3 Little-Known Perks of Buying CDs

Certificates of deposit (CDs) can be a smart way to capture high interest rates. With some CD rates currently north of 5.50%, the headliner perk on today’s top-paying CDs is undoubtedly APY, APY, and APY. But don’t let high interest obscure some of the lesser-known benefits of buying CDs. Growing your Money is important, but these three lesser-known perks could sweeten a CD contract.Ready to open a CD and earn extra cash? Western Alliance Bank is a top pick from our experts and features an incredible rate: 1 Year: 5.51% APY (Min. Deposit $1).1. Some CDs allow a “bump-up” rateStandard CDs offer a fixed rate for a specific period. For example, if you lock into a 5.50% APY, you’ll get 5.50% for the length of your term, whether that’s three months or five years.Locking in at a high rate can be glorious if CD rates fall. But if you lock your CD rate too early, the opposite could happen: You could watch CD rates soar, while yours is still paying out at a lower APY.This is where a “bump-up” CD can come in handy.Bump-up CDs let you increase your rate at least one time during your term (some allow several bump-ups). This allows you to capture a higher APY after your term has started. Typically, bump-up CDs have lower initial rates than standard CDs. But they can prove useful in a fluctuating rate environment, especially if you think the CD provider will raise its rates.2. You can access interest as you earn itWhile many CDs lock up your initial deposit for the length of your term, some will let you access the interest you’re earning. Yes, even without penalty. Often, these CDs will even transfer the interest into a separate Account, like a checking or savings account. Depending on your CDs terms, the interest could be deposited monthly, quarterly, semiannually, or annually.3. Brokered CDs can be sold on secondary marketsBrokered CDs are a little-known CD type. These CDs are available only through brokerage accounts, such as:FidelityCharles SchwabVanguardEdward JonesThe broker isn’t the CD issuer but rather buys CDs in bulk from providers, like banks, then sells them to its customers. Often, these CDs have ridiculously high APYs.Because the broker isn’t the CD issuer, it usually doesn’t let you withdraw from your CD — not even with an early withdrawal penalty. Instead, you have to sell your CD on a secondary market if you want out early. This involves finding a buyer who will take the CD off your hands.Selling a CD on the secondary market could result in a loss, especially if rates have increased since you purchased yours. But for savvy investors focused on the long term, today’s top-paying CDs could eventually result in a gain. CD rates won’t stay high forever. If you load up on long-term CDs, you could turn a profit when rates start to fall, not to mention earn high interest as you wait.Of course, like investing in stocks and other assets, trading CDs has risks. But it’s a strategy that many fixed-income investors simply don’t know about.All in all, CDs can offer investors more than just a high APY. Don’t get me wrong: Earning high interest on your savings is a major benefit. But dig a little deeper into your contract; you might find some perks that surprise you.

This Is Why I Keep Almost No Money in My Checking Account

For as long as I can remember, I’ve never kept more than what my monthly budget calls for in my checking account. Over the years, I’ve treated checking accounts as a kind of layover for my paychecks. It’s not the final destination but a hub that transfers money to different places, like my IRA or savings account.Some people disagree and stash lots of cash in their checking accounts. I can understand their reasoning: Checking accounts offer easy access to cash and are often more flexible than, say, a CD or high-yield savings account. But for as much as a checking account can make you feel secure, here are two reasons why I would advise against storing too much cash there.Checking account money is too easy to spendLike it or not, checking accounts make it easy to spend money. Without the added friction of transferring money out of a savings account, this could lead you to squander your hard-earned cash.To be clear, easy access is fine if you have a purpose for your money. For example, if you’re moving into a new house, you’ll need cash on hand to cover the expenses. But without a purpose or plan, you can become tempted to spend money instead of saving it, leaving big personal finance goals, like saving for a home down payment or retirement, untouched.If unused cash is burning a hole in your pocket, you could restrict access — not to mention earn high interest — with a certificate of deposit (CD). CDs offer you a competitive interest rate in exchange for locking your money up for a certain period, like 12 months. Often, CDs have early withdrawal penalties, which could discourage you from touching your money. Even a short-term CD, like 3 to 6 months, could help you capture interest without locking your money up for long periods.Interest is essentially nullEven if you’re not a big spender, stashing cash in your checking account is inefficient for the rock-bottom rates these accounts pay — if they pay interest at all.In comparison, today’s top-paying savings accounts offer lucrative rates that can help your money grow with (or outpace) inflation. Don’t overlook that. If inflation has affected your household budget, today’s high-yield savings accounts can help you offset higher costs with money earned on interest.Of course, savings accounts add some friction between you and your money. Some high-yield savings accounts even restrict how many times per month you can withdraw money and how much you can take out daily, weekly, or monthly. If access is important to you, a money market account (MMA) could be the perfect middle between flexibility and high interest. These accounts have attractive interest rates and may come with debit cards or check-writing privileges. Some banks will even let you set up direct deposits in an MMA, which could bypass using a checking account as a middle ground.That said, certain checking accounts will offer high interest on your deposits. Check the fine print, however, as some may earn high interest up to a certain amount (like $1,000), whereas others will require large minimum balances to activate the high APY.Keep only as much as you will spendTo be sure, I do keep money in my checking account. I know in advance how much we’re going to spend for the month and I keep only that to cover bills and rent. If we have money left over when the month ends, we divvy it up between my IRA and our down payment fund (a high-yield savings account). I also like to keep at least $100 in the checking account. That way, I don’t risk overdrafting the account.Even if you’re hesitant about moving money into accounts with less access, there are still strategies that could give you greater flexibility without missing out on high interest. Take care not to depend solely on your checking account, and keep your options open so you can outpace inflation and prevent yourself from overspending.

