Investing

Nearly 1 in 4 cardholders — 23% — did not redeem any rewards at all in 2024, according to a new survey by Bankrate.
More consumers say rewards can be difficult to redeem or are worth less than they thought, according to the Consumer Financial Protection Bureau.
Now the CFPB is cracking down on what it calls “bait-and-switch” rewards programs.

CFPB cracks down on rewards tactics

About 90% of all credit card spending is on rewards cards. But according to the CFPB, an increasing number of consumers have reported that some rewards are hard to redeem or are not worth as much as they thought. In 2023 alone, complaints involving credit card rewards jumped 70% over pre-pandemic levels. 

“Large credit card issuers too often play a shell game to lure people into high-cost cards, boosting their own profits while denying consumers the rewards they’ve earned,” CFPB Director Rohit Chopra said in a statement. “When credit card issuers promise cashback bonuses or free round-trip airfares, they should actually deliver them.”

According to the Consumer Bankers Association, only a small share of credit card users report problems with rewards: Complaints regarding rewards made up just 2% of all credit card complaints reported to the CFPB since January 2020. 
“The only bait-and-switch that’s happening here is from the CFPB once again misrepresenting its own data,” CBA President and CEO Lindsey Johnson said in a statement.
“As the CFPB’s own research shows, credit cards are — by far — the best tool for the one-fifth of Americans that lack access to credit to begin building their financial lives,” Johnson said.
Consumer complaints about credit card rewards are exceedingly rare, the American Bankers Association also noted.
“Despite widespread evidence that credit card rewards programs are highly popular and deliver tremendous value to tens of millions of U.S. cardholders from all walks of life, Director Chopra has once again chosen not to let facts get in the way of his decision to tarnish a hugely popular consumer product,” Rob Nichols, the ABA’s president and CEO, said in a statement.

Consumers like reward cards

Even with credit card interest rates near an all-time high, when deciding on a new credit card, 83% of cardholders said their final decision comes down to perks, according to a separate report by CardRates.com.
The majority, or 58%, of credit card users polled by CardRates said they preferred cash back over miles or points. But still, not all cardholders used the credit card rewards available to them.
Travel rewards can be more lucrative but are notoriously harder to redeem, Bankrate also found. Only 11% of rewards cardholders redeemed for a free hotel stay, while just 10% redeemed for a free flight, according to Bankrate.
“Failing to redeem your rewards is a major missed opportunity,” said Bankrate’s senior industry analyst Ted Rossman. “While the best rewards can be subjective, the worst reward is getting nothing at all.”

How to make the most of rewards

In the best-case scenario, credit card rewards are “almost like free money,” said Bill Hardekopf, a credit card expert and CEO of BillSaver.com.
But that’s only if you pay your credit card off on time and in full every month. With credit card rates over 20%, on average, the benefits of cash back or other perks are quickly eroded if you carry a balance.
“If you miss a payment or are late on a payment, you get socked with a huge penalty — that interest rate will far outweigh the rewards you are going to get,” Hardekopf said.
When it comes to which reward card to choose, Hardekopf recommends a cash-back card with a low, or no, annual fee. “The best reward you can get is cash back because cash talks — it’s easy to understand and there’s no problem redeeming.”
Subscribe to CNBC on YouTube. More

When asked to choose between a store card or a buy now, pay later plan, 58% of surveyed shoppers prefer store cards, according to a new report by LendingTree.
Interest rates for retail store credit cards are averaging a bit more than 30%.
If you plan to finance your holiday purchases, keep in mind “ownership costs,” experts say.

Filadendron | E+ | Getty Images

High interest rates aren’t deterring many shoppers from store credit cards.
When asked to choose between a store card or a buy now, pay later plan, 58% of surveyed shoppers prefer store cards, according to a new report by LendingTree. The remaining 42% picked BNPL loans.

