HELOCs, in particular, have pros and cons, including a lower interest rate than many other credit options. But they also come with inherent risks that may be worth avoiding, particularly for seniors who have a small buffer for financial missteps. To that end, below we will break down what seniors should consider before pursuing a HELOC right now.
First, seniors should consider the benefits of a HELOC.
Not only will it allow you access to potentially hundreds of thousands of dollars but that access will come via a lower interest rate than most alternatives. Credit cards have an average interest rate hovering around 21% now while personal loans are around 12%. But HELOCs, because they use your home as collateral, come with rates around 9% right now. And the likelihood of that rate falling further as the year progresses could rise as inflation cools and interest rates are cut, thanks to the variable rate nature that HELOCs come with.
Other advantages may be attractive for seniors, too. Interest paid on HELOCs is tax-deductible if the funds are used for qualifying home repairs or renovations. And you’ll only need to pay interest on the amount utilized, not the full credit line you’ve been approved for. So, if you secure the HELOC to help pay expenses or debt, but realize you don’t need as much as you applied for, you’ll only pay interest on the amount used (the direct opposite of home equity loans, in which borrowers will get saddled with interest on the full loan amount).
But there are substantial risks HELOCs come with that seniors should be aware of, too.
A variable rate is positive in a climate in which rates are dropping or holding steady at a low APR. They’re less advantageous, however, when rates are high and interest rate cuts are minimal. Although a cut to the federal funds rate looks imminent, which will lower the rate on home equity borrowing, only one cut is expected for 2024 at this time of the year.
So, seniors will need to weigh this risk before getting started. And if inflation somehow starts increasing again, and a rate hike becomes required, the rates on HELOCs will also follow, making them more costly to repay. This would be a problem for seniors who need access to low-interest-rate funding.
Consider a home equity loan instead
For those seniors interested in using their home equity but leery of the variable rate nature of HELOCs, a home equity loan could prove to be a viable alternative. These work similarly to HELOCs but come in a lump sum versus a revolving line of credit. They also have fixed rates, which will only change if you elect to refinance to a lower rate in the future.
And, right now, they come with slightly lower rates than HELOCs (8.60% on average, as of June 26, versus 9.17% for HELOCs). Home equity loan interest is also tax-deductible for qualifying home projects, for those who need the money to fix up or renovate their current home.
The bottom line
Both HELOCs and home equity loans come with unique advantages and disadvantages. But for seniors looking for a safe and effective way to access financing, a home equity loan is likely the better choice. With a combination of lower rates and a fixed nature, this borrowing option is safer for seniors in need of some extra financing. Ultimately, however, the decision will be up to the individual homeowner and their financial situation so it’s critical to weigh the pros and cons of both before acting. If you don’t, you could risk losing your home if you can’t pay back what you borrowed.
Matt Richardson is the managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.
Jesse Zanger is managing editor of CBS New York. Jesse has previously worked for the Fox News Channel and Spectrum News NY1. He covers regional news around the Tri-State Area, with a particular focus on breaking news and extreme weather.
Alicia Keys, the 16-time Grammy-winning artist, recently returned to the Professional Performing Arts School in New York City where her musical journey began.
The visit came during a special segment for “CBS Mornings,” as Keys continues to enjoy a standout year, including a Grammy nomination for her Broadway musical “Hell’s Kitchen.”
Keys, who graduated as class valedictorian, shared her memories of the school.
“I’ve always been pretty social. I’m definitely a troublemaker,” she laughed. “Like in the sense of like, I test people and I like, challenge people. I was definitely challenging the teachers for sure.”
Reflecting on her early musical experiences, Keys recalled signing her first record deal and the debut album she released at 20, which won five Grammy’s that included “Song of the Year” for her hit “Fallin.'”
“I remember like … everything was possible. Everything was going to happen,” she said, looking around the school.
Keys reunites with her former music teacher
Her visit also brought her back to her former music teacher, Linda Aziza Miller, who taught Keys how to arrange music and hone her craft.
“She taught me so much about how to arrange music, how to arrange a song. Those are the things that I took, and I put into the music,” Keys said.
That teacher-student bond is now reflected in Keys’ Broadway production “Hell’s Kitchen,” where a character named Ms. Liza Jane is inspired by both Keys’ grandmother and Ms. Aziza.
Ms. Aziza, now the orchestra pianist for “Hell’s Kitchen” at the Shubert Theatre, was moved by the reunion.
“It’s really a moment that I never saw coming,” she said.
The visit culminated with a surprise for a theater class, where Keys joined the students for an impromptu performance of “This Girl Is on Fire.”
“I’m so happy to see you guys,” Keys told them. “I’m really honored to be here, to talk to you and get a second. Just tell you that I’m proud of you and that, you know, I really recognize you.”
Keys also took a moment to share advice with the students.
