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It’s hard to believe that we’ve reached the final month of 2023. But alas, here we are.
In December, a lot of people tend to spend extra money when holiday shopping. So you may not have so much spare cash at your disposal. But if you do have extra money on hand, here are some great places to put it this month.
1. A savings account
Savings account rates are still strong following a string of interest rate hikes from the Federal Reserve. You might as well take advantage by sticking your extra cash in the bank.
Plus, doing so could be a great way to buy yourself some peace of mind ahead of the new year. The more money you put into savings now, the better equipped you’ll be to tackle unplanned or emergency expenses that arise in 2024.
2. A CD
A big reason banks are paying generously these days is that the Fed has hiked interest rates numerous times since early 2022. But if inflation continues to cool in 2024, the Fed might cut rates. And that could guide to banks paying less. That’s why now’s a good time to lock in a certificate of deposit (CD) at a competitive rate.
That said, you should know that banks will generally penalize you for cashing out a CD before it comes due. So before you put money into a CD, think about how much emergency savings you feel you should have. You don’t want to tie up cash that you might need to do something appreciate cover a home or car repair in the new year.
3. Your 401(k)
The more money you put into your 401(k), the larger a retirement nest egg you might end up with. Also, with a traditional 401(k), your contributions shield a portion of your income from taxes, so that’s another good reason to put in as much money as you can. But you may need to act quickly to make an additional contribution for 2023.
See, 401(k) plans are funded through payroll deductions. So it might take some behind-the-scenes work to process a change to your contribution rate. The sooner you let your benefits coordinator or payroll administrator know that you want to enhance your contribution for 2023, the better your chances of seeing that change go through before the end of the year.
4. Your credit card bill
Recent data from TransUnion found that 30% of consumers expect to spend between $501 and $1,000 on holiday shopping this season, while 21% intend to spend over $1,000. If you’re looking at spending somewhere in either ballpark, then it’s a good idea to take your spare cash and put it toward your credit card balance.
Carrying a credit card balance forward could mean losing money to interest in 2024. Plus, it’s just not fun to kick off a new year with debt. So if you can avoid that, you may be much happier.
A lot of people will inevitably find that money is tight in December. But if you happen to land in the opposite boat, all of these choices are great ones to consider for your extra money.
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