Markus Andrews

Tax-related identity theft happens when criminals use your personal information to file a return in your name and claim your refund.
Victims are waiting an average of almost 19 months for the IRS to process their returns and issue refunds, the National Taxpayer Advocate reported.

5M3photos | Moment | Getty Images

As the start of tax season approaches, experts are warning filers about tax-related identity theft, an issue that often halts returns and delays refunds.
Tax identity theft happens when criminals use your personal information to file a return in your name and claim your refund — and “it continues to be a huge problem,” said Eva Velasquez, president and CEO of the Identity Theft Resource Center.

The IRS’ Identity Theft Victim Assistance program had 294,138 individual case receipts during fiscal 2023, up from 92,631 in 2019, according to the National Taxpayer Advocate’s annual report to Congress released last week. 
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Tax-related identity theft has diminished since the early days of electronic filing. But “the challenge is it takes so long to resolve,” Velasquez said.
Indeed, victims are waiting an average of almost 19 months for the IRS to process their returns and issue refunds, National Taxpayer Advocate Erin Collins wrote in the organization’s report to Congress. She called the lengthy waits “unconscionable.”
There are signs of tax identity theft listed on the IRS website, including a letter from the agency about a “suspicious tax return,” the inability to e-file, tax transcripts by mail you didn’t request and more.

There are also two key steps taxpayers can take to protect themselves.

File your tax return early

One of the best ways to avoid tax-related identity theft this season is by filing your return early, according to Mark Steber, chief tax information officer at Jackson Hewitt.
“There’s just too much downside risk in allowing the scammers and the stealers to come in and get in front of you by filing a faster return,” he said.

There’s just too much downside risk in allowing the scammers and the stealers to come in and get in front of you by filing a faster return.

Mark Steber
Chief tax information officer at Jackson Hewitt

Of course, it’s important to wait for the necessary tax forms to file a complete and accurate return. With missing information, the IRS may flag your filing, which could cause delays.
As a year-round precaution, the IRS recommends protecting your data with strong passwords, multi-factor authentication, encryption programs and software updates.

Get an identity protection pin for the future

If you’re looking for added protection, experts suggest getting an identity protection PIN, or IP PIN, from the IRS.
This six-digit number blocks others from using your Social Security number or individual taxpayer identification number to file a tax return. Once you enroll, the agency generates a new IP PIN for you each year.
Previously, IP PINs were only for identity theft victims. “Now, they’ve opened it to everyone,” Steber said. “I highly recommend it.”
However, he doesn’t recommend “last-minute adjustments” by trying to get an IP pin before filing your 2023 return. “If you file [your return] now, you do a lot more to protect your data and secure your personal information” than trying to get an IP pin in January, Steber added. More

Most Gen Zers blame the economy for making it harder to get by, according to a recent report.
Those just starting out are more likely to need a side hustle to help cover their monthly expenses.
In the struggle to build wealth, young adults should not discount the advantage of time and the power of compound interest, experts say.

Gen Zers are having a harder time making ends meet, let alone building wealth.
Roughly 38% of Generation Z adults and millennials believe they face more difficulty feeling financially secure than their parents did at the same age, largely due to the economy, according to a recent Bankrate report. Gen Z is generally defined as those born between 1996 and 2012, including a cohort of teens and tweens.

In the face of a higher cost of living, 53% of Gen Z workers also said they have a side hustle — more than any other generation — to help cover their monthly expenses, Bankrate found. Fewer are saving for the future.

Parents need to realize that their kids are in trouble.

Laurence Kotlikoff
professor of economics at Boston University

“This is a tougher climate, for sure,” said Laurence Kotlikoff, economics professor at Boston University and president of MaxiFi, which offers financial planning software. “Parents need to realize that their kids are in trouble.”

