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    2025 could be a renter’s market — but it won’t last, economists say. Here’s how to take advantage

    Higher supply of available units for rent is fostering a renter-friendly market in the U.S. 
    But it might not last — on top of low profitability, construction companies are facing uncertainties, an economist points out. 
    Here are three things to do now while you can.

    Maskot | Maskot | Getty Images

    Renters should reap the benefits of a lower-cost rental market while they can. It might not last, experts say. 
    As of December, the median asking rent price in the U.S. was $1,695, down 0.5% — or $8 — from November, according to a report by Realtor.com. The latest rent price is 1.1% lower — or $18 — from a year before, and down 3.7% from peak highs in July 2022.

    Rent prices have come down because newly built apartments are increasing the supply of units available. With more inventory, some property managers must consider lowering their asking prices to attract tenants. 
    “We’re calling it a renter’s market. We think that’s going to continue for the next year,” Daryl Fairweather, chief economist at Redfin, recently told CNBC.
    Read more from Personal Finance:Tariffs are coming: How secondhand shopping is an option’Where’s my refund?’ How to check the status of your federal tax refundWhat the ‘mother of all trade wars’ can teach us about U.S. tariffs
    But this renter-friendly market is not forever.
    With construction activity of multifamily housing slowing down, the renter’s market might fizzle out after this year, experts say. 

    “This construction boom is probably going to be over and rents will probably start going up again,” Fairweather said.

    What’s slowing down supply

    “We’re seeing multifamily construction permitting slowing a bit,” said Joel Berner, a senior economist at Realtor.com.
    There are several reasons behind this. With rent prices coming down, it’s not  “economically viable,” or profitable, at the moment to build multifamily housing, Berner said.
    There’s also a level of uncertainty about the current administration’s policies around tariffs and deportations, he said. 

    This week, President Donald Trump imposed broad tariffs on imports from China. He paused the implementation of 25% tariffs on Canada and Mexico for at least 30 days. 
    In part due to such policy changes, costs are increasing for builders, Berner said. Tariffs on lumber and other materials make prices go up while mass deportation plans are making the labor force “smaller and more expensive,” he said.
    Nearly a third, or 31%, of construction tradesmen in the U.S. in 2022 were immigrants, according to the National Association of Home Builders, which analyzed 2022 Census data.
    “Anything that threatens to disrupt the flow of immigrant labor will send shock waves to the labor market in home construction,” Jim Tobin, president and CEO of the NAHB, previously told CNBC.

    3 key moves for renters

    If you’re in the rental market right now or plan to start looking this year, here are key steps you can take to maximize affordability while it’s still a renter’s market:
    1. Ask for a multiyear lease to secure a lower cost
    If you’re in an area where prices have been coming down, you could tell your landlord or property manager you’re interested in signing a multiyear lease if they reduce the rent price, Berner said. 
    In such negotiations, it can be helpful to have something to offer in return, like being flexible on the length of the lease, or paying a larger security deposit, he said.
    Tenant turnover can be expensive for landlords, especially if the property sits unoccupied for a few months.
    2. If you plan to buy a home, start saving now
    “If you’re a renter who intends to become a homeowner, this is a good time to save on rent,” Berner said — and then bank the difference for your down payment.
    Builders are expected to pivot their priorities and build more homes in the for-sale market this year. Single-family housing starts are forecast to increase by 13.8% in 2025, totaling 1.1 million new homes, according to Realtor.com data.
    Many renters struggle to build wealth in the U.S., and financial obstacles like high rent can keep would-be buyers from coming up with enough money for a down payment.
    If you manage to lower your monthly rent costs, “stash away some cash for a down payment,” Berner said. “The larger your down payment can be, the better.”

    3. Keep tabs on affordable markets elsewhere
    It can be tempting to look at more affordable housing markets as ideal places to move to, but experts don’t recommend uprooting your life and career just because rent prices are falling in one metro versus another. 
    On the other hand, if you’re looking to move at some point, it can be helpful to stay updated on where affordability is improving the most.
    For example, Austin, Texas, is the top metro among Redfin’s “most affordable metros,” or places where renters typically earn more money than they need in order to afford the typical rental unit. The typical renter in the area makes $69,781 annually, which is 25.14% higher than the $55,760 the site estimates is required to afford a typical apartment there, Redfin found.
    “Pay attention to how things are changing market to market and where you know you can make your money go the furthest,” Berner said.

