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Here are 4 money moves you should make to set yourself up for financial success in 2023

An end-of-year financial checklist to help you navigate high inflation and rising interest rates.

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Rgstudio | E+ | Getty Images

With the end of the year approaching, it may be time to reevaluate your finances. This year has been marked by record-high inflation and multiple interest rate hikes. As the Fed attempts to rein in inflation by raising interest rates, there's a strong possibility that the economy teeters towards a recession in the coming months. 

If you're concerned about the economy, you're not alone. This summer, consumer sentiment about the economy hit historic lows. Though personal finance advice is unlikely to save you from inflation or a market downturn, Select shares some personal finance tasks and tips to complete this year to help you save at least some money and to plan for the future.

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Check the APR on your credit card debt

When it comes to getting your finances in order, you'll want to consider how rising interest rates affect how much interest you pay on your debt. When the Fed increases the interest rate, or the federal funds rate, it alters the interest rate on interbank lending. This, in turn, affects how much interest you pay on your credit card debt. Credit card APRs are tied to the federal funds rate. 

In November, the Fed implemented its sixth rate hike this year. Now, the Fed's target interest rate range is around 4%, up from near-zero interest rates during the pandemic. This means credit card APRs have been on the rise too. According to the Federal Reserve, the average APR is 18.43% for credit cardholders paying interest, up nearly 4% from five years ago. 

In other words, it's likely to get even more expensive to revolve a balance on your credit card in the coming months. Of course, paying it off is easier said than done, but you may consider getting a 0% balance transfer card to help avoid paying a lot in interest.

With a 0% balance transfer card, consumers transfer their credit card balance to a new card for a small fee, usually 3% to 5% of the balance. Cardholders then pay 0% interest on that balance before the 0% introductory period ends. 

If you think this might be a good choice for you, you'll likely need a good credit score (a FICO score of 670 or above). You'll also want to make sure the balance transfer fee doesn't exceed the amount you'd be saving in interest with the new card.

The Citi® Diamond Preferred® Card and the Wells Fargo Reflect® Card are both good options.

The Citi® Diamond Preferred® Card has a 21-month 0% APR introductory period on balance transfers from the date of the first transfer, after that the variable APR will be 17.24% - 27.99%. Balance transfers must be completed within 4 months of account opening.

Citi® Diamond Preferred® Card

On Citi's secure site
  • Rewards

    None

  • Welcome bonus

    None

  • Annual fee

    $0

  • Intro APR

    0% for 21 months on balance transfers; 0% for 12 months on purchases

  • Regular APR

    17.24% - 27.99% variable

  • Balance transfer fee

    5% of each balance transfer; $5 minimum. Balance transfers must be completed within 4 months of account opening.

  • Foreign transaction fee

    3%

  • Credit needed

    Excellent/Good

See our methodology, terms apply.

Pros

  • No annual fee
  • Balances can be transferred within 4 months from account opening
  • One of the longest intro periods for balance transfers

Cons

  • 3% foreign transaction fee

The Wells Fargo Reflect® Card has a 0% introductory APR for 18 months from account opening on qualifying balance transfers with a three-month extension for cardholders who make on-time minimum payments during the introductory period. There's a 17.24% - 29.24% variable APR thereafter. Balance transfers made within 120 days qualify for the intro rate and fee. The balance transfer introductory fee is 3% for 120 days from account opening, then up to 5% ($5 minimum)

Wells Fargo Reflect® Card

On Wells Fargo's secure site
  • Rewards

    None

  • Welcome bonus

    None

  • Annual fee

    $0

  • Intro APR

    0% intro APR for 18 months from account opening on purchases and qualifying balance transfers. Intro APR extension for 3 months with on-time minimum payments during the intro period. 17.24% - 29.24% Variable APR thereafter

  • Regular APR

    17.24% - 29.24% variable APR on purchases and balance transfers

  • Balance transfer fee

    Introductory fee of 3% for 120 days from account opening, then up to 5% ($5 minimum)

  • Foreign transaction fee

    3%

  • Credit needed

    Excellent/Good

See rates and fees and our methodology, terms apply.

