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The Black Lives Matter movement has helped upend the idea of representation in the art market.
More Black artists are showing in galleries and museums, which has translated into higher sales.
“There’s a lot more support for Black artists,” one painter says.

People walk past a mural of George Floyd by the Cup Foods where he was killed by Minneapolis Police Officer Derek Chauvin in Minneapolis.
Sopa Images | Lightrocket | Getty Images

When George Floyd was murdered by police in 2020, the event brought a “scary” time for the Minneapolis neighborhood where it occurred.
“Everything was on fire,” said Lamar Peterson, a contemporary art painter who lives less than a mile from the scene.

“You couldn’t have your windows open because of the smoke,” Peterson said. “It just felt like it was Armageddon, the end of times.”
The streets were filled both with protesters and also looters, Peterson remembers.
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For Peterson, it was a personally difficult for another reason: Due to the lockdown at the time, he lost access to his studio based in the University of Minnesota building where he teaches.
Peterson, 49, an oil painter, was unable to do his work at home in a closed space.

“That was really hard for me,” Peterson said. “My outlet is my artwork.”
Today, Peterson has recently wrapped up his latest show at the Fredericks & Freiser art gallery in the Chelsea neighborhood of New York.
The works are the opposite of the dark time he lived through in 2020, with bright garden landscapes and Black figures that draw inspiration from the 1970s and 80s cartoons that Peterson grew up on.

Arrows pointing outwards

The Proud Gardener, Bouquet, 2022, by Lamar Peterson Oil on canvas 60 x 72 inches
Cary Whittier; Courtesy Fredericks & Freiser, NY

The paintings are about appreciating the fleeting beauty in life, he said, inspired by his own love of gardening and his father’s recent death.
“Flowers can be a metaphor for human life, too,” Peterson said. “There’s a beginning and an end.”
The show, titled “Proud Gardener,” sold “very well” and is one of Peterson’s most successful shows to date, according to Andrew Freiser, a co-owner of the gallery. Prices for the works ranged from $15,000 to $60,000, depending on size.
Peterson, who started showing his work in the early 2000s, has noticed a shift in the art market.
“There’s a lot more support for Black artists that kind of came out of George Floyd’s murder and institutions realizing that they need to do more,” Peterson said.

‘Absolutely genuine’ rise in interest in Black artists

Artist Kehinde Wiley, left, shakes hands with Barack Obama at the unveiling of his portrait of the former president at the Smithsonian’s National Portrait Gallery in Washington, D.C., on Feb. 12, 2018.
Saul Loeb | Afp | Getty Images

The market for work by Black American artists grew by nearly 400% between 2008 and 2021, according to a recent report from art market website ArtNet.
However, art in that category represented just 1.9%, or $3.6 billion, of global auction sales between 2008 and mid-2022, the report found.
The growth has not been consistent, according to ArtNet. Acquisitions of work by Black American artists peaked in 2015, two years after the start of the Black Lives Matter movement.
Still, there continues to be a higher interest in African American artists that is “absolutely genuine,” according to Sophie Neuendorf, vice president at ArtNet.
“Museums face a lot of criticism for showing primarily male white artists,” Neuendorf said.

There are a lot of artists that I think have risen to a level of prominence that have really placed them at the center of the contemporary art narrative.

Drew Watson
head of art services at Bank of America

“There’s been a real effort to consciously show more exhibitions of female, as well as African American artists,” she said.
That “sea change” in recent years has prompted museum shows of artists including Kerry James Marshall, Michael Armitage, Lynette Yiadom-Boakye and Jennifer Packer, noted Lucius Elliott, head of The Now Evening Auction at Sotheby’s, which focuses on contemporary works.
“My impression is there are vastly increased number of solo shows and group shows dedicated to Black artists in London, in Paris, in New York, across the United States,” Elliott said.
“Something fundamental has shifted here, and that’s driven I think more than anything by a desire to correct or redress a historical oversight, both in the market, but also for institutional representation,” Elliott said.
Other Black artists have gained importance, including Kehinde Wiley, who painted a portrait of former President Barack Obama, and Hank Willis Thomas, who sculpted the statue “The Embrace,” of Martin Luther King, Jr., and Coretta Scott King that was recently unveiled in Boston.