Gen Zers face greater obstacles to financial success

Inflation’s recent runup has indeed made it harder for those just starting out. More than half, or 53%, of Gen Zers say higher costs are a barrier to their financial success, according to a separate survey from Bank of America.
In addition to soaring food and housing expenses, millennials and Gen Z face other financial challenges their parents did not as young adults. Not only are their wages lower than their parents’ earnings when they were in their 20s and 30s, but they are also carrying larger student loan balances.
Roughly three-quarters of Gen Z Americans said today’s economy makes them hesitant to set up long-term financial goals and two-thirds said they might never have enough money to retire, another recent Prosperity Index study by Intuit found. 

Young adults also have the advantage of time

“Younger Americans haven’t had it easy in this economy, but any step they take toward strengthening the building blocks of their finances will pay off over time,” said Sarah Foster, analyst at Bankrate.
Gen Zers have the significant advantage of those extra years when it comes to saving for long-term goals such as retirement, she added.
“Prioritize investing in yourself, paying down debt and reaping the benefits of compound interest by saving for both the short and long term,” Foster advised.
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The earlier you start, the more you will benefit from compound interest, whereby the money you earn gets reinvested and earns even more.
There are no magic bullets, Matt Schulz, LendingTree’s chief credit analyst, recently told CNBC — but there are a few financial habits that pay off. “Most things around saving aren’t super complicated but it doesn’t mean they’re easy to do,” he said.
“Just like having a healthy lifestyle, it’s just about doing the right things over and over again over time and having patience.”
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Lawmakers are racing to avert a government shutdown, which could affect the upcoming tax season, IRS Commissioner Danny Werfel said last week. 
By law, the agency can preserve certain activities for ongoing operations after a lapse in funding.
But it’s unclear exactly which areas of taxpayer service would be affected, experts say.

Internal Revenue Commissioner Danny Werfel speaks during his swearing in ceremony at the IRS on April 4, 2023 in Washington, DC. (Photo by Bonnie Cash/Getty Images)
Bonnie Cash | Getty Images News | Getty Images

As Americans prepare for the opening of tax season, lawmakers are racing to avert a government shutdown. If they fail to come to an agreement, the resulting pause in nonessential operations could affect taxpayers’ filing experience, according to IRS Commissioner Danny Werfel. 
By law, the agency can preserve certain activities for ongoing operations after a lapse in funding, Werfel told reporters last week. But “shutdowns are highly disruptive,” he said, noting it could “increase the risk that we don’t have as smooth a filing season as we intend to have.”

Congress faces two looming deadlines, Jan. 19 and Feb. 2, to finalize a deal or pass a short-term funding measure. It’s the second deadline that affects the IRS.
While lawmakers have taken steps to extend both deadlines to early March, the new dates would still leave limited working days to reach a deal.
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“We experienced shutdowns before,” Werfel said. “We have not experienced a shutdown in the middle of filing season, so there’s some uncertainty there.” 
“Of course, we will do everything in our power to minimize the disruptions that a shutdown would have on the filing season,” he added. 

Some tax preparers have already begun accepting 2023 returns, but the season officially kicks off on Jan. 29 when the IRS starts processing filings.

What may happen at the IRS during a shutdown

While certain IRS functions would continue under a federal government shutdown, it’s unclear exactly which employees would keep working, experts say.
The U.S. Department of the Treasury in September released a lapsed appropriations contingency plan for fiscal 2024, covering critical operations for the IRS.

However, the American Institute of CPAs in November sent a letter to Treasury Secretary Janet Yellen and Commissioner Werfel, asking for plan updates with “filing season-specific activities.”
“There’s not a lot of winners if the IRS shuts down and has to go to their contingency plan,” said Kasey Pittman, tax policy director with Baker Tilly’s Washington tax council. 
The AICPA’s letter expressed concerns about phone service, taxpayer assistance centers, possible refund delays, paper correspondence and automated notices, pointing to an interpretation of the contingency plan from the National Taxpayer Advocate.