Pros

  • No annual fee
  • Long introductory APR period up to 21 months on purchases and qualifying balance transfers
  • 3% intro balance transfer fee ($5 minimum) for first 120 days
  • Access to Visa Signature Concierge
  • Get up to $600 cell phone protection (subject to a $25 deductible)
  • Access to My Wells Fargo Deals to earn cash back in the form of an account credit when shopping, dining

Cons

  • No rewards
  • No welcome bonus
  • 3% fee charged on foreign transactions

Take advantage of a high-yield savings account

The Fed's moves make it more expensive for consumers to borrow but rising rates also encourage people to save. When the Fed increases rates, annual percentage yields (APYs), or the interest you earn on your deposits, increases. 

High-yield savings accounts differ from traditional savings accounts because they offer significantly higher interest rates. The national average APY on savings accounts is 0.24%, according to the Federal Deposit Insurance Corporation (FDIC). Meanwhile, the high-yield savings accounts with the highest APYs have rates that are 18 times higher than the average APY on traditional accounts. The WSJ found that people who held their deposits in traditional savings accounts at the five largest banks missed out on more than $42 billion in interest by not switching to the five highest-yield savings accounts.

High-yield savings accounts are a good option for people looking to store their emergency funds as consumers are able to make up to six withdrawals a month without paying fees. Select ranked LendingClub High-Yield Savings and UFB Best Savings as some of the best high-yield savings accounts.

LendingClub High-Yield Savings

LendingClub Bank, N.A., Member FDIC
  • Annual Percentage Yield (APY)

    4.00%

  • Minimum balance

    No minimum balance requirement after $100.00 to open the account

  • Monthly fee

    None

  • Maximum transactions

    None

  • Excessive transactions fee

    None

  • Overdraft fees

    N/A

  • Offer checking account?

    Yes

  • Offer ATM card?

    Yes

See our methodology, terms apply.

Pros

  • Strong APY
  • No minimum balance required
  • No monthly fees
  • Free ATM card and no ATM fees

Cons

  • $100 minimum opening deposit required, though there's no minimum balance after that
  • No physical branch locations

UFB Best Savings

UFB Best Savings is a Member FDIC.
  • Annual Percentage Yield (APY)

    Earn up to 4.21% APY

  • Minimum balance

    None

  • Monthly fee

    None

  • Maximum transactions

    No max number of transactions; Max transfer amounts may apply

  • Excessive transactions fee

    None

  • Overdraft fees

    Overdraft fees may be charged, according to the terms, but a specific amount is not specified; overdraft protection service available

  • Offer checking account?

    No

  • Offer ATM card?

    Yes

See our methodology, terms apply.

Pros

  • Strong APY
  • No minimum balance
  • No monthly fees
  • Free ATM card
  • Free transfers between direct deposit accounts
  • Online and SMS banking available
  • Mobile check deposits

Cons

  • No option to add a checking account
  • No physical branch locations
  • Potential overdraft fee, though, overdraft protection is offered

Consider maxing out your 401(k)

If you have access to a 401(k) through your employer, you'll have until the end of the year to contribute up to the $20,500 limit for 2022. People above the age of 50 can make catch-up contributions for a total limit of $27,000. 

401(k) contributions are considered tax deductible. This means 401(k) contributions reduce your taxable income and therefore, the amount you pay in taxes. If you're able to invest more in your 401(k), you may consider increasing your contribution amount to further reduce your taxable income. 

Use up your FSA money

FSAs are flexible spending accounts that allow people to use pretax money for out-of-pocket medical expenses. These accounts are offered through your employer, and the money is 'use it or lose it'. This means that you must spend the money before the end of the year or risk losing it. The contribution limit in 2022 for FSAs is $2,850.

Note that some employers offer grace periods of a few months after the year ends, but you should check with your employer. If you have an FSA, you can use your funds on everything from out-of-pocket doctor's expenses to prescription medications to sunscreen.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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