“There are a lot of artists that I think have risen to a level of prominence that have really placed them at the center of the contemporary art narrative,” said Drew Watson, head of art services at Bank of America.
Works from established artists like Kerry James Marshall that depict Black figures are influencing the work of new artists and creating a lineage, Elliott noted.
“These are not images of degradation, but they’re images of dignity,” Elliott said.
Painter Xavier Daniels’ most recent show titled “Cry Like a Man” features portraits of Black men with vivid colors like purple, blue and white, meant to convey royalty, freedom and purity.

Prices for the works at the Black-owned Richard Beavers gallery in New York’s SoHo neighborhood ranged from between $30,000 to $42,000.
The male portraits are inspired by other Black men with whom Daniels, 42, had either worked during his 13-year career as a firefighter or been a student at an all-male predominantly Black college, he said.
The works in the recent show also touch on the mental health struggle Black men go through, with portions of some of the faces missing to reflect how negative stereotypes may lead them to not feel whole.
At the same time, the figures are empowered and free to be themselves, Daniels said.
“I’m just taking our experiences and creating art and a language I feel would help other Black males feel great about who they are,” he said.

Tips for investing in art
If you think you may want to invest in art, experts have some tips for getting started.

Look before you buy: Before you purchase any art, it is a good idea to take your time, go to galleries in person, see a lot of works, according to Freiser, the co-owner of the namesake Chelsea gallery. Ideally, you should look over at least several show cycles to decide what you like, he said.”There’s no way to look at art over a period of time without having your eye develop,” Freiser said. Bank of America’s Watson said he has met collectors who waited five years before making their first art purchase, which allowed them to train their eye and develop relationships with dealers and auction houses.”When that time does come and you are ready to take the plunge, you’ve done your homework,” Watson said.
Be realistic about appreciation: At Bank of America, art is not considered a pure investment, though it is an asset class, according to Watson. As such, the asset class wouldn’t be subject to quarterly reviews, like stocks and bonds, he said. It also comes with greater transaction costs, specific tax treatment and costs to conserve it.”When you think about it, it’s actually a cash flow negative asset,” Watson said. Whether or not a piece becomes more valuable varies on a case-by-case basis.”If you’re buying from an artist who’s up and coming, and you see that pop, it can certainly happen,” said Jocelyn D. Wright, a certified financial planner and managing partner at PF Wealth Management Group in Jenkintown, Pennsylvania.
Buy what you like: “My advice would be to always collect for passion, but with an investment view,” said Neuendorf, the ArtNet VP. If you’re going to display the work in your home, you want to be sure you like it, while also thinking of it as an investment, according to Wright. Also be sure to find out the artists’ stories when acquiring new pieces, she said.
Adjust your financial plan: Once you make a purchase, be sure to get it appraised, Wright said. Add the work to your homeowner’s insurance policy, or consider a separate policy to protect its value, she said. Also be sure to budget for other costs, like framing or other features that may help protect the work.Keep in mind that art investments tend to be illiquid. If you try to sell a work quickly, you may not get the full value, Wright noted. “It would certainly be the item of last resort to try to liquidate,” she said.
Cultivate relationships: Art dealers are looking for buyers who are going to be on the artist’s team, according to Freiser. Being open to lending the working for exhibits and acquiring other work from the artist are among the qualities sellers look for, he said.”We’re looking for a smart collector who’s interested in putting a collection over a period of time that brings value to the art as much as the art brings value to them,” Freiser said. –L.K.

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The average interest rate on typical 30-year mortgages has stayed between 6% and 7% for the last several months, roughly double what it was at the end of 2021 and early 2022.
The median home price in January was $383,000, which is about 1.5% higher than a year earlier.
Here’s what to know about how your credit score affects the interest rate you can qualify for.

Phiromya Intawongpan | Istock | Getty Images

Anyone who’s exploring homeownership may know that rising interest rates and elevated home prices are making that goal challenging.
The average rate on a typical 30-year, fixed-rate mortgage has been zigzagging between 6% and 7% for the last several months — down from above 7% in early November but roughly double the 3.3% average rate heading into 2022, according to Mortgage News Daily.

