Do You Have a Bank of America Savings Account? Here’s Why You Should Switch
By: Lyle Daly |
Updated
– First published on Nov. 4, 2023
Even after a year, you’ll have less than $1 in earnings with Bank of America, compared to $404 with CIT. Over 10 years, sticking with Bank of America costs you over $5,000.Now, this is only an example, and it’s worth mentioning that interest rates on savings accounts fluctuate. CIT won’t offer a 5.05% APY for 10 years straight. That rate will go up and down depending on the federal funds rate. But it’s a safe bet that high-yield savings accounts like this one will consistently offer much more than Bank of America.Are there any downsides or risks with high-yield savings accounts?You might be wondering what the catch is with high-yield savings accounts. After all, there must be a reason why they offer so much more than big banks.The savings accounts that pay the most are typically offered by online banks. These are much smaller than big banks. Online banks can afford to pay more interest because they don’t have the overhead costs that come with operating bank branches throughout the country. They also need to offer higher interest rates to attract clients, whereas big banks with established customer bases don’t.Banking is different with online banks, but it’s just as safe. If you haven’t used an online bank before, here’s what you should know about it:Online banks can be FDIC insured just like big banks. FDIC insurance covers up to $250,000 per depositor, per account in the event of a bank failure. Quality online banks have this, and you can confirm if a bank is FDIC insured by checking its website or looking it up using the FDIC’s BankFind Suite tool.You won’t have access to physical bank branches. Brick-and-mortar banks can be more convenient, because you can visit in person to make deposits and withdrawals. With online banks, you do almost everything from your bank’s web platform or mobile app.You can get cash at ATMs in your bank’s network. Most online banks have ATM networks that their clients can use for fee-free withdrawals. Some have larger networks than others, so it’s worth checking what different online banks have available in your area.Online banks have fewer fees and other requirements. You can find online banks with no monthly fees or minimum balance requirements, including online banks with high APYs. Many brick-and-mortar banks charge a monthly maintenance fee that they waive if you complete certain requirements, such as maintaining a minimum balance.If you’re not sure about doing all your banking online, you can always have accounts at both a traditional bank and an online bank. You’ll still be able to bank in person this way at a brick-and-mortar bank. But for your savings, an online bank is a much better option.
Ask Yourself These Essential Questions Before Opening a CD This Year
By: Maurie Backman |
Updated
– First published on Nov. 8, 2023
One benefit of putting money into a CD versus a regular savings account is that you might get an opportunity to earn more interest on your parked cash. CD rates are often higher than the rate you’ll get in a savings account. Also, when you open a CD, your interest rate is guaranteed throughout its term, whereas with a savings account, you might start with a higher rate only to see it fall weeks or months later.Now, it just so happens that CDs are paying pretty generously these days. But before you rush to open one, make sure to address these important questions.1. Am I sure I don’t need the money for something else?When you put money into a CD, you’re making a commitment. You can technically cash out a CD at any time, but if you do so before the end of its term, you’ll face a penalty (the exact amount of which will depend on the length of your CD and your bank). So it’s best to only tie up money in a CD that you’re certain you won’t need for its duration.To that end, think about your upcoming financial needs. The holidays will be here soon. Are you sure you won’t need the cash you’re thinking of putting into a CD to buy gifts? This is just one example, but the point is to make certain you can really afford to part with your cash for six months, 12 months, or however long your CD term is.2. Am I planning any large purchases for 2024?You may not have many larger purchases planned in the near term. But what are your plans for the new year?If you’re thinking of opening a 6- or 12-month CD at some point this year, it means that money will be restricted for a good part of 2024, too. So if you’re thinking of renovating your home or you have reason to believe that you might need a new car, you may want to hold off.3. Do I think rates will be more favorable down the line?Right now, CD rates are high thanks to a string of interest rate hikes implemented by the Federal Reserve. On Nov. 1, the Federal Reserve announced it would pause its interest rate hikes — something it did back in September as well.But the Fed still has one meeting left this year scheduled for mid-December. And if the central bank opts to raise interest rates at that point, it could result in higher interest rates for CDs as well.Of course, that’s a big “if.” Some economists are confident that the Fed is done raising interest rates. But you may want to wait until December to open a CD in case another rate hike happens.Putting money into a CD is a good way to earn extra interest on cash you’d like to leave in the bank. Just make sure it’s the right time to open a CD before diving in.
Is Your Net Worth Above Average for Your Age?