The site polled 2,040 U.S. adults in September.
That choice “speaks to the fact people may be looking for a little bit longer-term help with their financial situation,” said Matt Schulz, chief credit analyst at LendingTree.
In December, new cards offered by the top 100 retailers had an average annual percentage rate of 32.66%, up from 27.7% in 2022, according to the Consumer Financial Protection Bureau. Many short-term BNPLs do not charge interest, but longer-term loans do, and on the higher end, those rates can be comparable to a store card.
More from Personal Finance:Here’s why some credit card APRs aren’t going downEgg prices may soon ‘flirt with record highs,’ supplier saysBiden’s student loan forgiveness ‘Plan B’ is in its ‘last step,’ expert says
Younger shoppers have been early adopters of BNPL, and that shows in their payment preferences. 

About 59% of Gen Zers and 51% of millennials prefer BNPL over retail store credit cards, Lending Tree found. To compare, 38% of Gen Xers and 22% of baby boomers prefer BNPL.
“Buy now, pay later really started off as a millennial, Gen Z phenomenon,” Schulz said. “Younger Americans really drove a lot of the growth.” 
Whichever payment option you plan to use to finance holiday purchases this year, keep in mind the cost of carrying the debt, experts say.

How store cards and BNPL work

Retail store credit cards and BNPL loans operate differently.
A retail store credit card is a long-term, revolving line of credit that a store offers in conjunction with a bank partner. To entice new users, stores generally offer applicants a discount on their first card purchase, or financing deals. The card may also be tied into the retailer’s loyalty program, sometimes with bonus rewards for cardholders.
A buy-now, pay later loan — issued through a provider the merchant works with — typically breaks up the total cost of a purchase into installment payments over a set period of time. Some providers offer longer repayment periods, too, and charge interest. Users can have multiple purchases with the same BNPL provider at once, but those may be treated as individual loans with their own repayment terms.
With either payment method, make sure to pay off the balance on time — you might face penalties like fees and interest if you don’t stay on track.

A retail credit card can affect your credit history, as the account is reported to the three major credit bureaus: Equifax, Experian and TransUnion.
BNPL has been somewhat “invisible” to credit bureaus in the past, meaning the loan did not show up on users’ credit reports. But AfterPay, Affirm and Klarna are among the providers reporting some BNPL loans to the credit bureaus.
Both payment forms can be attractive for shoppers. Retail store credit cards tend to be easier to qualify for compared to other credit cards, especially as banks have been tightening credit card approval requirements in recent months, Schulz said. 
Over the third quarter of 2024, some banks have tightened their lending standards for credit card loans, lowered their credit limits and increased minimum credit score requirements, according to the Federal Reserve.
“It’s a reaction from the banks to rising delinquencies, rising debt and overall economic uncertainty,” Schulz said.

BNPL can also be relatively easy to apply for and qualify.
“The rise of buy now, pay later is the biggest reason why Americans are opening fewer store cards,” according to Ted Rossman, an industry analyst at Bankrate.

‘Consider the total cost of ownership’

The holiday season is here, a busy time to buy gifts for family and friends. If you find yourself in a situation where a retail store credit card or a BNPL can help stretch your budget, consider the “total cost of ownership,” Rossman said.
“Both of these payment methods can be advantageous depending on how you use them, but could also be a pretty slippery slope into debt and overspending,” he said.
BNPL can be tricky because you can have multiple loans running at the same time, and the costs “can add up,” Rossman said. Make sure to keep track of the pay-later loans you have and are able to withstand the automatic deductions.
If you can’t pay a retail card purchase off at the end of the statement period, any discount, reward or perk that you may get is going to be washed over by the interest you’ll owe on top of the outstanding balance, Schulz said. 
“Paying 30% interest to save 15 or 20% doesn’t make a whole lot of sense financially,” Schulz said. More

The Federal Reserve lowered its benchmark rate by a quarter point, or 25 basis points, at the end of its two-day meeting.
This marks the third rate cut in a row — all together shaving a full percentage point off the federal funds rate since September.
Lower borrowing costs will trickle down to some consumer loans.