Yet the interest rate that any particular buyer is able to qualify for depends at least partly on their credit score — meaning you have some control over whether you’re able to get the best available rate, experts say. And the difference that a good or excellent score makes in terms of monthly payments — and total interest paid while you hold the mortgage — can be significant.
“The score impacts practically everything: loan approval, interest rate, monthly mortgage insurance premiums … and ultimately their payment,” said Al Bingham, a credit expert and mortgage loan officer with Momentum Loans.
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The median home price in January was about $383,000, according to Redfin. Although prices have been sliding since mid-2022, that amount is still 1.5% higher than a year earlier. In January 2020, the median was below $300,000.
While you may be able to negotiate on the price of the house to bring the overall cost of homeownership down, it’s also worth making sure you go into the process with as high a credit score as possible.

Lenders check three scores but use one number

Although things like steady income, length of employment, stable housing and other aspects of your financial life are important to lenders, your credit score gives them additional information.
The three-digit number — which ranges from 300 to 850 — feeds into a lender’s calculation of how risky a borrower you may be. For example, if you’ve always made your debt payments on time and you have a low credit utilization (how much you owe relative to your available credit), your score will benefit.
And the higher the number, the less of a risk you are to lenders — and therefore the better terms you can get on a loan.

Lenders check a homebuyer’s credit report and score at each of the three large credit-reporting firms: Equifax, Experian and TransUnion. For mortgages, the score provided by those companies is typically a specific one developed by FICO, because it is the score currently relied on by Fannie Mae and Freddie Mac, the largest purchasers of home mortgages on the secondary market. (In the coming years, this reliance on one score is poised to change.)
However, because that particular FICO score can differ among the three credit-reporting firms due to differences in what is reported to them and the timing, mortgage lenders use the middle number to inform their decision.

The higher your score, the lower the interest rate you’ll be charged. For illustration only: On a $300,000, fixed-rate 30-year mortgage, the average rate is 6.41% (as of Thursday) if your credit score is in the 760-to-850 range, according to FICO.
This would make your monthly principal and interest payment $1,878. On top of this amount typically would be property taxes, homeowners insurance and, if your down payment is less than 20% of the home’s sale price, private mortgage insurance.
In contrast, if your score were to fall between 620 and 639, the average rate available is 7.99%. That would mean a payment of $2,201 (again, for principal and interest only).

Most of your monthly payment goes to interest at first

Because of how loans are structured, most of your monthly payment would go to interest at the beginning of the loan instead of toward the principal.
For example, if you started paying on that $300,000 mortgage next month with a rate of 6.41%, in two years you would have paid $39,600 in interest and just $7,438 toward the principal, according to Bankrate’s mortgage calculator.
In comparison, a rate of 7.99% would mean that in two years, you would have paid $49,570 in interest and $5,455 toward the principal, according to the Bankrate calculator.

There are ways to boost your credit score

If you want to get your score up before applying for a mortgage, there are some key things you can do.
“Improving your credit score really comes down to the fundamentals,” said Ted Rossman, senior industry analyst for Bankrate. “You should aim to pay your bills on time, keep your debts low and show that you can successfully manage a variety of types of credit over the long haul.”
And, he said, there are some things you can do to improve your score fairly quickly.

“My favorite is to lower your credit utilization ratio,” Rossman said, referring to credit card balances. “This resets every month and it typically reflects statement balances, so you might have a high utilization ratio even if you pay your credit cards in full to avoid interest.”
You may want to consider making an extra mid-month payment or asking for a higher credit limit to bring the ratio down, he said.
“It’s often recommended to keep [the ratio] below 30%, although below 10% is even better, and your credit score should improve as long as you bring it down,” Rossman said.
He also recommends checking your credit report — which you can do for free at annualcreditreport.com — before applying for a mortgage. “Look for any errors and correct them as soon as possible,” he said.

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An employee with a face mask and shield cleans the door of Bath & Body Works store on July 21, 2020 in Pembroke Pines, Florida.
Johnny Louis | Getty Images News | Getty Images

Company: Bath & Body Works (BBWI)

Business: Bath & Body Works operates a specialty retailer of home fragrance, body care, soaps and sanitizer products. In August 2021, Bath & Body Works (formerly known as L Brands) completed the separation of its Victoria’s Secret business. 
Stock Market Value: $9.68B ($42.42 per share)

Activist: Third Point

Percentage Ownership:  6.02%
Average Cost: $38.16
Activist Commentary: Third Point is a multi-strategy hedge fund founded by Dan Loeb. The fund selectively takes activist positions. Loeb is one of the true pioneers in the field of shareholder activism and one of a handful of activists who shaped what has become modern-day shareholder activism. He popularized the poison-pen letter at a time when the measure was often necessary. As times have changed, he has transitioned from the poison pen to the power of the argument. Third Point has amicably obtained board representation at companies like Baxter and Disney, but also will not hesitate to launch a proxy fight if the firm is being ignored. 

