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4 high-yield savings account mistakes to avoid this spring
In a bid to bring inflation down to its 2% target, the Federal Reserve increased its federal funds rate several times over the past couple of years, leading to today’s high-rate environment. In turn, the rates offered on credit cards, auto loans and mortgages are higher today than they were in recent years, making it expensive to borrow money.
But savers can take advantage of the upside to the current rate environment: high interest rates on deposit accounts. With the federal funds rate paused at a 23-year high, the returns on certificates of deposit (CDs) and high-yield savings accounts are a big draw for savers.
And, while it may be a good idea to open a high-yield savings account while interest rates are up, there are some mistakes that you should avoid.
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4 high-yield savings mistakes to avoid this spring
Here are five high-yield savings mistakes to avoid this spring.
Opening an account without shopping around
Right now, there are numerous options for high-yield savings accounts offering impressive returns. That said, some are more impressive than others — and it’s important to earn the biggest return possible on your savings.
If you want to do that, be sure to shop around. Banks and credit unions compete for your business, and one way they do that is with interest rates on both loans and deposit accounts. So, be sure to compare rates at a number of financial institutions before you choose one — and be sure to compare the other factors, like monthly fees or charges that could come with the account.
Explore the best high-yield savings account options now.
Not comparing your options regularly
The rates being offered on high-yield savings account interest rates can change over time. So, you could open the account with the highest possible annual percentage yield (APY) today and then find a new account with a higher rate tomorrow.
So, it’s typically a good idea to compare your account options regularly to ensure that you’re not missing out on a great rate elsewhere — even after you open your account. While you probably don’t need to compare your options daily, it could benefit you to take a look at what’s available about once a month.
Keeping too much money in your account
High-yield savings account returns are variable, meaning that your account rate will change based on the overall rate environment. What that means is that if rates go down in the future, you’ll earn less interest on the money in your account.
So, while these accounts can be a great place for your emergency savings, you may want to lock in today’s high rates by putting some of your money in a CD — or look for other investment options instead.
“An emergency fund should carry a balance of six to 12 months of expenses,” says Brandon Robinson, president and founder of JBR Associates, a financial services firm. So, if you have $5,000 in monthly expenses, your emergency fund should be a minimum of $30,000 and a maximum of $60,000, according to Robinson.
Anything over that amount could be better utilized in another type of interest-bearing account.
Ignoring sign-up bonuses
High-yield savings accounts can come with sign-up bonuses — and it’s important to compare these bonuses as you weigh your account options. After all, if one account pays 5% with a $500 sign-up bonus and another pays 5.15% with no bonus, it may be worth opening the account with the bonus — provided you can meet the requirements. Just keep in mind that you’ll probably have to keep the account open and funded for a certain time to earn the extra money.
Compare your leading high-yield savings account options today.
The bottom line
High-yield savings accounts can be a great way to take advantage of today’s high-rate environment, but it’s important to avoid the common mistakes outlined above when you do. Be sure to compare your options and regularly check your rate against the rates being offered by other banks and credit unions. And, if you want to maximize your returns, it can also help to compare the sign-up bonuses being offered with these types of accounts.
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Social Security Fairness Act passes U.S. Senate
Legislation to expand Social Security benefits to millions of Americans passed the U.S. Senate early Saturday and is now headed to the desk of President Joe Biden, who is expected to sign the measure into law.
Senators voted 76-20 for the Social Security Fairness Act, which would eliminate two federal policies that prevent nearly 3 million people, including police officers, firefighters, postal workers, teachers and others with a public pension, from collecting their full Social Security benefits. The legislation has been decades in the making, as the Senate held its first hearings into the policies in 2003.
“The Senate finally corrects a 50-year mistake,” proclaimed Senate Majority Leader Chuck Schumer, a Democrat from New York, after senators approved the legislation at 12:15 a.m. Saturday.
The bill’s passage is “a monumental victory for millions of public service workers who have been denied the full benefits they’ve rightfully earned,” said Shannon Benton, executive director for the Senior Citizens League, which advocates for retirees and which has long pushed for the expansion of Social Security benefits. “This legislation finally restores fairness to the system and ensures the hard work of teachers, first responders and countless public employees is truly recognized.”
The vote came down to the wire, as the Senate looked to wrap up its current session. Senators rejected four amendments and a budgetary point of order late Friday night that would have derailed the measure, given the small window of time left to pass it.
Vice President-elect JD Vance of Ohio was among the 24 Republican senators to join 49 Democrats to advance the measure in an initial procedural vote that took place Wednesday.