Shutdown could affect IRS priorities

If lawmakers don’t finalize a deal, or pass a short-term funding measure, it could threaten the agency’s progress on past issues and new initiatives, according to Mark Everson, a former IRS commissioner and current vice chairman at Alliantgroup.
“It’s not just a regular filing season,” he said, pointing to challenges like the employee retention tax credit backlogs and the upcoming Direct File pilot program, which will allow certain taxpayers to file directly with the IRS for free. 
Meanwhile, the IRS faces mounting pressure to continue improving service after an infusion of funding and efforts from some Republican lawmakers to rescind it.
There’s an “incredibly long list of things that they’re after,” Everson said. “They certainly don’t need that kind of disruption.” 
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With advanced technology, thieves can capture a voice recording and then use a software program to generate an imitation “deepfake” version that can be used to impersonate you.
Fraud cost U.S. consumers more than $7 billion in the first three quarters of 2023, a 5% increase from the same period a year earlier, according to the Federal Trade Commission.
If you are aware of a specific scam, research shows you are 80% less likely to engage with it.

Natasaadzic | Istock | Getty Images

Artificial intelligence tools and sophisticated technology are making it harder for consumers to spot scams.
Fraud cost U.S. consumers more than $7 billion during the first three quarters of 2023, according to the Federal Trade Commission. Those figures are up 5% compared to the same period in 2022.

“Fraud is at a crisis level in this country,” said Kathy Stokes, director of fraud prevention programs at AARP. 
Perpetrators of these types of crimes may be organized gangs or transnational criminal enterprises with employees who have scripts they follow to lure victims. “They have the money, they have the time and they’ve got the playbook to get you into that heightened emotional state,” Stokes said. “It’s us against them.”
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The most crucial step to avoid being scammed is knowing what could happen and discussing it with family and friends. When people are aware of a specific scam, they are 80% less likely to engage with it, and if they do engage, are 40% less likely to lose money or sensitive information, according to the FINRA Investor Education Foundation. 
Here are five of the top financial scams you should look out for in 2024, and ways to avoid becoming a victim.

1. Grandparent scams

Playing on people’s emotions by targeting personal relationships and posing as someone they care about is a starting point for many fraud schemes. 
The grandparent scam is becoming a more damaging version of imposter scams with advanced technology. Thieves can capture a voice recording and then generate an imitation version of your voices that can be used to impersonate you.
Fraudsters may call and pretend that they are a family member in immediate jeopardy — for example, that they have been arrested or are dangerously ill — and urgently needs money. Fraudsters frequently try to isolate their victims by concocting some reason the victim cannot consult with friends, family or law enforcement, such as saying the case is under a “gag order.”

“Elder fraud and elder abuse are reprehensible crimes,” U.S. Attorney General Merrick B. Garland said in a statement to CNBC. “I urge all Americans, particularly older Americans, to be on the lookout for potential scams, to pause before turning over personal information, and to report fraud and abuse when it occurs.” 
Some scammers may have a third conspirator pose as a courier and go to a grandparent’s home to pick up the money. 

How to avoid grandparent scams: 
“Don’t answer any emails or phone calls from unknown persons,” advises Michael Bruemmer, vice president of global data breach and consumer protection at Experian. “All they need is less than a 10-second voiceprint.”

Choose a “safe word” or “password” to share with a grandparent, family member or loved one and say that word when you call in an emergency situation so they know it’s you.
If you get a call or text from someone claiming to be a loved one but using an unfamiliar number, call or text the usual number that you use to reach that person to confirm they called.
Confirm emergency financial requests with other family members. Don’t fall prey to a scammer who tells you to keep their initial call or text a secret. 

2. Romance scams

Romance scams have been a common way to use new, but fake, relationships to steal people’s money and they are growing in popularity. These scams often start with private messages on social media or dating apps, after thieves review the information posted on these accounts. 
Once the new “love interest” gains your trust, they may claim that someone close to them is sick, hurt or in jail. They may claim to be in the military or need help with an important delivery. After telling the lie, they’ll ask for money or a purchase made on their behalf.  