What’s Happening?

Third Point initially filed a 13D on Bath & Body Works (“BBWI”) on Dec. 8, 2022, and expressed its concern with the company’s executive compensation structure, its financial discipline, investor communication and board composition. On Feb. 22, Third Point sent a letter to BBWI’s board announcing that it intends to nominate a slate of director candidates for election. Third Point believes that additional oversight is required on the board when it comes to corporate governance, executive compensation and shareholder rights.

Behind the Scenes

Last May, BBWI’s CEO Andrew Meslow stepped down from his position, citing health reasons. The board, chaired by Sarah Nash, named her as interim CEO. In its announcement, the company stated that Nash currently served as the CEO of privately held Novagard Solutions, a company that manufactures silicone coatings and sealants. As part of this appointment, BBWI agreed to increase Nash’s annual compensation as chair of the company to $1,000,000 from $700,000 during the time she served as interim CEO. Additionally, the company agreed to pay her an annual base salary of $1,350,000 and a short-term performance incentive compensation target of 190% of her base salary for her work as interim CEO. The situation became egregious when the board, in addition, awarded her $18 million of restricted stock units on March 11, 2022. She would receive this $18 million regardless of how long she served as interim CEO. Ultimately, she served as interim CEO for a full seven months for the $18 million.

Would this have happened if an activist were on the board? We don’t think so. As an example, in April 2019, ABB chairman Peter Voser stepped in as interim CEO of ABB. He did not receive any increase to his compensation as chairman and he received the same salary and short-term incentives as the prior CEO and no additional long-term incentive grants or benefits, except those legally required. He served as interim CEO for 11 months and received total compensation of $4.2 million, which was $3.3 million less than the prior CEO and $1.7 million less than the permanent CEO succeeding him. ABB was a $50 billion company at the time. BBWI is a roughly $10 billion company. Further, Voser did not have another full-time job back then. For the $4.2 million, he agreed to devote his full attention to ABB. One other thing – Lars Förberg, co-founder and managing partner of activist fund Cevian Capital was on the board of ABB at the time.

Third Point also takes issue with the fact that the BBWI board does not designate Nash as an executive chair even though she is receiving $18 million in stock grants vesting over the next three years. Third Point believes that $6 million of compensation per year renders a director non-independent. We would tend to agree with that. Let’s look at another example. Richard Dreiling is designated as the executive chair of Dollar Tree because he is paid a salary of $1 million per year and has stock options to acquire 2.25 million shares of stock at the company’s all-time highest closing price, vesting over five years. Before negotiating that deal, the board reached out to shareholders owning more than 50% of their stock. The dominant theme from that outreach was that the company should do whatever was necessary to secure Dreiling’s services as the company’s top executive for a multi-year period. This is just good corporate governance. Having previously grown Dollar General from a $4.5 billion company to a $25 billion company in seven years as its CEO, Dreiling was imminently qualified for this position. He also did not have another full-time position, and Dollar Tree is a $30 billion company. Finally, Paul Hilal, founder and CEO of activist investor Mantle Ridge was on the board, brought on Dreiling and led the board in structuring and negotiating this entire arrangement.
In contrast, the BBWI board did not appear to reach out to shareholders, did not have an activist or any shareholder representative on the board and seemed to enter an “arms-length” negotiation between Nash and the board she leads. That is how you reach an $18 million payment for seven months of work while holding on to your full-time job. So, Third Point is now going to make a books-and-records request under Delaware law to assess the information the board relied on to justify this payout. My guess is that the support for this decision will be underwhelming.
The Nash-led BBWI board is now doing whatever it can to protect itself from having a shareholder representative on the board. And when I say, “whatever it can,” I mean the very least the board thinks it has to do to win. We often see this in activist campaigns at companies with inexperienced and/or entrenched boards. In this case, the board is “refreshing” its membership by adding two new directors to the 12-person board. This allows the board to continue with business as usual, while at the same time enabling it to go before Institutional Shareholder Services and argue that there is no need for a Third Point representative on the board because it has been refreshed. However, when a board has egregious corporate governance practices, its members are the last people you want to appoint new directors. A board like this will need a lot more refreshment than just two additional directors.
The company may also argue that it received an approval vote of over 95% on its most recent say-on-pay proposal in 2022. This vote was entirely focused on 2021 pay and did not include Sarah Nash as a named executive officer. Furthermore, ISS recommended voting “for” on say on pay, but also said that the $18 million Nash award and her overall compensation as interim CEO will be analyzed next year.
Third Point’s Loeb popularized the poison-pen letter at a time when it was needed. As times have changed, he has transitioned from the poison pen to the power of the argument. Third Point’s letter to BBWI is evidence of that. Third Point has amicably obtained board representation at companies like Baxter and Disney, but the firm will not hesitate to launch a proxy fight if it isn’t being heeded. Often the difference between amicable activism and confrontational activism is the response of the company. It is up to the company as to how adversarial this engagement gets. It is often difficult in activist campaigns to identify who is wearing the black hat and who is wearing the white hat. In this situation, it seems obvious. Large institutional shareholders and ISS will not condone egregious corporate governance. If this goes the distance, we believe Third Point will show the BBWI board how powerful a good argument is.
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.