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    Top Wall Street analysts pick these 3 stocks for attractive dividends

    The IBM logo is displayed on a smartphone in Poland.
    Omar Marques | Lightrocket | Getty Images

    Talk around tariffs, the emergence of China’s DeepSeek and earnings of key companies have put the stock market on a roller-coaster ride. Investors seeking stable returns may consider adding dividend stocks to their portfolios.
    Given the vast universe of dividend-paying stocks, it can be difficult to select the right one. To this end, investors can benefit from tracking the stock picks of top Wall Street analysts, whose recommendations are based on in-depth analyses of a company’s financials and growth prospects.

    Here are three dividend-paying stocks, highlighted by Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
    International Business Machines (IBM)
    This week’s first dividend stock is tech giant IBM (IBM). The company impressed investors with its market-beating fourth-quarter earnings. Notably, IBM’s Software segment’s performance reflected solid demand for artificial intelligence (AI) and the Red Hat Linux operating system.
    The company returned $1.5 billion to shareholders via dividends in the fourth quarter. IBM has a dividend yield of 2.6%.
    In reaction to the results, Evercore analyst Amit Daryanani raised the price target for IBM stock to $275 from $240 and reiterated a buy rating. The analyst highlighted that the Q4 revenue growth was driven by continued acceleration in IBM’s Software business growth, which helped offset the weakness in the Consulting and Infrastructure segments.
    “We think the print highlighted IBM’s unique position across both Software and Consulting segments that are starting to inflect higher with AI and potential M&A being incremental upside catalysts,” said Daryanani.

    The analyst noted that despite flattish trends in the fourth quarter, the company expects the Consulting segment’s performance to improve in 2025, driven by higher IT spending and the conversion of the $5 billion of AI signings to revenues.
    Daryanani further added that during the December quarter, IBM’s shareholder returns comprised only dividends and no share repurchases. He highlighted that the company is committed to a consistent and growing dividend. He expects IBM to allocate more capital to mergers and acquisitions rather than share repurchases.
    Daryanani ranks No. 244 among more than 9,300 analysts tracked by TipRanks. His ratings have been successful 61% of the time, delivering an average return of 14%. See IBM Stock Charts on TipRanks.
    Verizon
    The next dividend pick is telecom giant Verizon Communications (VZ). The company posted strong results for the fourth quarter of 2024 and achieved the best quarterly postpaid phone gross additions in five years. On Feb. 3, Verizon paid a quarterly dividend of just over 67 cents per share. VZ stock offers a dividend yield of 6.8%.
    Recently, Tigress Financial analyst Ivan Feinseth reiterated a buy rating on Verizon stock with a price target of $55. The analyst highlighted that a reacceleration in mobile and broadband subscriber growth is fueling the company’s revenue and cash flow.
    Feinseth thinks that Verizon will continue to gain from robust 5G adoption and increasing services revenue growth. He also thinks that the company is well-positioned to benefit from AI-led growth in mobile edge computing. The analyst noted that Verizon has a solid track record of developing and integrating AI enhancements across its network and is in the process of integrating several generative AI initiatives.
    “5G and margin expansion combined with AI-driven network optimization and operating efficiency expansion is driving a re-acceleration in Business Performance trends,” said Feinseth.
    The analyst also expects Verizon’s expansion into emerging technologies, like autonomous vehicle connectivity, smart city infrastructure and remote health-care solutions, to drive further growth. Moreover, Feinseth thinks that VZ’s above-average dividend yield makes it a compelling pick. He pointed out that the company has hiked its dividend every year for the past 18 years.
    Feinseth ranks No. 169 among more than 9,300 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, delivering an average return of 15%. See Verizon Insider Trading Activity on TipRanks.
    EPR Properties
    Another attractive dividend stock is EPR Properties (EPR), a real estate investment trust (REIT) that is focused on experiential properties such as movie theaters, amusement parks, eat-and-play centers and ski resorts. EPR offers a dividend yield of 7.2%.
    After the company hosted a multi-city non-deal road show, RBC Capital analyst Michael Carroll reiterated a buy rating on EPR stock with a price target of $50. The analyst stated that management “highlighted an attractive story supported by a healthy tenant base, recovering box office, and a pragmatic investment approach.”
    Carroll noted that consumers have been resilient following the Covid-19 pandemic and continue to give importance to experiences, thus benefiting EPR due to its focus on experiential properties. Also, management noted that the mid- to high-end customers, who are its tenants’ major clients, continue to be healthy and are visiting its properties.
    The analyst added that EPR expects to gain from a rebound in box office in 2025. The company expects 110-115 wide releases by studios in 2025 and more than 120 in 2026, compared to only 95 in 2024.
    Carroll is also bullish on EPR stock due to its lucrative dividend yield of more than 7%, which it expects to grow at the rate of 3% to 5% per year. At a multiple of an estimated 9.0-times forward adjusted funds from operations, the analyst finds EPR’s valuation attractive.
    Carroll ranks No. 886 among more than 9,300 analysts tracked by TipRanks. His ratings have been successful 61% of the time, delivering an average return of 7.5%. See EPR Properties Ownership Structure on TipRanks. More

