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Q: What Is a Dead Cat Bounce?

A 'dead cat bounce' is a colorful way of describing an unexpected price jump that occurs after a long, slow decline — and typically just before another price drop.

Mar

2025

What Is a Dead Cat Bounce and How Can You Spot It?

By Ashley Kilroy | Growing Wealth, invest, Investing | Comments Off

A dead cat bounce refers to an unexpected price jump that occurs after a long, slow decline — and typically just before another price drop. In other words, the price jump isn’t “live” and typically doesn’t last.

The danger can be that the apparent rebound might create a false sense of value, momentum, or optimism. That said, some investors may be able to take advantage of a dead cat bounce to create a short position. Unfortunately, it’s usually hard to identify a dead cat bounce until after the fact.

Nonetheless, investors may want to know some of the signs of this price pattern, as it can help them gauge certain market movements.

Key Points

• A dead cat bounce refers to a temporary price jump after a decline, often followed by another drop.

• It is difficult to identify a dead cat bounce in real-time, making it challenging for investors to take advantage of it.

• Dead cat bounces can occur in individual stocks, bonds, or market sectors.

• Investors should be cautious when interpreting price movements and consider other factors before making investment decisions.

• Active investors may use technical analysis and market indicators to help identify potential dead cat bounces.

What Is a Dead Cat Bounce?

The phrase “dead cat bounce” comes from a saying among traders that even a dead cat will bounce if it’s dropped from a height that’s high enough.

Thus, when a security or market experiences a steady decline and then appears to bounce back — only to decline again — it’s often dubbed a dead cat bounce.

What can be puzzling for investors is that the bounce, or “recovery”, doesn’t have a rhyme or reason; it’s merely part of a short-term market variation, perhaps driven by market sentiment or other economic factors.

Knowing the Specifics

If you’re learning how to invest in stocks or invest online, bear in mind that a dead cat bounce is not used to describe the ups and downs of a typical trading day — it refers to a longer-term drop, rebound, and continued drop. The term wouldn’t apply to a security that’s continuing to grow in value. The spike must be brief, before the price continues to fall.

It’s also important to point out that this financial phenomenon can pertain to individual securities such as stocks or bonds, to stock trading as a whole, or to a market.

Why It Helps to Identify This Pattern

Even for experienced traders or short-term investors using sophisticated technical analysis, it can be difficult to identify a dead cat bounce. Sometimes a rally is actually a rally; sometimes a drop indicates a bottom.

The point of trying to distinguish whether the rise in price will continue or reverse is because it can influence your strategy. If you have a short position, and you anticipate that a rally in stock price will end in a reversal, you may want to hold steady.

But if you think the rally will continue, you may want to exit a short position.

Example of a Dead Cat Bounce

To illustrate a dead cat bounce, let’s suppose company ABC trades for $70 on June 5, then drops in value to $50 per share over the next four months. Between Oct. 7 and Oct. 14, the price suddenly rises to $65 per share — but then starts to rapidly decline again on Oct. 15. Finally, ABC’s stock price settles at $30 per share on Oct. 16.

This pattern is how a dead cat bounce might appear in a real-life trading situation. The security quickly paused the decline for a swift revival, but the price recovery was temporary before it started falling again and eventually steadied at an even lower price.

Recommended: How to Invest in Stocks

Historical Dead Cat Bounce Pattern

There are countless examples of the dead cat bounce pattern in stocks and other securities, as well as whole markets. One of the most recent affected the entire stock market during the COVID-19 pandemic.

The U.S. stock market lost about 12% during one week in February 2020, and appeared to revive the following week with a 2% gain. But it turned out to be a false recovery, and the market dipped back down again until later in the summer.

What Causes a Dead Cat Bounce?

A dead cat bounce is often the result of investors believing the market or security in question has hit its low point and they try to buy in to ride the turnaround. It can also occur as a result of investors closing out short positions.