The Federal Reserve announced Wednesday that it will lower its benchmark rate by another quarter point, or 25 basis points. This marks the third rate cut in a row — all together shaving a full percentage point off the federal funds rate since September.
For consumers struggling under the weight of high borrowing costs after a string of 11 rate increases between March 2022 and July 2023, this move comes as good news — although it may still be a while before lower rates noticeably affect household budgets.

“Interest rates took the elevator going up in 2022 and 2023 but are taking the stairs coming down,” said Greg McBride, chief financial analyst at Bankrate.com.
More from Personal Finance:The inflation breakdown for November 2024 — in one chartEconomists have ‘really had it wrong’ about recessionTrump tariffs would likely have a cost for consumers
Although many people, overall, are feeling better about their financial situation heading into the new year, nearly 9 in 10 Americans think inflation is still a problem, and 44% think the Fed has done a bad job getting it under control, according to a recent survey by WalletHub.
“Add in talk of widespread tariffs, and you’ve got a recipe for uneasy borrowers,” said John Kiernan, WalletHub’s managing editor.
In the meantime, high interest rates have affected all sorts of consumer borrowing costs, from auto loans to credit cards.

December’s 0.25 percentage point cut will lower the Fed’s overnight borrowing rate to a range of between 4.25% and 4.50%. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates consumers see every day.

From credit cards and mortgage rates to auto loans and savings accounts, here’s a look at how the Fed rate reduction could affect your finances in the year ahead.

Credit cards

Most credit cards have a variable rate, so there’s a direct connection to the Fed’s benchmark. Because of the central bank’s rate hike cycle, the average credit card rate rose from 16.34% in March 2022 to more than 20% today — near an all-time high.
Since the central bank started cutting interest rates, the average credit card interest rate has only edged off extremely high levels. 
“Another rate cut is welcome news at the end of a chaotic year, but it ultimately doesn’t amount to much for those with debt,” said Matt Schulz, LendingTree’s credit analyst. “A quarter-point reduction may knock a dollar or two off your monthly debt payment. It certainly doesn’t change the fact that the best thing cardholders can do in 2025 is to take matters into their own hands when it comes to high interest rates.”
Rather than wait for small annual percentage rate adjustments in the months ahead, the best move for those with credit card debt is to consolidate with a 0% balance transfer card or a lower-interest personal loan, Schulz said.
Otherwise, ask your issuer for a lower rate on your current card — “that works way more often than you’d think,” he said.

Customers shop for groceries at a Costco store on December 11, 2024 in Novato, California. 
Justin Sullivan | Getty Images

Auto loans

Auto loan rates are also still sky-high — the average auto loan rates for used cars are at 13.76%, while new vehicle rates are at 9.01%, according to Cox Automotive.
Since these loans are fixed and won’t adjust with the Fed’s rate cut, “this is another case where taking matters into your own hands is your best move,” Schulz said.
In fact, anyone planning to finance a car may be able to save more than $5,000, on average, by shopping around for the best rate, a 2023 LendingTree report found.

Mortgage rates

Because 15- and 30-year mortgage rates are fixed and mostly tied to Treasury yields and the economy, they are not falling in step with Fed policy. 
As of the latest tally, the average rate for a 30-year, fixed-rate mortgage increased to 6.75% from 6.67% for the week ended Dec. 13, according to Mortgage Bankers Association.
“Mortgage rates have gone up — not down — since the Fed began cutting interest rates in September,” said Bankrate’s McBride.
“With expectations for fewer rate cuts in 2025, long-term bond yields have renewed their move higher, bringing mortgage rates back near 7%,” he said.

But since most people have fixed-rate mortgages, their rate won’t change unless they refinance or sell their current home and buy another property. 
Anyone shopping for a home can still find ways to save.
For example, a $350,000, 30-year fixed mortgage loan with an average rate of 6.6% would cost $56 less each month compared with November’s high of 6.84%, according to Jacob Channel, senior economic analyst at LendingTree.
“This may not seem like a lot of money at first glance, but a discount of about $62 a month translates to savings of $672 a year and $20,160 over the 30-year lifetime of the mortgage,” he said.