Scammers will often ask for payment in ways that are harder to trace and reverse, such as gift cards and peer-to-peer services such as Venmo and Zelle, said Ted Rossman, a senior industry analyst at Bankrate. “Be very suspicious if someone that you don’t know asks you for one of these payments.”
Another frequent lie from an online “love interest” is an offer to help invest in cryptocurrency. While many victims of romance scams send money with a gift card, the most significant dollar losses — more than one-third of losses to romance scams in 2022 — were in cryptocurrency, according to the FTC.  

How to avoid romance scams: 

Talk to friends or family about a new love interest and pay attention if they’re concerned.
Don’t share with a love interest any personal information, usernames, passwords or one-time codes that others can use to access your accounts or steal your identity. 
If someone you’ve just met tells you to send money because they’re in trouble or to receive a package, the FTC says you can bet it’s a scam.

3. Cryptocurrency scams

Investment-related scams are the most costly type of financial fraud with total losses of more than $3.8 billion in 2022, according to the FTC. The median loss was $5,000. 
Scammers use cryptocurrencies because they don’t have the same legal protections as credit or debit cards, and payments usually can’t be reversed. With investment scams, crypto is central in two ways: It can be both the investment and the payments that can’t be reversed.
Besides claiming to be a love interest who needs you to send them money, crypto scams may start with an “investment manager” calling you out of the blue with a tip that seems too good to be true or a scammer claiming to be a celebrity who can quadruple your money. 

How to avoid cryptocurrency scams: 

Don’t mix online dating and investment advice. If you meet someone on a dating site or app and they want to show you how to invest in crypto or ask you to send them crypto, that’s a scam.
Know that a legitimate business or government entity will never email, text or message you on social media to ask for money, and will never demand that you buy or pay with cryptocurrency. 
Don’t pay anyone who contacts you unexpectedly demanding payment with cryptocurrency.

4. Employment scams

Business and job-related scams are another top category of financial fraud, and with companies laying off workers, these schemes are likely to continue in 2024. 
Some scammers use enticing, hard-to-detect tactics to lure victims through interviews with a company that may seem legitimate. Then this fake employer sends you a fake email to collect personal information, or says they’re using a third party, which is also fake, to do a background check. Once they have your personal identity information, it’s an easy step to get into your bank account. 
Other job scams may promise guaranteed or easy income if you purchase a program they offer, or you’ll see job opportunities that involve receiving or sending money to another account. 

How to avoid employment scams:

Look up the name of the company or the person who’s hiring you, plus the words “scam,” “review” or “complaint.” See if others say they’ve been scammed by that company or person.
Never click on a link from an unexpected text, email or social media message, even if it seems to come from a company you know.
Don’t ever pay a fee to get a job. If someone asks you to pay upfront for a job or says to buy cryptocurrency as part of your job, it’s a scam.

5. Online account tax scam

In this scam targeting individuals, swindlers pose as a “helpful” third party and offer to help create an online account at IRS.gov to pay taxes. Bad actors can use the taxpayer information in such accounts to file a sham tax return where the scammer gets the refund. The information can also be used for other financial fraud or identity theft, such as to get a loan or open a line of credit. 
“Any of the process that you’d go through to set up an account or check on a refund or just to look at payments that you’ve made, all of that would start at IRS.gov,” said IRS spokesperson Eric Smith. “If someone contacts you saying, ‘We’ll help you set up an IRS account and send us all of your information,’ that’s bogus.”

How to avoid online account tax scams:

Set up a taxpayer’s IRS Online Account at IRS.gov yourself. Do not use third-party assistance for that task.
Don’t store financial records and information in an email account.

“If a criminal gets in there, they have a roadmap to everything,” said Haywood Talcove, CEO of LexisNexis Risk Solutions’ government group.