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Some Treasury bills, or T-bills, are now paying 5% after a series of interest rate hikes from the Federal Reserve. 
You can buy T-bills through TreasuryDirect, a website managed by the U.S. Treasury Department, or a brokerage account.
However, there are a few things to know about each purchase option, financial experts say.

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With some Treasury bills now offering 5%, the assets have become more appealing to investors. But there are a few things to know about the purchase process, experts say.
Backed by the U.S. government, Treasury bills, or T-bills, are nearly risk-free, with terms of four weeks to 52 weeks. You receive T-bill interest at maturity, which is exempt from state and local taxes.  

After a series of rate hikes from the Federal Reserve, T-bills have become a competitive option for cash, with some T-bills paying more than 5%, as of Feb. 24.
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However, there’s not a direct rate comparison with other products because T-bills are typically sold at a discount, with the full value received at maturity, explained Jeremy Keil, a certified financial planner with Keil Financial Partners in Milwaukee.
For example, let’s say you purchase $1,000 of one-year T-bills at a 4% discount, with a $960 purchase price. To calculate your coupon rate (4.16%), you take your $1,000 maturity and subtract the $960 purchase price before dividing the difference by $960.   

Fortunately, you’ll see the “true yield” or “bank equivalent yield” when buying T-bills through TreasuryDirect, a website managed by the U.S. Department of the Treasury, or your brokerage account, Keil said.

How to buy T-bills through TreasuryDirect

If you already have a TreasuryDirect account — say, because you’ve purchased Series I bonds — it’s relatively easy to buy T-bills, according to Keil, who detailed the process on his website.
After logging into your account, you can pick T-bills based on term and auction date, which determines the discount rate for each issue.
“You don’t really know truly what the rate is going to be until the auction hits,” Keil said. The process involves institutions bidding against one another, with no action required from everyday investors. 

How to buy T-bills through TreasuryDirect
1. Log in to your TreasuryDirect account.
2. Click “BuyDirect” in top navigation bar.
3. Choose “Bills” under “Marketable Securities.”
4. Pick your term, auction date, purchase amount and reinvestment (optional).

After the auction, “you get the exact same rate as the Goldman Sachs of the world,” with TreasuryDirect issuing T-bills a few days later, he said.
There is one downside, however. If you want to sell T-bills before maturity, you must hold the asset in TreasuryDirect for at least 45 days before transferring it to your brokerage account. There are more details about the process here.

There’s more liquidity through brokerage accounts

One way to avoid liquidity issues is by purchasing T-bills through your brokerage account, rather than using TreasuryDirect.
Keil said the “biggest benefit” of using a brokerage account is instant access to T-bills and immediately knowing your yield to maturity. The trade-off is you’ll probably give up around 0.1% yield or lower, he said.

George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts, also suggests buying T-bills outside of TreasuryDirect to avoid liquidity issues.
For example, there are low-fee exchange-traded funds — available through brokerage accounts — that allow investors to buy and sell T-bills before the term ends, he said.
“The fees pose a small drag on the interest,” Gagliardi said, but the ease of purchase and ability to sell before maturity “may override the small penalty in interest rates” for many investors.

