may not be worth it. After all, a big benefit of a balance transfer is consolidation. If you move over most of your debt but are still left with a $3,000 balance lingering on an additional card, you haven’t necessarily solved your problem the way you wanted to.

A fixed-rate loan may be a better bet

Clearly, balance transfers have their drawbacks. So you may want to consider a fixed-rate loan, like a home equity or personal loan, as an alternative to a balance transfer.

With these loan options, you’ll forgo the 0% introductory period you might get with a balance transfer. But you’ll also have a lot longer to pay off your debt.

So let’s say the interest rate on your balances now ranges from 18% to 24%. You might sign a fixed-rate personal loan at 8%. But you won’t only have 12 months, or 18 months, to pay off that loan. You might easily get five years, which gives you more breathing room because you’re guaranteed that 8% rate for that loan’s duration.

Also, a fixed-rate loan might make it possible to consolidate all of your debt. So logistically, it could make more sense.

Now just as there are fees usually associated with a balance transfer, there can be closing costs to put a home equity or personal loan in place. So you’ll need to compare the costs involved.

But all told, you shouldn’t assume that a balance transfer is your best choice when you’re looking to consolidate multiple credit card debts. A fixed loan may be a better option by virtue of the fact that you get more time to tackle your debt without having to worry about your interest rate soaring while you’re still in the process of paying it off.

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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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