If you do get caught in a scam, report it to local law enforcement, the FBI, the state attorney general where the fraud took place, AARP and the FTC.
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Beginning in February, certain student loan borrowers who have spent a decade in repayment will get their debt forgiven.
Here’s how to know where you fall on that timeline.

Chris Tobin | Digitalvision | Getty Images

Beginning in February, certain student loan borrowers who have spent a decade in repayment will get their federal student loan debt forgiven, the Biden administration recently announced.
Most borrowers need to make payments for 20 years or 25 years on an income-driven repayment plan before their debt is erased. But under the U.S. Department of Education’s new repayment program, called the Saving on a Valuable Education, or SAVE, plan, those who took out $12,000 or less will get their debt erased after just a decade.

To qualify for the aid, you’ll also need to make sure you have eligible federal student loans and that you’re enrolled in the SAVE plan.
Here’s what to know about the 10-year timeline to forgiveness.

Pandemic-era payment pause counts

Other forbearances, deferments may count, too

The Department of Education gives federal student loan borrowers several options to pause their payments.
Due to the timeline of regulatory changes, borrowers may have to wait for some of these periods to be credited to their forgiveness timeline under the SAVE plan. Some of these stretches may only start counting after July.

But it seems that forbearances could qualify toward forgiveness: either 12 consecutive months in a forbearance, or 36 cumulative months, a Department of Education spokesperson told CNBC. Time spent in an economic hardship deferment, and other deferments, such as the deferments for cancer and unemployment, may also get you credit, depending on when you were enrolled.
You should also eventually get credit for time spent in repayment before a loan consolidation.

There may be an option to pay for forgiveness

The Department of Education added that borrowers, in time, can make “buyback” payments to get credit for any periods in deferments or forbearances that didn’t count toward forgiveness.
But the spokesperson said that option hasn’t been implemented yet. “We will provide more detail on it when it is going live,” they said.
If your calculated payment under SAVE is currently $0, “the cost to the borrower for the buyback will be zero, letting them get all the other deferments and forbearances covered at no additional cost,” said higher education expert Mark Kantrowitz. “It’s a pretty sweet deal.”Don’t miss these stories from CNBC PRO: More

“New-collar” jobs require highly skilled employees and come with salaries in the top half of the wage scale — but don’t require a college degree.
Health care, engineering, technology and software are some of the industries looking to hire new-collar workers, according to job search site Monster.
Between continuing education courses, online classes, certification programs and boot camps, there are more opportunities to get up to speed on the latest technology and get a foot in the door.

Pixelfit | E+ | Getty Images

The labor market may be cooling but there are opportunities ahead, especially for new-collar workers.
So called “new-collar” jobs typically require highly skilled workers and often come with salaries in the top half of the U.S. wage scale — but they don’t require a college degree.

The term was coined nearly a decade ago by Ginni Rometty, former chief executive of IBM, to describe a slew of positions being created that demanded advanced skills but not necessarily higher education.
“New-collar jobs may not require a traditional college degree,” she wrote in 2016. “What matters most is that these employees — with jobs such as cloud computing technicians and services delivery specialists — have relevant skills, often obtained through vocational training.”
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Indeed, a four-year degree has been losing its luster. Rising college costs and ballooning student loan balances have caused more students to question the return on investment. 
As students look for a more direct link to the workforce, there’s a shift “toward shorter-term programs,” according to Doug Shapiro, executive director of the National Student Clearinghouse Research Center.

Federal data also shows that trade school students are more likely to be employed after school than their degree-seeking counterparts — and much more likely to work in a job related to their field of study.
What’s more, a growing number of companies, including many in tech, recently decided to drop degree requirements for middle-skill and higher-skill roles.

Where the new-collar positions are

“There is still value in a four-year degree,” said Vicki Salemi, career expert at Monster. However, technical training “is on ramp in some areas like health care, engineering, software and technology.”
Even though those industries are also increasingly integrating artificial intelligence as a tool in the workplace, technically trained workers are particularly positioned to benefit.