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Higher than expected inflation for January means consumers can price growth to stay higher than average this year.
The Federal Reserve will likely continue to raise interest rates.
For households, stubbornly higher prices and uneven wage growth will be challenges.

Shoppers look at items displayed at a grocery store in Washington, D.C., on Feb. 15, 2023.
Stefani Reynolds | AFP | Getty Images

A new U.S. government reading showing persistent high inflation rattled Wall Street on Friday.
Consumers can expect the rate of price growth will likely stay higher than average through 2023.

“Inflation is going to come down gradually, if the Fed conducts policy the way it says it intends to,” said William Luther, director of the American Institute for Economic Research’s Sound Money Project.
“We’re looking at higher than normal price increases, certainly through 2023 and probably through much of 2024, as well,” Luther said.
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The Federal Reserve’s preferred measure for inflation, the personal consumption expenditures price index, showed headline inflation rose 5.4% from a year ago as of January and 0.6% for the month. Core inflation excluding volatile food and energy prices increased 4.7% and 0.6% for the month.
Declines in inflation that have happened since June actually reversed in January.

“It’s possible that this is just a blip, that we had more price increases in January and fewer price increases in December,” Luther said.

Earlier this month, the consumer price index, a separate government measure, also showed higher than expected inflation for January, with a 6.4% gain over 12 months and a 0.5% increase for the month.
While the inflation rate is poised to subside this year, “it will not be a straight line,” Raymond James chief economist Eugenio Aleman told CNBC.com at the time.
The Federal Reserve is tasked with getting inflation under control, while trying to avoid a deep economic recession.

What the latest inflation measure shows

The personal consumption expenditures price index, or PCEPI, is the central bank’s preferred measure as it seeks to bring inflation down to a 2% target.
There are two reasons why the PCEPI may be a better measure than the CPI, according to Luther.
First, the PCEPI measures all consumption expenditures, including those that are not coming directly out of consumers’ discretionary income, such as those made on their behalf by the government or employers.
“It puts more accurate weights on the categories of expenditures that are being made in the economy by consumers,” Luther said.

We’re looking at higher than normal price increases, certainly through 2023 and probably through much of 2024, as well.

William Luther
director of the American Institute for Economic Research’s Sound Money Project

The CPI, on the other hand, only looks at a basket of goods purchased from individuals’ discretionary incomes. Moreover, the basket of goods the CPI tracks is updated every year, while the PCEPI gets updated each month.
That really matters in cases where you have some individual prices that are changing a lot, according to Luther.

More interest rate hikes ‘almost a certainty’

The Federal Reserve has undertaken a series of interest rate hikes to tamp down inflation.
Based on Friday’s data, it’s “almost a certainty” the central bank will raise rates by 25 basis points in March, and maybe even higher, Luther said.
“If we continue getting these high inflation readings, it will have little choice [but] to go even further,” Luther said.

Prices will not come down

Organic eggs were priced at more than $11 per dozen at a store in Walnut Creek, California, on Feb. 10, 2023.
Smith Collection/gado | Archive Photos | Getty Images

As the Federal Reserve brings inflation down to a 2% target, prices will still continue to grow, albeit at a lower rate, Luther noted.
However, prices that have risen during high inflation will not return to where they were before.
A period of below 2% inflation would be needed to see prices subside back to where they were, Luther said.

Why wage growth is uneven

Even amid the highest inflation in 40 years, things could have been much worse for the typical household, Luther noted.
Median real wages are more or less where they were prior to both the pandemic and record high inflation kicking in, he said.

As prices shot up, many employees who saw their real wages decline were likely able to get new jobs or renegotiate with their current employers to push up their nominal wages, Luther said.
However, there may have been a lag between the price and wage increases, which may have hurt those households.
To be sure, not every household may have been able to negotiate for higher nominal wages, which means their income has not kept up with inflation, Luther noted.

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The average trade-in value of 2020 leased cars is 19% more than the predetermined residual value — a vehicle’s worth at the end of a lease — according to Edmunds data.
This means you may be able to capitalize on that difference instead of simply turning in the car.
Here are some options that may be available to you if your lease runs up soon.