Student loans

Federal student loan rates are also fixed, so most borrowers won’t find much relief from rate cuts.
However, if you have a private loan, those loans may be fixed or have a variable rate tied to the Treasury bill or other rates. As the Fed cuts interest rates, the rates on those private student loans will come down over a one- or three-month period, depending on the benchmark, according to higher education expert Mark Kantrowitz.
Still, “a quarter-point interest rate cut would reduce the monthly loan payments by about $1 to $1.25 on a 10-year term, about a 1% reduction in the total loan payments,” Kantrowitz said.
Eventually, borrowers with existing variable-rate private student loans may be able to refinance into a less expensive fixed-rate loan, he said. But refinancing a federal loan into a private student loan will forgo the safety nets that come with federal loans, such as deferments, forbearances, income-driven repayment and loan forgiveness and discharge options.
Additionally, extending the term of the loan means you ultimately will pay more interest on the balance.

Savings rates

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.
As a result of the Fed’s previous rate hikes, top-yielding online savings account rates have made significant moves and are still paying as much as 5% — the most savers have been able to earn in nearly two decades — up from around 1% in 2022, according to Bankrate.
“The prospect of the Fed moving at a slower pace next year is better news for savers than for borrowers,” McBride said. “The most competitive yields on savings accounts and certificates of deposit still handily outpace inflation.”
One-year CDs are now averaging 1.74%, but top-yielding CD rates pay more than 4.5%, according to Bankrate, nearly as good as a high-yield savings account.

Don’t miss these insights from CNBC PRO More

As the calendar turns to 2025, many Americans want to improve their finances in the New Year.
Paying down debt is a top financial goal, one recent survey found.
To successfully get those balances down for good, it helps to shift your priorities, experts say.

Skynesher | E+ | Getty Images

When it comes to financial resolutions for 2025, there’s one goal that often lands on the top of the list — paying down debt, according to a new survey from Bankrate.
That’s as a majority of Americans — 89% — say they have a main financial goal for 2025, the November survey of almost 2,500 adults found.

While paying down debt came in as a top goal, with 21%, other items on Americans’ financial to-do lists include saving more for emergencies, with 12%; getting a higher paying job or additional source of income, 11%; budgeting and spending better, 10%; saving more for retirement and investing more money, each with 8%; saving for non-essential purchases, 6%; and buying a new home, 4%.
Those goals cap off a year that had some financial challenges for consumers. Some prices remain elevated, even as the pace of inflation has subsided. As Americans grapple with higher costs, credit card debt recently climbed to a record $1.17 trillion. The average credit card debt per borrower rose to $6,380 in the third quarter, according to TransUnion.

Lower interest rates may help reduce the costs of holding that debt. The Federal Reserve moved on Wednesday to cut rates for the third time since September, for a total reduction of one percentage point.
Yet the best-qualified credit card borrowers — those with superior credit scores — still have an average rate of 20.35%, down from around 20.79% in August, according to Mark Hamrick, senior economic analyst at Bankrate.
“It could be injurious to personal finances if people accumulated debt that they’re not substantially paying down,” Hamrick said. “It’s prudent and heartening to see that people are identifying debt broadly as something they want to address in the coming year.”

‘The Fed isn’t the cavalry coming to save you’