“Social Security is a bedrock of our middle class. You pay into it for 40 quarters, you earned it, it should be there when you retire,” Ohio Senator Sherrod Brown, a Democrat who lost his seat in the November election, told the chamber ahead of Wednesday’s vote. “All these workers are asking for is for what they earned.”
What is the Social Security Fairness Act?
The Social Security Fairness Act would repeal two federal policies — the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) — that reduce Social Security payments to nearly 3 million retirees.
That includes those who also collect pensions from state and federal jobs that aren’t covered by Social Security, including teachers, police officers and U.S. postal workers. The bill would also end a second provision that reduces Social Security benefits for those workers’ surviving spouses and family members. The WEP impacts about 2 million Social Security beneficiaries and the GPO nearly 800,000 retirees.
The measure, which passed the House in November, had 62 cosponsors when it was introduced in the Senate last year. Yet the bill’s bipartisan support eroded in recent days, with some Republican lawmakers voicing doubts due to its cost. According to the Congressional Budget Office, the proposed legislation would add a projected $195 billion to federal deficits over a decade.
Without Senate approval, the bill’s fate would have ended with the current session of Congress and would have needed to be re-introduced in the next Congress.
CBS News
12/20: CBS Evening News – CBS News
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Saturday is the winter solstice and 2024’s shortest day. Here’s what to know about the official start of winter.
The 2024 winter solstice, the shortest day of the year, happens on Saturday, Dec. 21, in the Northern Hemisphere. The celestial event signifies the first day of winter, astronomically.
What is the winter solstice?
The winter solstice is the day each year that has the shortest period of daylight between sunrise and sunset, and therefore the longest night. It happens when the sun is directly above the Tropic of Capricorn, a line of latitude that circles the globe south of the equator, the National Weather Service explains.
The farther north you are, the shorter the day will be, and in the Arctic Circle, the sun won’t rise at all.
How is the day of the winter solstice determined?
The winter solstice occurs because of the Earth’s tilt as it rotates around the sun.
When the Northern Hemisphere tilts away from the sun, the nights last longer. The longest night happens on the solstice because the hemisphere is in its furthest position from the sun. That occurs each year on Dec. 21 or 22.
This year, it falls on Dec. 21 at 4:21 a.m ET, to be precise.
On the summer solstice, when the northern tilt is closest to the sun, we have the longest day, usually June 20 or 21.
The solstices are not always exactly on the 21st every year because the earth’s rotation around the sun is 365.25 days, instead of 365 even.
Will days start getting longer after the winter solstice?
Yes. Each day after the solstice, we get one minute more of sunlight. It doesn’t sound like much, but after just two months, or around 60 days, we’ll be seeing about an hour more of sunlight.
When will winter officially be over in 2025?
The meteorological winter ends on March 20, 2025. Then, spring will last until June 20, when the summer solstice arrives.
How is the winter solstice celebrated around the world?
Nations and cultures around the world have celebrated the solstice since ancient times with varying rituals and traditions. The influence of those solstice traditions can still be seen in our celebrations of holidays like Christmas and Hanukkah, Britannica notes.
The ancient Roman Saturnalia festival celebrated the end of the planting season and has close ties with modern-day Christmas. It honored Saturn, the god of harvest and farming. The multiple-day affair had lots of food, games and celebrations. Presents were given to children and the poor, and slaves were allowed to stop working.
Gatherings are held every year at Stonehenge, a monumental circle of massive stones in England that dates back about 5,000 years. The origins of Stonehenge are shrouded in mystery, but it was built to align with the sun on solstice days.
The Hopi, a Native American tribe in the northern Arizona area, celebrate the winter solstice with dancing, purification and sometimes gift-giving. A sacred ritual known as the Soyal Ceremony marks the annual milestone.
In Peru, people honor the return of the sun god on the winter solstice. The ancient tradition would be to hold sacrificial ceremonies, but today, people hold mock sacrifices to celebrate. Because Peru is in the Southern Hemisphere, their winter solstice happens in June, when the Northern Hemisphere is marking its summer solstice.
Scandinavia celebrates St. Lucia’s Day, a festival of lights.
The “arrival of winter,” or Dong Zhi, is a Chinese festival where family gathers to celebrate the year so far. Traditional foods include tang yuan, sweet rice balls with a black sesame filling. It’s believed to have its origins in post-harvest celebrations.
Researchers stationed in in Antarctica even have their own traditions, which may include an icy plunge into the polar waters. They celebrate “midwinter” with festive meals, movies and sometimes homemade gifts.