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    Looming $2.7 billion Pell Grant shortfall poses a new threat for college aid

    New projections for the federal Pell Grant program now estimate a $2.7 billion funding shortfall later this year. 
    About 40% of college students rely on Pell Grants, a type of aid available to low-income families.
    “If program funding is not shored up, students could face eligibility or funding cuts for the first time in more than a decade,” said Michele Zampini, senior director of College Affordability at The Institute for College Access & Success.

    Hero Images | Hero Images | Getty Images

    College advocates breathed a sigh of relief when the U.S. Department of Education said the Trump Administration’s “federal funding freeze” would not affect federal Pell Grants and student loans. 
    Nearly 75% of all undergraduates receive some type of financial aid, according to the National Center for Education Statistics. About 40% of college students rely on Pell Grants, a type of federal aid available to low-income families who demonstrate financial need on the Free Application for Federal Student Aid application.

    For these students and their families, this aid is crucial for college access.
    However, there’s a problem brewing.
    The Congressional Budget Office in January released new supplemental projections for the Pell Grant program, which now estimate a $2.7 billion funding shortfall for the 2025 fiscal year. 
    “If program funding is not shored up, students could face eligibility or funding cuts for the first time in more than a decade,” said Michele Zampini, senior director of college affordability at The Institute for College Access & Success. “We are back in the danger zone.”

    More students qualify for Pell Grants

    The new, simplified FAFSA, which first launched in 2023, was meant to improve access by expanding Pell Grant eligibility to provide more financial support to low- and middle-income families.

    But overall, the number of Pell Grant recipients is down significantly.
    In fact, the number of Pell Grant recipients peaked over a decade ago, when 9.4 million students were awarded grants in the 2011-12 academic year, and sank 32% to 6.4 million in 2023-24, according to the College Board, which tracks trends in college pricing and student aid.
    Now data from the Department of Education shows that many more students are on track to receive Pell Grants this year: As of Dec. 31, more than 9.3 million 2024–25 FAFSA applicants were eligible for a Pell Grant. Among recent high school graduates attending college for the first time, the number of Pell recipients is up 3.3% compared to a year earlier, an increase of approximately 30,000 students.

    Why this year is problematic for Pell Grants

    Although there have been other times when the Pell Grant program operated with a deficit, this year’s shortfall “was perhaps made worse by the changes to Pell Grant eligibility that increased the number of students eligible for the Pell Grant starting in 2024-25,” said higher education expert Mark Kantrowitz.
    Not only do more students now qualify for a Pell Grant because of changes to the financial aid application, but more students are also enrolling in college — a reversal from the significant decline in college-bound students after the pandemic.