To pay down credit card balances — as well as other debts from auto loans or other lines of credit — individuals may need to shift their financial priorities.
A majority of Americans admit to having bad financial habits, finds a recent survey from Allianz Life Insurance Company of North America.
That includes 30% who admit to spending too much money on things they don’t need; 28% who don’t save any money; 27% who only save some money; 23% who aren’t paying down debt fast enough; and 21% who spend more than they earn.
For debtors who want to pay their balances down, the best approach is to take matters into their own hands, said Matt Schulz, chief credit analyst at LendingTree.
“Even though the Fed is reducing rates, the Fed isn’t the cavalry coming to save you,” Schulz said.
More from Personal Finance:Why new retirees may need to rethink the 4% ruleThere’s ‘urgency to act’ to get best returns on cash, expert saysSlash your 2024 tax bill with these last-minute moves
Asking your credit card company for a more competitive interest rate on your debt often works, according to Schulz. About 76% of people who asked for that in the past year got their way, LendingTree found.
“It’s absolutely worth a call,” he said.
Moreover, balance holders also may keep an eye out for 0% transfer offers, which can let them lock in a no-interest promotion for a fixed amount of time, although fees may apply. Or they may consider a personal loan to help consolidate their debts for a lower rate.
Even as debtors prioritize those balances, it’s still important to prioritize personal savings, too. Experts generally recommend having at least three to six months’ living expenses set aside in case of an emergency. That way, there’s a cash cushion to turn to in the event of an unexpected car repair or veterinary bill, Shulz said.
Admittedly, by also prioritizing savings, it will take more time to pare down debt balances, he said. But having savings on hand can also help stop the debt cycle for good. More

The price of bitcoin sailed past $100,000 in early December and was still up more than 130% year-to-date, as of Dec. 18.
Some investors now have large bitcoin positions, but could rebalance to better align with their goals, risk tolerance and timeline.
However, you’ll need to consider capital gains taxes when selling from a brokerage or exchange.

Hispanolistic | E+ | Getty Images

Many investors are likely still deciding whether to stay in bitcoin or reduce their profits from the last bull run to new all-time highs.
So, after a strong year for bitcoin, it could be time for investors to weigh rebalancing their portfolio by shifting assets to align with other financial goals, according to financial experts.    

The price of the flagship digital currency sailed past $100,000 in early December and was still up more than 130% year-to-date, as of Dec. 18. 
Some investors now have large bitcoin allocations — and they could have a chance to “take some risk off the table,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York.
More from Personal Finance:Senate may vote on a bill to change certain Social Security rules. What to knowThere’s a higher 401(k) limit for 2025 — why you should update your account nowStudent loan forgiveness opportunities lost to those who refinance, CFPB warns
“The golden rule of ‘never invest more than you’re willing to lose’ comes into play, especially when we’re talking about speculative assets,” said Boneparth, who is also a member of CNBC’s Financial Advisor Council.
Before using bitcoin profits to buy other investments, you may consider using the gains to fund another financial goal, like retiring early or buying a home, he said.  

Decide on your ‘line in the sand’

There’s a different thought process if you want the money to stay invested, Boneparth said.
Typically, advisors pick an asset allocation, or mix of investments, based on a client’s goals, risk tolerance and timeline.
Often, there’s a “line in the sand” for the maximum percentages of a single asset, he said.  
Typically, Boneparth uses a maximum of 20% of a client’s “investable net worth,” which doesn’t include a home, before he starts trimming allocations of one holding.

‘There’s no free lunch’ with taxes

When selling crypto in a brokerage account or exchange, you could owe taxes on growth, depending on how long you’ve owned the asset, Boneparth said. 
“There’s no free lunch,” he said. “Just because it’s crypto doesn’t mean you’re exempt from paying taxes on your gains.”
You’ll owe regular income taxes on profits from crypto owned for one year or less. But you’ll trigger long-term capital gains — taxed at 0%, 15% or 20% — on profitable assets owned for more than one year. 

However, you could harvest crypto gains tax-free if you’re in the 0% long-term capital gains bracket for 2024, experts say.
For 2024, you’re eligible for the 0% rate with taxable income of $47,025 or less for single filers and $94,050 or less for married couples filing jointly. These amounts include any gains from crypto sales.
“That’s a very effective strategy if you’re in that bracket,” Andrew Gordon, a tax attorney, certified public accountant and president of Gordon Law Group, previously told CNBC.
The 0% capital gains bracket may be bigger than you expect because it’s based on taxable income, which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted gross income. More

The Senate is poised to vote to eliminate certain Social Security rules that limit benefits for some public workers.
Here are answers to some common questions about what the changes would mean.