Despite growing fears about job security, companies investing in AI are not seeing workers displaced. Instead, these companies are increasing their demand for workers with data analysis and IT skills, according to a recent study, co-authored by Columbia Business School professor Tania Babina.
“AI stands as the cutting-edge catalyst propelling skill evolution in our workplaces,” Babina wrote.

How to land one of today’s most in-demand jobs

Between continuing education courses, online classes, certification programs and boot camps, there are more opportunities for young people just entering the workforce or older people looking to change careers to get up to speed on the latest technology.
Job seekers can take advantage of the wide range of training programs currently available to strengthen their candidacy, according to Barbara Safani, president of Career Solvers in New York.
“I am seeing a lot of people with college degrees going back and learning coding or something skill-specific as a way to reenter the market,” Safani said. “Either they are not happy in their career, or they are not that employable.”

Even without an undergraduate degree, the increasing popularity of coding classes and boot camps makes it possible to get a foot in the door, she said.
“The people that I’ve seen who have done this got jobs and they were placed fairly quickly,” she added.
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Growing up in the age of the internet and technology, online shopping is second nature for Gen Zers.
Yet, a bulk of Gen Z drivers prefers to shop for a car in person while only 9% do so online, according to a report by Cars.com.

Momo Productions | Digitalvision | Getty Images

Growing up in the age of the internet and technology, online shopping is second nature for Gen Zers.
One-third, 32%, of Gen Z consumers shop online at least once a day, according to data from marketing firm Tinuiti.

Yet, 80% of Gen Z drivers prefer to shop for a car in person. Only 9% prefer to do so online, according to a recent report by Cars.com, which defines Gen Z adults as those between ages 18 and 28.
“When we’re talking about them finishing a deal in person, it means they’ve already done extensive research online,” said Rebecca Lindland, senior director of industry data and insights at Cars.com. “There’s a lot of benefit to going in person and finishing that deal.”
The Cars.com survey was conducted from August to September and had 4,000 participants split evenly across four generations. Baby boomers were the only generation more likely than Gen Z to purchase a car in person, with 89%, while millennials were the most likely to prefer buying online, with 16%.
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Affordability is important for Gen Z adults, who are facing many challenges as they approach early adulthood and enter the workforce. On top of student loan debt, they face high housing costs and lower wages.

Buying a car in person allows you to test drive the vehicle. It can also help you negotiate with the dealer, who may be inclined to offer discounts at the point of sale.
“Aside from your house or housing, a car is usually the next in line for the highest transaction that people will face. Any time you can get that number down is a good thing,” said Paul Waatti, an industry analyst at market research firm AutoPacific.

Car prices are expected to stabilize in 2024

While the cost of a new car is still generally elevated, prices are beginning to cool down due to higher inventory and dealers offering incentives.
The average transaction price for a new car in the U.S. was $48,759 in December, according to data from Kelley Blue Book, a Cox Automotive company. Although it represents a 1.3% increase from the prior month, it’s a 2.4% decline from a year ago.
Used car prices are also expected to stabilize by the end of 2024. The average listing price for a used car last month was $26,091, down 3.9% from a year earlier.
Indeed, “the shift from a seller’s market to a buyer’s market is well underway,” said Michelle Krebs, executive analyst for Cox Automotive, in a statement.

While only 25% of Gen Z drivers would finance their cars through a dealership, per Cars.com, they can use the market shift to their advantage.
“Gen Z doesn’t get the credit for being as savvy as they actually are,” said Waatti. The share of those who use dealership financing shows they’re being underestimated.