    Freshmen enrollment jumped 5.5% this fall compared with last year, with the sharpest gains among those from the lowest-income neighborhoods, according to a recent analysis by the National Student Clearinghouse Research Center. (Because of a “methodological error” in research group’s preliminary enrollment findings, the rebound in freshmen enrollment this year was particularly striking.)
    “They really low-balled enrollment projections,” Zampini said. “Program costs are based on how many students are expected to enroll in a given year and how many of those students will be eligible for Pell funding.”
    The Congressional Budget Office’s projected change from a surplus to a deficit is due in part to that shift in enrollment figures from a decrease to an increase, according to Kantrowitz. 

    How the Pell Grant program is funded

    The Pell program functions like other entitlement programs, such as Social Security or Medicare, where every eligible student is entitled to receive a Pell award.
    However, unlike those other programs, the Pell program does not rely solely on mandatory funding that is set in the federal budget. Rather, it is also dependent on some discretionary funding, which is appropriated by Congress.
    In 2024, the discretionary portion of Pell Grant program was estimated to cost about $24.5 billion, funded with $22.5 billion of appropriations, $1.2 billion of mandatory dollars and less than $1 billion of reserves, according to the Committee for a Responsible Federal Budget.
    More from Personal Finance:Morehouse College president: Trump funding freeze is an ‘existential threat’Student loan debt swelled under Biden, despite historic forgivenessWhat shutting down the Education Dept, could mean for student loans
    Because Congress appropriates discretionary funds for the program based on projections of how much it will cost in the upcoming year, “there is an inevitable annual mismatch between how much the program costs and how much funding is actually available,” Zampini said.
    “It becomes a guessing game,” she added.
    In previous years, Congress has provided supplemental funding to avoid a shortfall. But if Congress doesn’t fix this problem, “the U.S. Department of Education would be forced to respond by either cutting eligibility or the average grant,” Kantrowitz said.

    Already, those grants have not kept up with the rising cost of a four-year degree. Currently, the maximum Pell Grant award is $7,395 — after notching a $500 increase in the 2023-34 academic year.
    Meanwhile, tuition and fees plus room and board for a four-year private college averaged $58,600 in the 2024-25 school year, up from $56,390 a year earlier. At four-year, in-state public colleges, it was $24,920, up from $24,080, according to the College Board.
    Future deficits could be even greater if the maximum Pell Grant award is adjusted to keep pace with inflation in the years ahead. In one scenario, the Pell Grant program could face a $38 billion cumulative shortfall over the next decade as awards are inflation adjusted, the Committee for a Responsible Federal Budget also found.

    Adding to the complications this year, the Trump administration is reportedly looking for ways to close parts or all of the Department of Education, which is responsible for disbursing college aid.
    “I am very concerned about the idea that there would be no Education Department,” Zampini said, but “the Pell program has always been bipartisan given its effectiveness and we are hoping that will continue to be the case.”
    Even if the Education Department no longer existed, another government agency would likely administer the task of distributing those funds, other experts say.
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    Starboard pushes an open door at Becton Dickinson as company seeks to separate its biosciences unit

    Pavlo Gonchar | Sopa Images | Lightrocket | Getty Images

    Company: Becton Dickinson and Co (BDX)

    Business: Becton Dickinson develops, manufactures and sells medical supplies, devices, laboratory equipment and diagnostic products for health-care institutions, physicians, life science researchers, clinical laboratories, pharmaceutical industry and the public worldwide.
    Stock Market Value: ~$66.65B ($229.85 per share)

    Stock chart icon

    Becton Dickinson shares in the past 12 months

    Activist: Starboard Value

    Ownership: ~0.70%
    Average Cost: n/a
    Activist Commentary: Starboard is a very successful activist investor and has extensive experience helping companies focus on operational efficiency and margin improvement. Starboard also has significant experience with its strategic activism. In 57 prior campaigns where it had a strategic thesis, the firm had a 32.96% return versus 14.61% for the Russell 2000 during the same period. Additionally, Starboard has initiated activist campaigns at 24 prior health-care companies and its average return on these situations is 17.65% versus an average of 9.57% for the Russell 2000 during the same time periods.

    What’s happening

    On Feb. 3, Starboard announced it has taken a position in Becton Dickinson and called for the separation of its life sciences division. Days later, on Feb. 5, the company shared its intent to separate its biosciences and diagnostics solutions business.