Blank Social Security checks are run through a printer at the U.S. Treasury printing facility February 11, 2005 in Philadelphia, Pennsylvania.
William Thomas Cain | Getty Images

During the Senate’s final days of business in this congressional session, it is expected to vote on a bill that would change certain Social Security rules.
The bill — the Social Security Fairness Act — would repeal provisions that reduce Social Security benefits for some individuals who also receive pension income from jobs in the public sector.

On Nov. 12, the House of Representatives passed the bill with the support of members of both sides of the aisle.
Now, it is up to the Senate to pass the bill amid a packed schedule that also includes a deadline to avoid a federal government shutdown.

What Social Security rules would be repealed?

The Social Security Fairness Act would eliminate certain rules affecting some public pensioners — the Windfall Elimination Provision, or WEP, and the Government Pension Offset, or GPO.
The WEP reduces Social Security benefit payments for individuals who also receive income from noncovered pensions — payments from employers who did not withhold Social Security taxes from their salaries.
The GPO adjusts Social Security spousal or widow(er) benefits for people who receive income from noncovered pensions.

Both rules have been in effect for decades.
The WEP was enacted in 1983 to make it so workers with noncovered pensions were not reimbursed as though they were long-time low-wage earners. Social Security has a progressive benefit formula, which means low earners receive a higher income replacement rate.
The Government Pension Offset was established in 1977 and reduces Social Security benefits for spouses and surviving spouses who receive a pension based on their own government work that wasn’t subject to Social Security payroll taxes and Social Security spousal benefits based on their spouse’s work record.

Who is — and isn’t — affected by the rules?

The WEP affected 2.01 million individuals — or 3.1% of all Social Security beneficiaries — as of 2022, according to the Social Security Administration.
The GPO applied to almost 735,000 beneficiaries as of 2022, according to the Social Security Administration. That rule affects about 1% of all beneficiaries, according to previous estimates from the Congressional Research Service.  
More from Personal Finance:Why new retirees may need to rethink the 4% ruleThere’s ‘urgency to act’ to get best returns on cash, expert saysSlash your 2024 tax bill with these last-minute moves
To be sure, the WEP and GPO do not apply to everyone.
Specifically, the WEP doesn’t affect beneficiaries who have 30 or more years of substantial earnings under Social Security. The rule also doesn’t apply to individuals who fall under other specific categories, according to the Social Security Administration: federal workers who were first hired after Dec. 31, 1983; employees of nonprofit organizations that were exempt from Social Security coverage as of Dec. 31, 1983; individuals who only receive pension income for railroad employment; and individuals whose only work that didn’t include Social Security taxes was before 1957.
The GPO generally doesn’t affect spouses or surviving spouses who receive government pensions not based on their earnings or who are federal, state or local government employees whose pension is from employment where they paid Social Security taxes.
The Social Security Administration provides a tool on its website to help estimate how a pension may affect Social Security benefits.

What are the chances the bill will pass?