Newsday Llc | Newsday | Getty Images

3.3 million cars were leased in 2020

An estimated 3.3 million leases were originated in 2020, according to Edmunds. That’s 18% lower than in 2019, before the pandemic upended auto sales.
And with few discounts being offered by manufacturers on new cars — whether you buy or lease — the share of people who lease has continued to fall. By mid-year 2022, leases comprised 18% of new-car transactions, down from 27.2% a year earlier.

While the latest inflation reading shows that used-car prices slid 11.6% from a year ago — the average paid in January was roughly $26,510, according to Kelley Blue Book — they remain elevated compared with where they’d be if normal depreciation were in play. 

“February 2023 trade-in equity is still more than double the pre-pandemic level,” said Thomas King, president of the data and analytics division at J.D. Power.

Leased models that have the most extra value

Among cars leased in 2020, the Mercedes-Benz GLS-Class has the highest dollar difference between current trade-in value ($62,257) and its originally estimated residual value ($50,942). That’s $11,315 (or 22%) more than expected. The Toyota Sienna has a trade-in value ($30,207) that’s $8,741 (or 41%) higher than the $21,465 residual value.

When it comes to the most popular 2020 leased cars, both the Honda Civic and Accord have trade-in values that are 31% higher than their residual values, the Edmunds data shows. That translates into positive equity of $4,430 and $5,065, respectively.

Consider buying out the lease and keeping the car

There are a few ways you may be able to take advantage of the positive equity.
For starters, it may be wise to consider buying out the lease when it ends, because you would be getting the car for less than you would if you were to buy it off a dealer lot.
If you want to try capitalizing on the positive equity as a trade-in or for cash, start by finding what your vehicle is worth. You can do this on sites like Carfax.com or Edmunds. Generally, the retail price will be a few thousand dollars more than you’d get by trading it in or selling to a dealership.

You may be able to sell it for profit

You also should determine the buyout amount, which is generally the same as the residual value if you wait until the lease is up (this information is in your contract). You may be able to buy it out early, although there could be fees involved in doing so. You could also just buy out the lease and then turn around and sell the vehicle for more in the open market.
Additionally, check whether your financing company allows you to sell the car to any dealer you want (a so-called third-party buyout). Some automakers have restricted this practice and require you to return the car to one of that brand’s dealerships (i.e., return a Honda to a Honda dealer).
If you are allowed to sell the car elsewhere, you could shop it around to used car dealers to see where you could get the most, Drury said. If you can’t do a third-party buyout, you could sell back the car to one of the same brand’s dealerships instead of just returning it at the end of the lease.

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The Supreme Court on Tuesday will hear two legal challenges to the Biden administration’s historic student loan forgiveness plan.
Six GOP-led states brought one of the lawsuits, claiming President Joe Biden is overstepping his authority.
The second legal challenge was backed by the Job Creators Network Foundation, a conservative advocacy organization, and also accuses the president of abusing his power.

The U.S. Supreme Court in Washington, D.C.
Kent Nishimura | Los Angeles Times | Getty Images

Here’s what 6 GOP-led states allege in their suit

On Sept. 29, six Republican-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — filed a lawsuit against the president’s plan, arguing that Biden was vastly overstepping his authority by moving to cancel hundreds of billions of dollars in consumer debt without authorization from Congress.

The Biden administration says that the Heroes Act of 2003 grants the U.S. Secretary of Education the authority to make changes to the federal student loan system during national emergencies. The U.S. has been operating under an emergency declaration since March 2020 because of the Covid pandemic. The Heroes Act of 2003 is a product of the 9/11 terrorist attacks, and an earlier version of it provided relief to federal student loan borrowers affected by the attacks.
However, the six states in question counter that the president’s recent loan forgiveness plan is far more broad than the type of modifications permitted by that law.

In other words, higher education expert Mark Kantrowitz said, the states are asserting that Biden is using Covid as an excuse to pass his plan.
“For example, if it was an emergency, why wait three years to provide the forgiveness?” Kantrowitz asked. “Why present it in a political framework, as fulfilling a campaign promise?”
Yet the Biden administration insists that the public health crisis has caused considerable financial harm to student loan borrowers and that its debt cancellation is necessary to stave off a historic rise in delinquencies and defaults.

The six states also argue that Biden’s plan would cause financial harm to their states, including a loss of profits for the companies that service federal student loans.