    Behind the scenes

    Becton Dickinson (BDX) is a global medical technology company comprised of essentially two businesses: (i) MedTech, which consists of the BD Medical (medication delivery and management solutions, advanced monitoring and pharmaceutical systems) and BD Interventional (products for vascular, urology, oncology and surgical specialties) and (ii) BD Life Sciences, which provides products for the collection and transport of diagnostics specimens as well as instruments and reagent systems to detect a range of infectious diseases. Within MedTech, BDX is the market leader in the infusion pumps and prefilled syringes businesses, a position which has been supercharged by the growth in popularity of GLP-1s. These two businesses have historically been similar in size, but MedTech has been growing faster and now accounts for $15.1 billion of revenue and $6.7 billion of earnings before interest, taxes, depreciation and amortization versus Life Sciences contributing $5.2 billion of revenue and $2.0 billion of EBITDA.

    The problem here is simple and straightforward: The company operates two distinct businesses that are at different stages with different growth rates and valuation multiples and no real reason to be under the same roof. The MedTech business has a higher growth rate (mid-single digits) than Life Sciences (low-single digits) but a lower valuation multiple (13-times to 14-times) than Life Sciences (upward of 20-times) because MedTech is assessed as a rule of 40 company – that is, its growth rate plus its operating margins should equal or exceed 40. Life Sciences is seen as more structurally stable and immune to things like cyclicality, and it has reduced exposure to reimbursement pressure. Additionally, the presence of major industry players like Thermo Fisher and Danaher give the Life Sciences business a little consolidation value that slightly boosts its valuation multiple.
    This is not always a problem, but in BDX’s case, the entire company is trading at 16.8-times EBITDA, closer to the value of its least valuable part. As Starboard has recommended, spinning off or selling the Life Sciences business is a simple solution to a simple problem. The short-term value creation here is straightforward. If separated, the Medtech Business should get a 13-times to 14-times EBITDA valuation based on its growth, while Life Sciences should get a valuation north of 20-times. This alone would result in a valuation north of $110 billion at the low end of the multiple range. But there is additional value creation that could be attained after separation. The ability to better motivate management with the success of their own division and expand the universe of potential investors to two pure-play businesses are just the table stakes in a separation. The real value comes from two separate management teams being able to better focus on and devote resources to their own businesses. In the case of BDX, that could lead to margin improvement through the integration of acquisitions that were somewhat neglected as part of a bigger company. There have been reports of a $30 billion valuation price for the Life Sciences business. This is a valuation slightly below the expected 20-times EBITDA multiple we think it could receive. We expect that is because BDX may retain some parts of the Life Sciences business that synergize with MedTech.
    This is not always a problem, but in BDX’s case, the entire company is trading at 16.8-times EBITDA, closer to the value of its least valuable part. As Starboard has recommended, spinning off or selling the Life Sciences business is a simple solution to a simple problem. The short-term value creation here is straightforward. If separated, the Medtech Business should get a 13-times to 14-times EBITDA valuation based on its growth, while Life Sciences should get a valuation north of 20-times. This alone would result in a valuation north of $110 billion at the low end of the multiple range. But there is additional value creation that could be attained after separation. The ability to better motivate management with the success of their own division and expand the universe of potential investors to two pure-play businesses are just the table stakes in a separation. The real value comes from two separate management teams being able to better focus on and devote resources to their own businesses. In the case of BDX, that could lead to margin improvement through the integration of acquisitions that were somewhat neglected as part of a bigger company. There have been reports of a $30 billion valuation price for the Life Sciences business. This is a valuation slightly below the expected 20-times EBITDA multiple we think it could receive. We expect that is because BDX may retain some parts of the Life Sciences business that synergize with MedTech.
    Starboard is known as a very diligent, tenacious and committed activist investor that will do whatever is necessary to create value for its investors and other shareholders. When the firm wants board seats, it generally gets board seats. But that is not the case here. Starboard’s “activist” skills might be wasted or not needed here as it appears that in this case, the firm is pushing an open door rather than breaking one down. BDX has already acknowledged this issue and announced that it is considering the divesture of its Life Sciences segment. Whether this is because the company has been considering this anyway or because it heard Starboard loud and clear is irrelevant. Starboard is the type of activist that does not care who gets the credit, as long as the best decisions are made for shareholders.
    Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

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    RFK Jr. had up to $1.2 million in credit card debt — what experts say about tackling high balances

    Robert F. Kennedy Jr., who is in the running to serve as Health and Human Services secretary, revealed he was carrying up to $1.2 million in credit card debt in recent financial disclosures.
    While experts say it’s a “massive” balance, the politician does have the income to pay it off.
    As inflation has picked up, more Americans have turned to credit cards for financial wiggle room.