“I want you to always be yourself,” she said. “I want you to never forget that the more unique you are, the more you stand out.”
Gayle King is an award-winning journalist and co-host of “CBS Mornings.” King interviews top newsmakers and delivers original reporting to “CBS Mornings” and all CBS News broadcasts and platforms. She is also editor-at-large of Oprah Daily and hosts “Gayle King in the House,” a live, weekly radio show on SiriusXM.
The world’s largest rodent is having a big moment.
The capybara — a semi-aquatic South American relative of the guinea pig — is the latest in a long line of “it” animals to get star treatment during the holiday shopping season.
Shoppers can find capybara slippers, purses, robes and bath bombs. There are cuddly plush capybaras and stretchy or squishy ones. Tiny capybaras wander across bedding, T-shirts, phone cases, mugs, key chains, crochet patterns and almost any other type of traditional gift item. Last year, it was the axolotl that took pride of place on many products, and the endangered amphibian remains popular. Owls, hedgehogs, foxes and sloths also had recent turns in the spotlight.
Trendy animals and animal-like creatures aren’t a new retail phenomenon; think the talking Teddy Ruxpin toys of the 1980s or Furby and Beanie Babies a decade later. But industry experts say social media is amplifying which animals are hot — or not.
“It’s really the launch on TikTok, Instagram and other social media platforms that allow these characters or animals to blow up like crazy,” said Richard Derr, who has owned a Learning Express Toys franchise in Lake Zurich, Ill., for nearly 30 years and is also a regional manager for the specialty toy store chain.
Social media is also speeding up the cycle. Must-have animals may only last a season before something new captures customers’ imaginations.
“It’s really important to keep feeding that beast,” Juli Lennett, a vice president and toy industry advisor at market research firm Circana, said. “If you are an influencer, you’re not going to talk about last year’s stuff.”
Skyrocketing plush toy sales — fueled by a need for comfort during the pandemic — are also increasing the demand for new and interesting varieties, Lennett said. In the first nine months of this year, sales of plush animals were up 115% from the same period in 2019, she said. Overall toy sales rose 38% in that time.
Capybara lying on grass with a Cattle Tyrant bird standing on its back.
/ Getty Images
Consumers are seeking out increasingly exotic species that they see in online videos, games and movies. Highland cows, red pandas and axolotls, a type of salamander native to Mexico, have all popped up in popular culture. According to Google Trends, searches for axolotls shot up in June 2021 after Minecraft added them to its game.
“Nobody knew what an axolotl was in 2020,” Derr said. “Now, everybody knows axolotls.”
Cassandra Clayton, a Vermont Teddy Bear Company product designer, said rising sales to adults are also fueling the demand for unique – and collectible – plush toys.
“Stuffed animals are really becoming an ageless item,” she said. “Especially with the boom of self-care in adults and turning towards comfort objects to help de-stress and relax in your life.”
Clayton expects demand for unusual stuffed animals to continue to grow. Among the oddest she has seen: a stuffed version of a water bear, a type of microorganism also known as a moss piglet or a tardigrade.
“It doesn’t necessarily inspire you to cuddle with them, but you’re really seeing the industry start turning towards those characters,” she said. “I think that’s the next trend.”
Figuring out the next “it” animal — or microorganism — is a challenge for toy makers.
“You never know exactly when they’re going to hit and how big they’re going to be,” said Sharon Price John, the president and CEO of Build-A-Bear Workshop, a chain of nearly 500 stores that offers an expanding menagerie of animals and characters for customers to customize, including capybaras and axolotls.
Sharon Price John, President and CEO of Build-A-Bear Workshop, poses for a photo Thursday, Dec. 12, 2024, in St. Louis.
Jeff Roberson / AP
The St. Louis-based company watches social media and gets ideas from talking to store employees and patrons, John said. It usually takes Build-A-Bear up to a year to introduce a new stuffed toy, she said, but the company can move faster if it spots a trend. It sometimes tests a small batch online to make sure a trend is sticking, John said.
Annual trade shows in Asia, Germany and elsewhere are another place to spot new trends. Punirunes – digital, interactive pets that also come in plush varieties – are big in Japan right now and will likely take off in the U.S., toy store owner Derr said.
“Here, I can’t give them away. They’re too new. But give it a year or two,” he said.
Companies can kick off their own trends too. Build-A-Bear’s Spring Green Frog, introduced in 2020, was an immediate hit thanks to videos posted by customers. It remains popular, with nearly 2 million sold, John said.
John suspects people are drawn to friendly, slow-moving capybaras because watching videos of them are so relaxing. But shoppers who want one need to act fast. A Build-A-Bear holiday capybara with red and green sprinkles on its fur – dubbed a “cookiebara” – has already sold out, she said.
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Durbin reported from Detroit. Crawford reported from Lake Zurich, Ill.