Since these trends aren’t driven by technical factors, that’s why the bounce is typically short-lived — usually lasting a couple of days, or maybe a couple of months.

4 Signs of a Dead Cat Bounce

Although a dead cat bounce is typically not reflective of a stock’s intrinsic value, the dramatic price increase may tempt investors to jump on an investment opportunity before it makes sense to do so.

The following typical sequence of events may help an investor correctly identify a dead cat bounce as it might occur with a specific stock.

1. There is a gap down.

Typically the stock opens lower than the previous close, usually a significant amount like 5% (or perhaps 3% if the stock isn’t prone to volatility).

2. The security’s price steadily declines.

In a true dead-cat-bounce scenario, that initial gap down will be followed by a sustained decline.

3. The price sees a monetary gain for a short time.

At some point during the price drop, there will be a turnaround as the price appears to bounce back, close to its previous high.

4. A security’s price begins to regress again.

The rally is short, however, and the stock completes its dead cat bounce pattern with a final decline in price.

Dead Cat Bounce vs. Other Patterns

How do you know whether the pattern you’re seeing is really a classic dead cat bounce versus other types of movements? Here are some clues.

Dead Cat Bounce or Rally?

One way to assess a dead cat bounce with a particular stock is to consider whether the now-rising stock is still as weak as it was when its price was falling. If there’s no market indicator as to why the stock is rebounding, you might suspect a dead cat bounce.

Dead Cat Bounce or Lowest Price?

Since investors are looking for opportunities to profit, they try to find investment opportunities that allow them to buy low and sell high.

Therefore, when assessing investment opportunities, a successful investor might try to recognize emerging companies, and buy shares of a stock while the price is low, and before other investors get wind of a potential opportunity.

Since companies go through business cycles where stock prices fluctuate, pinpointing the lowest price point might be hard. There’s no way to know if a dead cat bounce is really happening until the prices have resumed their descent.

Dead Cat Bounce or Bear Market Bottom?

Investors may also confuse a dead cat bounce for the actual bottom of a bear market. It’s not uncommon for stocks to significantly rebound after the bear market hits bottom.

History shows that the S&P 500 often sees substantial gains within the first few months of hitting bottom after a bear market. But these rallies have been sustained, and thus are not a dead cat bounce.

Investing Strategies to Avoid a Dead Cat Bounce

For investors who want a more hands-on investing approach — meaning active investing vs. passive — it’s generally better to use investing fundamentals to evaluate a security instead of attempting to time the market (and risk mistaking a dead cat bounce for an opportunity).

Investors who are just starting may want to consider building a portfolio of a dozen or so securities. Picking a few stocks allows investors to monitor performance while giving their portfolio a little diversification. This means the investor distributes their money across several different types of securities instead of investing all of their money in one security, which in turn can help to minimize risk.

Active investors could also consider selecting stocks across varying sectors to give their portfolio even more diversification instead of sticking to one niche.

Investors with restricted funds might consider investing in just a few stocks while offsetting risk by investing in mutual funds or exchange-traded funds (ETFs).

For investors who would prefer not to execute an active investing strategy alone, they can speak with a professional manager. Working with a professional manager may help the investors better navigate the intricacies of various market cycles.

Limitations in Identifying a Dead Cat Bounce

As noted several times here, a dead cat bounce can’t really be identified with 100% certainty until after the fact. While some traders may believe they can predict a dead cat bounce by using certain fundamental or technical analysis tools, it’s impossible to do so every single time.

If there were a way to accurately predict market movements or different patterns, people would always try to time the market. But there are no crystal balls in investing, as they say.

The Takeaway

With 20-20 hindsight, investors and analysts can clearly see that an individual security or market has experienced a steady drop in value, a brief rebound, and then a further drop — a phenomenon known as a dead cat bounce.

Unfortunately, though, it can be too hard for most investors to distinguish between a dead cat bounce and a bona fide rally, or the bottom of a given market or security’s price. Still, knowing what to look for may help investors make more informed choices, especially when it comes to making a choice around keeping or closing out a short position.