    Robert F. Kennedy Jr., U.S. President Trump’s nominee to be secretary of Health and Human Services, testifies before a Senate Finance Committee confirmation hearing on Capitol Hill in Washington, U.S., Jan. 29, 2025. 
    Evelyn Hockstein | Reuters

    Americans’ credit card balances soared to a record $1.17 trillion in 2024 — and even the wealthy are not immune from carrying these balances.
    One example is Robert F. Kennedy Jr., who recently revealed in financial disclosures that he was carrying up to $1.2 million in credit card debt. Kennedy is President Donald Trump’s nominee for Health and Human Services secretary.

    Kennedy’s credit card balances range between $610,000 and $1.2 million in accounts that carry interest rates of 23.24% to 23.49%, the filing shows.
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    Financial experts interviewed by CNBC said balances that high are unusual.
    “That’s a truly massive amount of credit card debt,” said Ted Rossman, senior industry analyst at Bankrate.
    “He has a lot of income, so I don’t even know why you’d have all that debt if you have that much income,” said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners, who reviewed Kennedy’s filing.

    Kennedy was not immediately available for comment.
    For all consumers — from the ultra-wealthy like Kennedy with an estimated $30 million net worth, to lower earning households — experts say it’s best to stay away from ongoing credit card debt.

    Credit cards have become a ‘de facto emergency fund’

    Yet in recent years, as prices have climbed, carrying credit card debt has been difficult for some borrowers to avoid.
    “With inflation being so powerful and so stubborn, it’s just shrunk a lot of people’s financial wiggle room down to zero,” said Matt Schulz, chief credit analyst at LendingTree. “Americans look at credit cards as kind of a de facto emergency fund.”
    Those balances can be costly.
    Because the disclosures are essentially snapshots, it’s not clear if he pays off his balances in full each month, experts say.
    If Kennedy pays $50,000 per month toward the lower estimated $610,000 credit card balance, it will take him an estimated 15 months to pay off the debts. Notably, that will cost him approximately $93,000 in interest, according to a Federal Reserve Bank of Dallas calculator.
    If he pays $50,000 per month on a $1.2 million balance, it will take 33 months to pay off and cost roughly $434,000 in interest.

    To reduce those costs, experts say, it would be wise for Kennedy to accelerate the paydown of those balances.
    That same advice may apply to the average household, for whom credit card debt can also be costly.
    The average debt per credit card borrower was $6,380 as of the third quarter of 2024, according to TransUnion. Currently, the average credit card interest rate is 20.13%, according to Bankrate.
    Those borrowers may also be paying for other debts. Average unsecured debt — excluding balances tied to real property such as cars or homes — climbed 8% to $29,364 in 2024, according to Money Management International.

    Paying off debts provides ‘guaranteed risk-free’ return

    With interest rates that high, it usually makes the most sense to prioritize debt paydown over other priorities such as investing or saving, according to experts.
    “If you’re paying down credit card debt at 20%, that’s a guaranteed risk-free, tax-free return,” Rossman said. “You’re unlikely to get that much from your investments.”
    Bankrate’s research has found higher-income individuals are more likely to carry long-term credit card debt, with 59% of borrowers who earn $100,000 or more having been in debt for at least a year. That includes 24% who have been in credit card debt for at least five years, Rossman said.
    “Higher-income people often get higher credit limits, and sometimes that gets people into trouble,” Rossman said.