The 5 Best Kirkland Products to Buy at Costco

Buying generic brands can save you money, but rarely can they surpass (or even replicate) the taste of the original. The exception is Costco’s Kirkland Signature products. Many of these products have amassed a cult following simply for being better in taste and lower in price than many nationally recognized brands.It’s tough to pick which Kirkland products are the best, but if I had to narrow it down, here are five Kirkland products I’m buying regularly at Costco.1. Shelled pistachiosPrice: $14.99 to $16.99I’ve always loved pistachios but could never betray my personal finances to pay exorbitant prices for such small bags. Costco, however, changed that. The Kirkland Signature Pistachios come in 24 ounce bags (1.5 pounds) and cost only $15 to $17. That’s cheaper than Kroger ($5.49 for six ounces), Safeway ($7.99 for six ounces), and Walmart ($9.98 for 12 ounces).2. Lounge pantsPrice: $16.99Fall has just arrived in my home city, Portland, and we’re already breaking out the winter clothes. This year, I bought a pair of Kirkland Signature lounge pants and they’re super comfortable. Plus, you can’t beat that price. Costco is even running a promotion online that will save you $25 if you buy five to nine qualifying clothing items and $60 if you buy 10.3. Kitchen bagsPrice: $20.49The Kirkland Signature Kitchen Bags are a staple in our household. They’re big, sturdy, and have flexible tops to wrap around trash and avoid punctures. These bags are strong enough to hold our garbage, plus cat litter when we clean the boxes.4. Adult multivitamin gummiesPrice: $16.99 for twoNot the most exciting Costco purchase you’ll ever make, but nevertheless a good value, this two-pack of multivitamins comes with 320 gummies for about $17. That’s cheaper than buying Vitafusion gummies off Amazon ($12.19 for 150 gummies) and even rivals the price on Walmart’s brand of adult gummies ($8.88 for 150).5. Variety snack packPrice: $32.99This is one of the best buys I’ve seen in awhile. For about $33, this snack pack gives you 51 single-serving pouches with snacks you’ll actually like, like granola bars, trail mix, almonds, cashews, peanuts, and blueberries. Perfect for kids’ lunches or your own snacks during the day.How to find good Kirkland productsPrepare yourself for some trial and error. Fortunately, even the worst Kirkland Signature products are still decent enough to consume (case in point: the notoriously ugly “Costco sweater” you can’t help but buy). Even better: Most are covered by Costco’s 100% satisfaction guarantee. If you don’t like it, you can bring it back for a full refund.There is one little-known way to find popular Kirkland products. You’ll need to the download the Costco shopping app, then follow these steps:Open the Costco shopping app.Click “Shop” from the bottom menu.Scroll to the bottom and click “View more categories.”Click “Explore Our Brands” from the list of categories (in my app, the categories are in alphabetical order, so just look for the “E’s”).Find Kirkland Signature from the list.Click “Shop All Kirkland Signature.”Organize the products by “Most Viewed.”This will bring up product pages that have received a large volume of traffic. When I did it recently, I saw the variety snack pack was number one, followed by toilet paper, batteries, and a stone island 12-burner gas grill (shrug). Take a look for yourself the next time you browse the Costco app and see what other Costco members are buying.