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About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

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Mar

2025

What Is an Equal-Weighted Index? How to Calculate It

By Rebecca Lake | Growing Wealth, invest, Investing | Comments Off

An equal-weight index gives each constituent in a market index the same weight versus a market-cap-weighted or price-weighted index, where bigger companies (or those trading at higher prices) hold a larger share of the index.

Equal weighting strives to equalize the impact of each company’s performance on the overall index. Traditional market-cap weighting tends to give bigger companies more influence over outcomes. Equal-weight investing is a smart beta strategy that may appeal to certain types of investors more than others.

Key Points

• An equal-weighted index assigns the same weight to each component, regardless of market capitalization.

• Calculation involves dividing the total number of components into 100 to find the weight per component.

• Rebalancing is necessary to maintain equal weighting, typically done quarterly or annually.

• Performance can differ significantly from market-cap weighted indexes due to equal representation.

• Potential benefits include increased diversification and reduced concentration risk in larger stocks.

What Is an Equal-Weighted Index?

A stock market index tracks the performance of a specific group of stocks or a particular sector of the market. For example, the S&P 500 Composite Stock Price Index tracks the movements of 500 companies that are recognized as leaders within their respective industries.

Stock market indexes are often price-weighted or capitalization-weighted.

• In a price-weighted index, the stocks that have the highest share price carry the most weight. In a capitalization-weighted index, the stocks with the highest market capitalization carry the most weight.

• Market capitalization represents the value of a company as measured by multiplying the current share price by the total number of outstanding shares.

While some investors may wish to invest in stocks, others may be interested in mutual funds or index funds, which are like a container holding many stocks.

How Equal Weighting Works

An equal-weighted index is a stock market index that gives equal value to all the stocks that are included in it. In other words, each stock in the index has the same importance when determining the index’s value, regardless of whether the company is large or small, or how much shares are trading for.

An equally weighted index essentially puts all of the stocks included in the index on a level playing field when determining the value of the index. With a price-weighted or capitalization-weighted index, on the other hand, higher-priced stocks and larger companies tend to dominate the index’s makeup — and thereby dictate or influence the overall performance of that index.

This in turn influences the performance of corresponding index funds, which track that particular index. Because index funds mirror a benchmark index, they are considered a form of passive investing.

Most exchange-traded funds (ETFs) are passive funds that also track an index. Now there are a growing number of actively managed ETFs. While equal-weight ETFs are considered a smart beta strategy, they aren’t fully passive or active in the traditional sense. These funds do track an index, but some active management is required to rebalance the fund and keep the constituents equally weighted.

Examples of Equal-Weight Funds

Equal-weight exchange-traded funds (ETFs) have grown more common as an increasing number of investors show interest in equal-weight funds. Equal weight falls under the umbrella of smart-beta strategies, which refers to any non-market-capitalization strategy.

The term “smart beta” doesn’t mean a particular strategy is better or more effective than others.

Equal-weight funds, for example, are designed to shift the weight of an index and its corresponding funds away from big-cap players, which can unduly influence the performance of the index/fund. And while an equal-weight strategy may have improved fund performance in some instances, the results are not consistent.

Here is a list of some of the top five equal-weight ETFs by assets under management (AUM):

1. Invesco S&P 500 Equal Weight ETF (RSP )

2. SPDR S&P Biotech (XBI )

3. SPDR S&P Oil and Gas Exploration and Production (XOP )

4. SPDR S&P Global Natural Resources ETF (GNR )

5. First Trust Cloud Computing ETF (SKYY )

How to Calculate Equal-Weighted Index

To calculate equal weighted index, you need to know two things:

• The share price of each stock that’s included in the index

• Total number of stocks included in the index

If you’re calculating an equally weighted index value for an index that has five stocks in it, each one would be weighted 20%, regardless of its stock price or market capitalization. To find an equal-weighted index value, you would simply add the share price of each stock together, then multiply it by the weight.