Last week, Senate Majority Leader Chuck Schumer, D-N.Y., said he would put the Social Security Fairness Act up for a vote.
The House bill was introduced Reps. Abigail Spanberger, D-Va., and Garret Graves, R-La. The Senate version was co-led by Sens. Sherrod Brown, D-Ohio, and Susan Collins, R-Maine.
Schumer has since filed a notice that he intends to call a cloture vote on the motion to proceed this week. If the cloture vote to proceed has the necessary 60 votes, the rest of the process may go “fairly quickly,” said Maria Freese, senior legislative representative at the National Committee to Preserve Social Security and Medicare.
“The big vote is usually the motion to proceed,” Freese said. “If they can get 60 for that, then they should be in pretty good shape to get it done this year.”
A Senate version of the bill has 62 co-sponsors. However, there is no guarantee the bill will get 62 votes, Freese said. Two co-sponsors — Sens. Bob Menendez, D-N.J., and Dianne Feinstein, D-Calif. — are no longer in office. However, their successors — Sens. Andy Kim, D-N.J., and Adam Schiff, D-Calif. — both supported the bill when they were House members.
Yet another co-sponsor — Vice President-elect and current Sen. JD Vance, R-Ohio — may not be present to vote, Freese said.
Once a motion to proceed passes, amendments to the bill could be proposed if Senate leadership allows for it, said Emerson Sprick, associate director of economic policy at the Bipartisan Policy Center. Those amendments could seek to replace a full repeal of the rules with a different fix or to offset the cost of the benefit increases.
“It has not been the ideal process for a significant change to Social Security to go through,” Sprick said.
The co-sponsors of the House bill had to file a discharge petition to bring it to the floor for a vote, which means it didn’t go through committees. Similarly, lawmakers in the Senate have not had the opportunity to hear the drawbacks of a full repeal of the rules and the alternatives, Sprick said.
“Full repeal makes the program less fair and more financially insecure,” Sprick said.

How soon would affected beneficiaries see changes in their benefit checks?

The change for nearly 3 million Social Security beneficiaries may take time to implement, according to Freese.
The Social Security Administration, which is already short-staffed, may lose another 2,000 employees if it does not get the additional funding it requested in the continuing resolution Congress is also working to finalize, she said.
Moreover, it would take time for the agency’s staff to reprogram its computers and then begin sending out the new benefit payment amounts.

If the change is not put into effect immediately, the Social Security Administration will likely retroactively send catch-up checks or deposits to make up for the difference, Freese said.

How will the bill affect other Social Security reform?

The Social Security Fairness Act has received strong support from groups representing firefighters, police, teachers and other government employees who would be affected by the repeal of these rules.
However, policy experts have generally voiced opposition to the change, since nixing the rules would alter the progressive nature of the program.
It would also move Social Security’s projected trust fund depletion date to six months sooner, while costing about $196 billion over a decade, according to the Committee for a Responsible Federal Budget.
Even without this change, the trust fund the program relies on to pay retirement benefits may run out in nine years, the program’s trustees have projected.
“We are racing to our own fiscal demise,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement criticizing the efforts to repeal the WEP and GPO rules.
If the bill passes, it would also affect future reform efforts. But the problems Social Security now faces are bigger than just paying for the WEP and GPO repeal, Freese said.
“The closer it gets to the depletion date, the harder it gets, because you end up having less flexibility in terms of what you can do for the program in order to make it solvent,” Freese said. “You have less time to implement the changes.”

Don’t miss these insights from CNBC PRO More

Four out of the 10 “housing hot spots” for 2025 are located in the South, according to the National Association of Realtors.
While the NAR did not rank the hot spots, the metro area comprising Greenville and Anderson, South Carolina, stands out, according to the report.

Eyecrave Productions | E+ | Getty Images

Buying a house is not easy or cheap, especially in today’s market. 
But while it’s too soon to tell whether the housing market is going to favor buyers or sellers next year, some areas will offer more favorable market conditions than others, according to a new report by the National Association of Realtors.

The NAR identified 10 top metro areas as “housing hot spots” for 2025 based on a variety of economic, demographic and housing factors. 
More from Personal Finance:Economy faces ‘some potential storms’ in 2025What to do if you have ‘unverifiable income’What the rise of homeowners associations means for buyers
“Important factors common among the top performing markets in 2025 include available inventory at affordable price points, a better chance of unlocking low mortgage rates, higher income growth for young adults and net migration into specific metro areas,” Lawrence Yun, NAR chief economist and senior vice president of research, said in a statement.

The top 10 ‘housing hot spots’

“2025 is expected to be a year of more opportunities” for both homebuyers and sellers, said Nadia Evangelou, senior economist and director of research at the NAR. 
Four out of the NAR’s 10 “hot spots” are located in the South — although unlike those on other lists, none are in Florida. Three of the list’s hot spots are in the Midwest.