Two borrowers say ‘procedural rights’ were ignored

The second legal challenge the Supreme Court will consider Tuesday is backed by the Job Creators Network Foundation, a conservative advocacy organization.
Lawyers for the two plaintiffs, Myra Brown and Alexander Taylor, argue they were deprived of their “procedural rights” by the Biden administration because the White House didn’t allow the public to formally weigh in on the shape of its student loan forgiveness plan before it rolled it out. As a result, the lawyers argue, Brown and Taylor are either partially or fully excluded from the relief.
The Heroes Act exempts the need for a notice-and-comment period during national emergencies, but, like the states, the plaintiffs in this challenge argue that that law doesn’t authorize the president’s sweeping plan.

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As high inflation continues and interest rates go up, many people are seeing their savings dwindle and credit card balances increase.
As those debts become more expensive, delinquencies may be poised to increase.
Here’s what to do before you get overwhelmed by your debts.

Valentinrussanov | E+ | Getty Images

High inflation is leading to reduced savings and higher credit card debt — and there are some signs households may be reaching a tipping point under increased financial pressures.
A new survey from Bankrate finds 39% of individuals surveyed in January said their emergency savings are less than they were last year. Meanwhile, 10% still have no cash set aside – the same finding as in last year’s survey.

The results come as total household debt increased by 2.4%, to $16.9 trillion, in the fourth quarter of last year, the Federal Reserve Bank of New York announced last week. For all debt types, the share of current debt that became delinquent, where payments have not been made under the agreed terms, also increased in the fourth quarter.
An “ugly stew is brewing” as people buckle under the pressure of inflation, especially if they don’t have a lot of savings, noted Bruce McClary, senior vice president of the National Foundation for Credit Counseling.

Those individuals and families may turn to open lines of credit to help fill the gaps in their budgets — to pay for groceries or gas, for example. As interest rates rise, it has become harder to pay off those debt balances they’re carrying, according to McClary.
“It’s that combination of everything that is starting to push people over the edge,” he said.

More than a third — 36% — of the 1,032 respondents to Bankrate’s January survey said their credit card debt is higher than their emergency savings — a record high over the 12 years the poll has been conducted.

Still, slightly more than half of respondents — 51% — said they have more emergency savings than credit card debt. The remaining 13% have no credit card debt nor any emergency savings.

‘Younger workers are more financially fragile’

Younger generations are more likely to feel the financial strain, according to Mark Hamrick, senior economic analyst at Bankrate.
“Broadly speaking, younger workers are more financially fragile,” particularly if they are new to the work force, Hamrick said.
Bankrate’s survey found 45% of millennials, 44% of Gen Xers and 38% of Gen Zers have more credit card debt than money in savings. In comparison, just 25% of baby boomers said the same.

If we have one mantra, it is it pays to shop around for the best rate.

Mark Hamrick
senior economic analyst at Bankrate

Credit-counseling requests rise, as do stress levels

The New York Fed’s quarterly household debt and credit report found younger borrowers are showing signs of financial stress and are beginning to miss some credit card and auto loan payments.
The risk of delinquencies may continue based on the economy, according to Hamrick.
“Just having a job doesn’t solve the problem,” he said.
In recent months, the number of requests for credit-counseling sessions has increased, according to McClary. The number of people who receive a recommendation to start a debt-management plan after completing a counseling session is also up, he noted.

“We’re starting to see that uptick in volume,” McClary said. “That alone tells me that the number of consumer-credit delinquencies is likely going up.”
If you think you’re at risk of falling behind on your bills, do not wait to take action, McClary advised.
When people are facing delinquencies, they often skip the first step, which is to simply reach out and talk to their creditor, he said.
Renegotiating the terms of your debt early on may help avoid a financial disaster later on, McClary said.

If you don’t pay your account as agreed, that can have certain consequences. If your account is 30 days past due, you will likely incur a fee and also possibly a higher interest rate, which makes it more difficult to get back on track.
Once a bill is 60 days past due, a creditor is likely to report it to the credit bureau. Your credit score will likely be reduced, which can make it difficult to get the best rates on future loans or lines of credit, McClary noted.
Once it gets to 90 days past due, a creditor usually sends the bill to a collection agency and your account may be closed.
“The longer you wait without taking action, the worse your circumstances may get,” he added.
Contacting a nonprofit credit counseling agency for advice may also help connect you with a financial professional who can explain your options, McClary said.

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