So for example, say an index has five stocks priced at $100, $50, $75, $90 and $85. Each one would be weighted at 20%.

Following the formula, you would add each stock’s price together for a total of $400. You’d then multiply that by the 20% weighting to arrive at an equal-weighted value of 80.

As fund turnover occurs and new assets are exchanged for old ones, or as share prices fluctuate, the equally weighted index value must be recalculated.

The equally weighted index formula can be used to determine the value of a particular index. You may want to do this when determining which index ETF to invest in or whether it makes sense to keep a particular index mutual fund in your portfolio.

Advantages of Using an Equally Weighted Index

An index investing strategy might be preferable if you lean toward more conservative investments or you simply want exposure to a broad market index without concentrating on a handful of stocks. That’s something you’re less likely to get with mutual funds or ETFs that follow a price-weighted or capitalization-weighted index.

Here are some of the reasons to consider an equal-weighted index approach:

• An equal-weight strategy can increase diversification in your portfolio while potentially minimizing exposure to risk.

• It’s relatively easy to construct an equally weighted portfolio using index mutual funds and ETFs.

• It may appeal to value investors, since there’s less room for overpriced stocks to be overweighted and undervalued stocks to be underweighted.

• Equal-weighted index funds may potentially generate better or more incremental returns over time compared to price-weighted or capitalization-weighted index funds, but there are no guarantees.

Disadvantages of Using Equally Weighted Index

While there are some pros to using an equal weighted approach, it may not always be the best choice depending on your investment goals. In terms of potential drawbacks, there are two big considerations to keep in mind:

• Equal-weighted index funds or ETFs that have a higher turnover rate may carry higher expenses for investors.

There is typically a constant buying and selling of assets that goes on behind the scenes to keep an equal-weighted mutual fund or ETF in balance.

Higher turnover ratios, or, how often assets in the fund are swapped in and out, can lead to higher expense ratios if a fund requires more active management. The expense ratio is the price you pay to own a mutual fund or ETF annually, expressed as a percentage of the fund’s assets. The higher the expense ratio, the more of your returns you hand back each year to cover the cost of owning a particular fund.

• Equal-weighted indexes can also be problematic in bear market environments, which are characterized by an overall 20% decline in stock prices. During a recession, cap-weighted funds may outperform equal-weighted funds if the fund is being carried by a few stable, larger companies.

◦ Conversely, an equal-weighted index or fund may miss out on some of the gains when markets are strong and bigger companies outperform.

Advantages	Disadvantages
Can further diversify a portfolio	Will typically have higher costs
Constructing an equal-weight portfolio is straightforward	May see outsize declines in bear markets
Equal-weight strategies may appeal to value investors	May not realize full market gains
Equal-weight strategies may perform better than traditional strategies, but there are no guarantees

The Takeaway

In an equal-weight index, each stock counts equally toward the index’s value, regardless of whether the company is large or small, or what shares are currently trading for. The same is true of any corresponding fund.

There are advantages to investing in an equal-weight index fund over a capitalization-weighted index or price-weighted index. For example, equal-weighted indexes may generate better or more consistent returns. Investing in an equal-weight index may be appealing to investors who prefer a value investing strategy or who want to diversify their portfolio to minimize risk.

Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹

FAQ

How do equal-weight ETFs work?

Like an equal-weight index, an equal-weight ETF holds the same proportion of each of its constituents, which in theory may equalize the impact of different companies’ performance.

When should you buy equal-weighted ETFs?

If you’d like to invest in a certain sector, but you don’t want to be riding the coattails of the biggest companies in that sector because you see the value in other players, you may want to consider an equal-weight ETF.

What is the equally weighted index return?

