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CA News 2024


Top 8 Ways You Can Miss Out On Free Money

There’s an old economics saying that goes, “There’s no such thing as a free lunch,” but in real life, “free money” does exist. Banks, retailers, credit card companies and even Uncle Sam will give you free money if you take a few simple, smart financial steps.

Here are some of the top ways you’re likely to be missing out on free money right now.

1. Leaving money in a checking account without interest

If you have cash in a zero-interest checking account, you’re missing out on interest income and essentially losing money to inflation. The longer your money stays there, the more purchasing power you lose.

Any extra money you have should earn interest – or “free money” that you don’t have to work for. Your bank (or other banks) should pay you for allowing them to use your deposits. Find a better place to keep your money than a no-interest checking account.

2. Not using a high-yield savings account

The national average interest rate on savings accounts is currently only 0.46%. You can do so much better than that! Today’s best savings and money market accounts pay 5.00% APY or higher.

Don’t settle for the average bank’s unimpressive APY on your savings. Choose a savings account with a high return. And if the Fed keeps rates high for the rest of 2024 and into 2025, these high APYs will remain in place.

3. Don’t Get Your Employer Match on Your 401(k)

If you have a job with an employer-based retirement plan like a 401(k), you may be missing out on free money. Does your employer offer a matching contribution? If so, take it!

Many employer 401(k) matches are equal to a certain percentage of your salary. It varies by company, but some employers, for example, may match 50% of the first 6% of salary you contribute. So if you make $50,000 a year and contribute 6% of that to your 401(k) ($3,000), your employer will throw in an extra $1,500.

That’s not just ‘free money’, it’s free money that you’ve actually earned. Don’t leave that money on the table. Not taking your 401(k) match is like not using your paid vacation days. Take this! Use them! Receive the full compensation you are entitled to!

4. Not investing in IRA accounts

Along with a 401(k) or other workplace retirement plan, many people may be eligible to contribute money to another tax-advantaged retirement account, an individual retirement plan or IRA. There are two types of IRAs: traditional and Roth.

The traditional IRA gives you “free money” in the form of a tax deduction for your contributions, similar to a 401(k). (There are some income limits for who can qualify for this traditional IRA tax break.) If you’re in the 22% tax bracket and you put $7,000 into a traditional IRA for 2024, that means you’ll get about $1,540 in “free money.” gets. in reduced taxes.

The Roth IRA gives you “free money” in the future, in the form of tax-free withdrawals in retirement. You won’t get a tax break today, but your money will be allowed to grow tax-free for the rest of your life.

5. Failure to pay off high interest debts

If you carry a balance on your credit card and are paying interest every month, you are likely paying an annual interest rate of more than 20% APR. Being able to pay off credit card debt faster means “free money” in the form of interest you don’t have to pay.

Unless you are one of the best and luckiest investors in the world, it is difficult to find a higher return on investment (ROI) than 20%. Paying off high-interest credit card debt is almost always the first thing you should do with extra cash.

6. Not using a health savings account (HSA)

If you have a qualifying high-deductible health plan (HDHP), you are eligible to use a health savings account (HSA) to save money for healthcare costs. Just like a traditional IRA or 401(k), the money you put into an HSA is tax deductible – free money!

For example, if you’re in the 22% tax bracket and you put $4,000 into an HSA for 2024, that means you’ll get about $880 in “free money” from your federal income tax bill.

7. Don’t use cashback apps

Have you ever wanted to get ‘free money’ just by shopping? Now you can. The best cashback apps reward you for shopping at your favorite stores and brands, online or in person. Some of these apps pay cash rewards of 1%, 2%, 5%, 10% or more. If you’re a savvy shopper and like to find good deals, using cashback apps can be well worth the time and effort.

8. Not using reward credit cards

If you have good credit and aren’t vulnerable to overspending or missing payment deadlines, you can take your quest for “free money” to the next level with credit cards with cash back rewards.

Some of the best cash back cards offer 1%-6% cash back on everyday spend or large purchases. Some also have welcome offers where (for example) you can get an extra $200 cash back by spending a certain amount within the first few months of opening your account.

In short

You’re probably missing out on free money right now because you’re not getting tax breaks, interest income, and cashback rewards. With just a few simple strategies, you can get more of what you deserve from banks, retailers, employers and the federal government.

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Many people miss out on a guaranteed return because their money is languishing in a large bank savings account that earns virtually no interest. Our choice from the best online savings accounts could earn you 11x the national average interest rate on savings accounts. click here to discover the best-in-class accounts that made it onto our shortlist of the best savings accounts for 2024.