    While wealthy borrowers may face substantial interest charges, they may be tempted to use credit cards for certain perks. For example, the American Express Centurion Card, also known as the Black Card, comes with a $10,000 one-time fee, as well as an annual $5,000 fee. In return, borrowers get access to airport lounges, elite status at hotels and help finding tables at restaurants, among other rewards.
    Nevertheless, credit cards usually are not the most effective way for the wealthy to borrow money, according to Charlie Douglas, a certified financial planner who works with ultra-high-net-worth families.
    For wealthy investors to avoid having to sell investments and incur capital gains taxes when they want to make a big purchase such as real estate, it makes sense to have a line of credit already established, Douglas said. Importantly, that comes with no costs on an ongoing basis.
    It may also make sense to have up to one years’ worth of expenses in cash as a buffer, he said. More

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    Trump wants to end a popular Wall Street tax break. What to know about the ‘carried interest loophole’

    President Donald Trump has renewed calls to end a popular Wall Street tax break.
    The “carried interest loophole” refers to favorable tax treatment for certain compensation received by private equity, venture capital and hedge-fund managers.
    Investment fund general partners pay long-term capital gains on carried interest held for more than three years.

    President Donald Trump takes questions during a press conference with unseen Israel’s Prime Minister Benjamin Netanyahu in the East Room of the White House in Washington, DC, on February 4, 2025.
    Andrew Caballero-Reynolds | Afp | Getty Images

    Investment managers also receive management fees, subject to regular income taxes. But most earnings come from carried interest, according to tax expert Steve Rosenthal.

    Bipartisan support for carried interest reform

    Critics of carried interest argue these earnings should be treated like wages, taxed at regular income tax rates, rather than receiving preferential capital gains treatment. 
    “It’s come up again and again on a bipartisan basis,” said Garrett Watson, director of policy analysis at the Tax Foundation. But there’s been consistent pushback from industry lobbyists. 

    “We encourage the Trump administration and Congress to keep this sound tax policy … that supports jobs, workers, small businesses, and local communities,” the American Investment Council, a trade group that represents private equity, said in a statement.
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    While Trump vowed to end the tax break during his first term, the Tax Cuts and Jobs Acts of 2017 enacted a smaller change — extending the required holding period for long-term capital gains treatment to three years from more than one year. 
    A provision to extend the holding period to five years was considered for the Inflation Reduction Act in 2022. But in an evenly divided Senate, the change was cut amid industry pushback.
    “The carried interest loophole is a fascinating challenge,” Rosenthal said. “Everyone wants to close it, except private equity executives.”

    Projected revenue is a ‘drop in the bucket’

    The carried interest proposal comes as Republicans debate spending priorities and seek additional ways to pay for Trump’s tax cuts. 
    However, revenue from eliminating the carried interest tax break is a “drop in the bucket” compared with the trillions needed to extend expiring tax breaks and pass additional priorities, Watson said.
    Taxing carried interest as regular income could decrease the federal budget deficit by $13 billion over 10 years, according to a December estimate from the Congressional Budget Office.  More

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    The IRS has issued 3.2 million tax refunds this year. Here’s the average payment

    The IRS has issued 3.2 million refunds for the 2025 filing season so far.
    As of Jan. 31, the average refund amount was $1,928, which covers the first four days of the filing season.
    The agency sends most refunds in less than 21 days. You can check the status via “Where’s My Refund?” on IRS.gov.

    Hispanolistic | E+ | Getty Images

    Tax season has kicked off, and the IRS has issued roughly 3.2 million refunds this year as of Jan. 31, the agency reported. 
    This represents current-year returns filed.

    The average refund was $1,928 over the first four days of the filing season.
    However, the IRS expects more than 140 million individual filings through the April 15 deadline, so the average refund could change throughout the season.
    Typically, you can expect a refund when you overpay taxes throughout the year via paycheck withholdings or estimated payments.
    More from Personal Finance:Your tax return could be ‘flagged for audit’ without these key forms’Where’s my refund?’ How to check the status of your federal tax refundLower earners can see ‘five-figure refunds’ from these tax creditsAs of Dec. 27, the average refund for the 2024 season was $3,138, which is about 1% lower than the average payment in 2023, according to the IRS.
    You can check the status of your refund for the 2025 season via the “Where’s My Refund?” tool or the IRS2Go app.