3 Ways to Turn $1,000 Into Passive Income

You know something the wealthy are very good at? Making their money work for them. When they lie down to go to sleep at night, they want to know that their money is hard at work. The rest of us may not earn millions of dollars as we dream of building another yacht in the Netherlands, but we can steadily increase our net worth by making good decisions about where our money is going to hang out.Earning passive income is not just for the wealthy. Here’s how we can all get started, with as little as $1,000.1. Purchase dividend stocksLet’s say you purchase stock in the Dang, That Stings Rubber Band Company. You are now a part-owner. Sure, you may own a teeny, tiny slice of the company, but darn it all, you’re still an owner.While not all publicly traded companies do, Dang, That Stings Rubber Band Company pays dividends. A dividend is an amount of money that a company regularly pays its stockholders out of its profits (sometimes referred to as “reserves”). Typically, companies pay out quarterly.Purchasing $1,000 in stock in a company that pays dividends is one way to produce passive income. You can cash out those dividends and tuck them into your savings account, or you can reinvest them, slowly growing the amount of stock you own in the company.Note: If you want to invest in dividend-paying stocks, make sure the companies you’re interested in pay them.2. Make like Mr. MonopolyI can’t swear to it, but I’ve always suspected that Mr. Monopoly is heavily into lending money to Uncle Sam. Here’s how I believe he does it:First, he goes to TreasuryDirect.gov. That’s where he can directly invest in the U.S. government.Mr. Monopoly then determines whether he’s in the mood for short-term debt like Treasury bills, mid-term debt like Treasury notes, long-term debt like Treasury bonds, or inflation-protected debt like I bonds.Mr. Monopoly may be flashy, but he’s also concerned with protecting his money. Each of these investments is backed by the full faith and Credit of the U.S. government.3. Build an emergency fundOne of the least sexy, but most important, investments you can make is in your personal financial security. Let’s say you wake up one morning and rain is coming through the ceiling in your kitchen. Even without being quite awake yet, you realize that it’s not supposed to rain into your kitchen. A contractor swings by and you learn that it’s going to cost $7,500 to make repairs to your roof, attic space, and kitchen ceiling.Fortunately, your homeowners insurance will pay the majority of the cost. However, you have a deductible of $2,000 and there’s no money in your savings account to cover the cost. You end up putting the expense on a charge card with an interest rate of 17%.You mean to pay the $2,000 expense off by the end of the first billing cycle, but one thing after another comes up and you can only pay the minimum monthly payment of $50. Before you know it, you’ve been carrying that same $2,000 debit for 12 months. Unless you can come up with the money to pay the credit card off, you’ll carry that debt for another four years and end up paying a total of $972 in interest.If you don’t have an emergency savings account with enough money in it to cover a leaky roof (bald tires, broken water heater, unexpected medical expense, or other unwelcome surprise), you may find yourself paying interest rather than earning it.Before you look for ways to make your money grow, make sure you have a sufficient amount of money put away for emergencies.You may only have $1,000 to invest right now, but we all start somewhere. The great thing about having any money to invest is that warm feeling you get when someone pays you interest — rather than the other way around.

3 Little-Known Perks of Having a High Credit Score

The highest credit score you can get is an 850. But the reality is that most people don’t have perfect credit, and there’s a reason for it.Any time you apply for a new loan or credit card, a hard inquiry is done on your credit report, which can result in a very small hit to your score. So even if you’ve paid every single bill of yours on time in the past five years and maintain a $0 credit card balance, if you applied for a loan two months ago, chances are, you won’t have perfect credit.However, Experian, one of the three credit bureaus, reports that a credit score of 740 to 799 is considered very good, while a score of 800 to 850 is considered exceptional. So once your score reaches 800, there’s a good chance you’ll not only have a relatively easy time qualifying for a loan or credit card when you want one, but also, snagging a competitive interest rate in the process.But that’s not the only benefit to having a high credit score. Here are three perks you might also enjoy.1. You may have an easier time renting a homeIt’s common for landlords to perform a credit check on prospective tenants before letting them sign a lease. If you’re looking for an apartment in a city with few rentals, your high credit score might give you an edge. A landlord might prefer to rent to you than someone whose credit isn’t as great.You can also use a higher credit score as a negotiating tool for lower rent. Let’s say you’ve been in your rental for a couple of years and your landlord wants to impose an increase. You could point to your stellar credit as a reason they’d want to keep you around as a tenant — and potentially avoid having to pay more.2. You might save money on your car insuranceThere are different factors that determine what premium rates you’re quoted when you shop around for auto insurance. These include your driving history, location, and vehicle type and age.But another factor that auto insurers tend to take into account is credit. You’d think that wouldn’t be part of the mix, since your tendency to pay bills on time doesn’t necessarily correlate with the way you handle a vehicle on the road. But still, it’s often a factor unless you live in a state that bans the practice.3. You might have an easier time getting a jobSome employers conduct a credit check as part of the process of vetting employees. This is especially likely to happen if you’re applying for a job that requires you to handle or manage money.One thing you should know is that in the course of this type of credit check, a prospective employer generally will not get to see your actual credit score. However, they’ll see components of your credit report that include your payment history. And a strong payment history is indicative of a high credit score.It pays to boost your credit scoreA strong credit score could do a lot of good things for you. If you feel that your credit score needs work, you can boost it by:Paying bills on timeKeeping your credit card balances to a minimumNot applying for new loans or credit card accounts for a period of timeKeeping long-standing credit card accounts openChecking your credit report for errorsIt may take some time for these moves to have an impact on your credit. But once they do, you can put yourself in a position to benefit in more ways than one.