Here’s the full NAR list:

Boston-Cambridge-Newton, Massachusetts-New Hampshire
Charlotte-Concord-Gastonia, North Carolina-South Carolina
Grand Rapids-Kentwood, Michigan
Greenville-Anderson, South Carolina
Hartford-East-Hartford-Middletown, Connecticut
Indianapolis-Carmel-Anderson, Indiana
Kansas City, Missouri-Kansas
Knoxville, Tennessee
Phoenix-Mesa-Chandler, Arizona
San Antonio-New Braunfels, Texas

While the NAR did not rank the hot spots, the metro area comprising Greenville and Anderson, South Carolina, stands out, according to the report.
Factors such as a positive financing environment, strong migration gains, better affordability for first-time buyers, strong job creation and home price appreciation highlight the area, said Evangelou. About 42% of properties in the area are starter homes.

‘Unprecedented times’

While “a lot of these areas have been growing in recent years,” it’s important to remember that “we could potentially be walking into some pretty unprecedented times in 2025 and beyond,” said Jacob Channel, senior economist at LendingTree.
President-elect Donald Trump has been vocal about enacting ideas such as mass deportations and tariffs on all imports, as well as ending the conservatorship of Fannie Mae and Freddie Mac, he said. 
If enacted, such ideas could have domino effects into housing affordability. Immigrants make up about a third, or 32.5%, of construction tradesmen, according to an analysis of 2023 Census data by the National Association of Home Builders.
Change in immigration policy could affect the sector’s labor force. What’s more, with a shortage of workers, wages might go up and be passed on to buyers through higher home prices, experts say. More

For 2025, you can defer up to $23,500 into 401(k) plans, up from $23,000 in 2024, and workers age 50 and older can save an extra $7,500.
But starting next year, the catch-up contribution for workers ages 60 to 63 will rise to $11,250, which brings their total deferral limit to $34,750.
Experts suggest boosting 401(k) contributions now to maximize higher limits for 2025.

Fcafotodigital | E+ | Getty Images

If you’re eager to save more for retirement, it’s not too early to boost 401(k) plan contributions for 2025, financial experts say.
For 2025, you can defer up to $23,500 into 401(k) plans, up from $23,000 in 2024. For workers age 50 and older, the 401(k) catch-up contribution remains at $7,500 for 2025.

But there is a “super funding” opportunity for 401(k) catch-up contributions for a subset of savers, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
More from Personal Finance:Why new retirees may need to rethink the 4% ruleThere’s ‘urgency to act’ to get best returns on cash, expert saysSlash your 2024 tax bill with these last-minute moves
Enacted via Secure 2.0, the 2025 catch-up contribution limit will increase to $11,250 for employees ages 60 to 63, which brings the 401(k) deferral total to $34,750 for these investors.  
“Probably no one knows about the extra increase,” and it could take time before the general public is aware of the new opportunity, said Boston-area CFP and enrolled agent Catherine Valega, founder of Green Bee Advisory.
However, boosting contributions later could still be beneficial for savers in this age range, experts say.

Increase 401(k) deferrals for 2025 now

If you plan to adjust 401(k) deferrals for 2025, “now is the time to be doing it,” Valega said.
Typically, it takes a couple of pay periods for 401(k) contribution changes to go into effect, and you could miss some higher contributions in January by waiting, she said.
If you miss bigger deposits early, you can still max out your plan by boosting deferrals later in the year. But higher percentages can “impact cash flow more than people are typically willing to do,” Valega said. 

Lucas said he updated next year’s 401(k) contributions for his clients in early December.
“It’s already set for next year,” he said. “We’re on pace, starting with the first payroll.”

Of course, many workers cannot afford to max out their 401(k) plan every year.Roughly 14% of employees maxed out 401(k) plans in 2023, according to Vanguard’s 2024 How America Saves report, based on data from 1,500 qualified plans and nearly five million participants. More