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    A new bill would cap credit card interest rates at 10%. Here’s what that could mean for your money

    The median annual percentage rate (APR) on credit cards is near 25%.
    Credit card companies charged consumers more than $105 billion in interest in 2022, according to the Consumer Financial Protection Bureau.
    Capping credit card interest rates could limit borrowers’ access to credit.

    Freshsplash | E+ | Getty Images

    Despite the Federal Reserve’s recent cuts, credit card interest rates have been hovering near record highs. A new bipartisan bill would cap them at a dramatically lower figure, but experts say it may not be a win for consumers.
    Senators Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., introduced a bill this week that would cap credit card interest rates at a 10% annual percentage rate (APR) for five years. It’s an idea President Donald Trump floated at campaign rally in New York in September. 

    “Capping credit card interest rates at 10%, just like President Trump campaigned on, is a simple way to provide meaningful relief to working people,” Hawley said in a statement. 

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    The average APR on credit cards for January 2025 was 24.26%, according to LendingTree.
    Almost half of credit card holders carry debt from month to month, according to a recent survey by Bankrate. In 2022, credit card companies charged consumers more than $105 billion in interest and more than $25 billion in fees, according to a 2023 study by the Consumer Financial Protection Bureau. 
    “We cannot continue to allow big banks to make huge profits ripping off the American people. This legislation will provide working families struggling to pay their bills with desperately needed financial relief,” Sanders said in a statement.

    Limiting credit card interest rates is not a new idea

    This isn’t the first time these senators have proposed the idea of a rate cap. In 2023, Hawley proposed an 18% rate cap, while Sanders proposed a 15% rate cap in 2019. Neither had adequate support to advance the proposals.  

    Around three-quarters, or 77%, of Americans surveyed said they support a cap on the interest rates financial institutions can charge on a credit card, according to a recent survey by LendingTree. But that support is down from 80% in 2022, and 84% in 2019. 
    The legislation has a long way to go before it could become law, and experts say its fate may depend in part on what happens with inflation, and whether Trump continues to support the measure. 
    “If pricing stays stable, I think it’s going to be much tougher to advance this kind of legislation,” said Jaret Seiberg, a policy analyst for TD Cowen.

    Fees, rate structure may still make credit expensive

    While a 10% rate cap may sound appealing, experts say the intricacies of how it is structured are important, with consideration for periodic interest rates, fees and the repayment structure.
    “You could have zero interest and still have an incredibly expensive product,” said Chi Chi Wu, a senior attorney at the National Consumer Law Center.

    The proposal also seems at odds with the Trump administration’s interest in eliminating the Consumer Financial Protection Bureau, she said.
    “If policy makers want to show that they actually care about protecting consumers’ wallets and keeping them from being abused by high-cost credit, they would make sure we have a strong Consumer Financial Protection Bureau,” Wu said.

    Rate caps could limit access to credit

    The banking industry opposes the idea of a rate cap. Seven financial groups representing banks and credit unions of all sizes have joined forces to oppose the measure. They say it will limit consumers’ access to credit and push them into higher-priced, less-regulated products like payday loans, which can have an average APR of 400%. 
    “There’s no evidence that APR caps make consumers better off or save them money,” said Lindsey Johnson, president and CEO of the Consumer Bankers Association. 
    There are already a few federal caps on interest rates. In 2006, Congress passed the Military Lending Act, which put a 36% interest cap on revolving loans for active duty service members and their families.
    Federal credit unions are typically restricted to a 15% APR maximum, but the rate can be increased to protect the safety and soundness of the credit union. The maximum is currently 18% through March 10, 2026.

    Bankers say a rate cap inhibits lenders and reduces access to credit for higher-risk consumers. 
    “Providing an all-in APR is a flawed tool for measuring the true cost of the loan, because to maintain the safety and soundness of the lender and ensure that credit availability is offered to a broad range of consumers, banks have to price their loan products commensurate with a risk for each borrower,” Johnson said. 

    New bill may not apply to existing debt

    For consumers who are already carrying debt, this proposal may not be the lifeline it appears. 
    “If you already have a lot of debt, this legislation probably doesn’t help you,” said Seiberg.
    That’s because the interest rate cap wouldn’t be applied retroactively, he said: “It’s likely to only be on new purchases.”  More