By: Lyle Daly |
Updated
– First published on Nov. 2, 2023
Your net worth is a good number to keep track of, as it gives you an idea of how you’re doing with personal finance. You can calculate your net worth by adding up the value of your assets and subtracting any debts you have. For example, if you have $100,000 in investment accounts, $25,000 in bank accounts, and $10,000 in debt, then your net worth would be $115,000.The median net worth is $192,900, according to the Federal Reserve’s latest Survey of Consumer Finances. This varies with age, and it tends to go up as people get older. Want to see how your own net worth compares with the average for your age range? Here’s the recent data.The average net worth by ageHere are the median net worth numbers by age in the United States:Less than 35: $39,00035 to 44: $135,60045 to 54: $247,20055 to 64: $364,50065 to 74: $409,90075 or older: $335,600As the numbers show, building net worth takes time. Young adults have the lowest average net worth because they haven’t had much time to grow their savings and investments yet. Some even have a negative net worth, like those who took on debt to go to college.Net worth rises with age for several reasons. People make more money as they get older. Those who save and invest regularly are able to grow their net worth year after year. When you invest, your money can also earn compound interest — interest on top of the interest you’ve already earned.If your net worth is above average for your age, that’s a good sign. If it isn’t, don’t let it get you down.Everyone’s situation is different, and this doesn’t mean you’re doing poorly with money. Net worth can take a hit for reasons outside of a person’s control. A recession could cause a temporary loss in your stock portfolio, or you could have unexpected medical bills that drain your savings. Those are just a few examples of how your net worth could unexpectedly drop.Financial habits to follow for a high net worthIt’s interesting to compare your net worth to the average. But what’s most important is that your net worth is trending upward, and that you eventually have enough to retire when you want.Building your net worth is a process. Most people don’t get rich overnight. It’s the result of years of responsible financial habits. Here are the best habits to follow to increase your net worth.Spend less than you earn. Your net worth ultimately depends on how much you’re able to set aside from each paycheck. If you spend every penny, then your net worth will be stuck in neutral. Commit to saving a specific amount each month — 10% to 20% of your income is a good place to start.Build and maintain an emergency fund. It’s best to avoid debt, especially expensive credit card debt. That means you need to be ready for unexpected costs so you don’t need to take on debt to pay for them. Work on saving until you have an emergency fund with at least three months of living expenses. When you use that money, make sure to replenish it as soon as possible.Set up retirement accounts. These are a great way to save for the future because they help you save on taxes. If your employer offers a 401(k), it’s probably worth taking advantage. Many employers will match your 401(k) contributions up to a certain amount. You can also open your own individual retirement account (IRA).Invest in stocks. The stock market has historically delivered an average return of about 10% per year. It’s one of the most effective ways to build wealth. You can invest in the stock market through investment funds that buy a large number of stocks, such as mutual funds. These are typically available through retirement accounts, and you can also buy them through brokerage accounts.Building your net worth is not complicated. If you adopt the right financial habits, your net worth will soon be trending in the right direction.
Overhead Oops: 4 Common Mistakes When Booking Business Class
By: Lyle Daly |
Updated
– First published on Nov. 3, 2023
Business class is a big step up from economy and premium economy. It’s also much more expensive — potentially thousands of dollars more, if you pay cash. You can save money by booking with miles earned on your credit cards, but you’ll still spend a lot more miles than you would booking economy.Considering the cost, you definitely want to get your money’s worth when you book business class. This may seem easy enough, but some mistakes can detract from the experience or cost you more.These mistakes are normal. There are lots of differences between flying business class and economy, and if you haven’t done it before, you aren’t going to be an expert. That’s why it helps to be aware of the most common mistakes so you know what to avoid.1. Assuming all the seats are the sameSome people think that there’s no major difference between business-class seats. That couldn’t be further from the truth. The quality of your seat will depend on several things, including the airline, the route, the plane, and even which seat you choose.For example, many airlines provide lie-flat seats that turn into beds in business class. But some only have recliner-style seats, similar to what you get in domestic first class. These aren’t bad, but they’re not nearly as comfortable. Check the options an airline offers before you book and if possible, go with an airline that has lie-flat seats.Even within the same cabin, some business-class seats have advantages over others. If you’re traveling with someone else, you may want to see if there are two seats next to each other in the middle of the cabin. If you’re flying solo, then a seat on its own by the window may be a better choice.SeatGuru is a great way to check seating options before you buy. You provide the flight info, and it will give you the important details on the seating options. That includes the type of seats offered, which ones are in favorable locations, and which ones have potential issues, such as being close to the galley and potentially noisy.2. Not choosing your meal in advanceOne of the perks of business class is the food. There are normally much better meal options in business class than in economy. Airlines often have recipes from well-known chefs for business-class passengers, and you get served a meal with real cutlery, not plastic.Most airlines give you the option of choosing your meal in advance. If so, make sure to do so. There are a limited number of each meal option available. If everyone who orders before you picks the steak, and that’s what you want, the flight crew could run out before they get to you. This is easily avoided by selecting your meal online before your flight.It’s especially important to do this if you have any food allergies or dietary restrictions. If you need a meal that’s dairy-free, vegetarian, gluten-free, or meets any other requirements, the airline may have options available. But you need to request it in advance so the airline can prepare.3. Spending more than necessaryBusiness class costs a premium. That’s why it’s even more important to get the best deal possible, because it could save you thousands.There are a few reasons why travelers miss out on these deals. Here’s what not to do if you want to save money when booking business class:Being inflexible about your travel dates: Business-class prices can vary quite a bit, even from one day to the next. If you’re flexible, you’re more likely to find a good deal.Waiting until the last minute: Since the business-class cabin has far fewer seats than economy, it’s more likely to be completely booked if you wait too long. Also, you’ll have more options if you’re setting up a trip well in advance as opposed to booking at the last minute.Always paying in cash: You can also book business class with miles, and one of the fastest ways to earn them is with travel credit cards. Instead of paying $3,000 or more, you could redeem 60,000 to 80,000 miles.4. Not taking advantage of all the benefitsWhen you fly business class, you get more than just a better seat and food. There are lots of other perks, starting at the airport. They can include:A priority check-in lineA priority security laneFree checked baggage with higher weight limitsAirport lounge accessYou definitely don’t want to spend 30 minutes waiting in the standard check-in line when you could’ve sped through the priority line. And it’d be a shame to sit around the boarding area or pay for an expensive meal because you didn’t realize you had access to a comfortable airport lounge with free food.Airlines typically provide info on all their business-class amenities on their websites. This could also be in the emails they send you after you book. If you’re not sure what all the benefits are, make sure to find out online before your trip so you don’t miss out on anything.There’s no wrong way to fly business class, but it makes sense to make the most of the experience. By avoiding these mistakes, you’ll do just that.