Getting your own financing is ‘usually a better deal’

Before going to the dealer, look into direct lending from banks or credit unions. Shopping around for an auto loan is crucial if you’re going to the dealer in person because you won’t have to rely on the dealership financing. You show up with an understanding of what outside financing and payment options you’re eligible for.
“It’s usually a better deal trying to get your own financing rather than going into a dealership and just accepting what they have to offer,” said Waatti.
Make sure to get preapproved financing, even if you’re still open to accept offers from a dealership. “Having options is really key when going in to make a transaction,” he added.Don’t miss these stories from CNBC PRO: More

Higher interest rates are good news for savers who have money in cash.
But just how long that lasts depends on if and when the Federal Reserve decides to cut interest rates.
Here’s what to consider if you’re thinking of locking in higher returns on your cash.

Simpleimages | Moment | Getty Images

Higher interest rates were good news in 2023 for savers who were able to earn the best rates on their cash in years.
Even with the possibility of looming rate cuts by the Federal Reserve, 2024 still stands to be a great year for returns on cash.

“Yields are going to move lower this year,” said Greg McBride, chief financial analyst at Bankrate.
“But it’s still going to be a very good year for savers — especially those that lock in now,” McBride said.

When to expect interest rate cuts

Experts are taking bets for when interest rate cuts may come this year after a series of rate hikes aimed at tamping down high inflation.
“This is the first time in a very long time we’ve seen yields as high as they are,” said Douglas Boneparth, president and founder of Bone Fide Wealth, a wealth management firm based in New York City. Boneparth is also a member of the CNBC Financial Advisor Council.

Much of the Federal Reserve’s decisions from here will depend on inflation data. The latest read of the consumer price index was hotter than expected, with inflation up 3.4% over a year ago and still higher than the Federal Reserve’s 2% target.

Federal Reserve Governor Christopher Waller said on Tuesday that the central bank may take its time and move carefully with any future rate cuts.
Interest rate changes probably will not happen before June, McBride predicts.

‘Now’s the time to lock in’ CD rates

With no more interest rate increases on the horizon, that means the returns on cash have likely reached their highest point.
“If you’ve had your eye on a multiyear CD, now’s the time to lock in. The yields have peaked,” McBride said.
Certificates of deposit are products typically provided by banks or credit unions that promise a certain return provided the money is not withdrawn for a certain length of time.

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Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

Short-term CDs, which may have terms from three months to one year, may be poised to change more quickly, especially as the possibility of interest rate cuts comes closer, McBride said.
Top six-month and one-year CDs are currently providing annual percentage yields around 5.5%, according to Bankrate. Longer three-year and five-year CD rates are lower, with top rates of 4.75% and 4.6%, respectively.
One advantage of CDs is they provide a “risk-free return,” according to McBride, because they are covered by Federal Deposit Insurance Corporation insurance and require savers to go directly through a bank. However, savers may want to consider whether Treasurys, which are exempt from state and local taxes, may be a better deal, he noted.
An important caveat to consider is that the Federal Reserve’s anticipated rate decreases may not come to fruition, noted Boneparth. If the economy moves in another direction, the central bank’s strategy may change.

When a CD might not be the right choice

Before locking money in a CD, experts say it’s wise to consider whether that is the right place for your money.
If you need the money before the CD matures, you will have to pay early withdrawal penalties, noted Ted Jenkin, a certified financial planner and CEO and founder of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta. Jenkin is also a member of the CNBC FA Council.
Consequently, you should have a liquid emergency fund before you lock any cash in a CD, he said. Experts generally recommend having three to six months’ living expenses set aside in case of a sudden loss of income or other unexpected event.

Top online savings accounts are still providing annual percentage yields over 5%, McBride noted. However, those rates are not guaranteed and may be subject to more fluctuations as the timeline for the Fed’s interest rate cuts becomes more certain.
Above all, it’s important to match your money allocations to the time horizon for your goals.
For big, long-term goals such as retirement, you still stand to earn the highest returns by taking more risk and putting your money in the markets, noted Boneparth.
“If you chose cash as your preferred asset class last year, instead of equities, you clearly missed out in a very big way,” Boneparth said.Don’t miss these stories from CNBC PRO: More