The return of an equally weighted index would be captured by the performance of an investment in a corresponding index fund or ETF. So if you invest $100 in Equal Weight Fund A, which tracks an equal weight index, and the fund goes up or down by 5%, you would see a 5% gain or loss.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

You may also be interested in:

Value-Weighted Index: Explanation and How to Calculate

Understanding The Stock Market Index

The S&P 500 Explained and Defined

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q424-029

Feb

2025

12 Tips for the Cheapest Way to Rent a Car

By Anna Davies | Budgeting & Goals, money | Comments Off

There’s nothing like the convenience and freedom of having a car at your disposal when traveling, but it can definitely add to the cost of a trip.

What’s more, it can be hard to know just how much a car rental will add to the bottom line because the daily rate you see advertised may wind up not reflecting the amount you will pay once surcharges are added to the bill.

But with some smart strategies, you can control the costs of renting a car. These include uncovering special offers and deals, knowing which day of the week is cheapest to rent a car, and avoiding those pricey add-ons that you don’t truly need.

Key Points

• Booking car rentals early and being flexible with travel dates can lead to better deals and lower rates.

• Joining loyalty programs can provide discounts, free upgrades, and other perks.

• Noting pre-existing damage on the rental vehicle helps avoid unnecessary charges and disputes.

• Understanding add-on costs is essential to avoid unexpected expenses and keep the total rental cost under control.

• Choosing smaller cars and avoiding unnecessary add-ons can help save money on car rentals.

12 Tips to Save Money on Car Rentals

These tactics can help you save money the next time you rent some wheels while traveling.

1. Understanding All Those Add-On Costs

At first glance, advertised deals on car rentals can seem inexpensive.

The sticker shock may come once you’re actually at the counter. That’s because, in addition to the base rate of a rental car, costs may include:

• Additional driver cost. Are you going to be the only driver or will you be sharing driving duties with someone else? If someone else will be driving, it’s a good idea to add them to the rental to potentially avoid liability if something were to happen if someone else were behind the wheel.

• Fuel Purchase Option (FPO). This option allows a renter to pay for the full tank of gas at the time of rental and return the tank empty. It may be cheaper to fill the tank yourself. However, if you are the kind of person who likely returns a car close to the deadline and is racing to catch a flight, the FPO can save time and might be worth it.

• Fuel and Service. If you forgo the FPO and don’t return the car with a full tank, you will likely be charged for the cost of fuel, as well as a fee for the refueling service.

• Insurance. Insurance can include Loss Damage Waiver, Liability Insurance, Personal Accident Insurance, and Personal Effects Coverage. This insurance may or may not be necessary, depending on your existing car insurance coverage or the possibility of coverage via the credit card used for the reservation.

• Premium Emergency Roadside Service. This service can provide roadside assistance in the event of an emergency.

• Additional fees and taxes. Fees and taxes are not optional and can add up. Taxes and fees are dependent on where you rent your vehicle (different states have different taxes). There is typically an additional fee for cars rented at an airport or a hotel, which can add to your bill and take a bite out of your checking account.

• Toll fees. This typically includes not only the cost of driving on toll roads, but also convenience fees for having a transponder included in your rental to seamlessly pay those charges.

By knowing which charges can crop up and scanning for them, you may be able to avoid those extra costs. (Think of how many people opt for online banks vs. traditional ones to save on fees; it’s the same “do your research and save” principle at work.)

Recommended: How to Save Money on Gas

2. Considering Your Insurance Coverage

One way to get the cheapest possible deal on a rental car is to make sure you’re not doubling up on insurance coverage.

Find out what your car insurance covers. It may cover collision damage, and your homeowner’s or renter’s insurance may cover personal items that could be stolen from your vehicle.

But the disadvantage would be that if the worst were to happen, you would need to file a claim through your personal insurance, which could cause your rate to increase.

As noted above, your credit card’s car rental coverage may be a money-saving option. This can be a good travel hack that allows you to waive the insurance offerings from a rental car company yet not need to use your personal car insurance to file a claim.

Some pointers:

• If you are renting a car with a credit card, as many people do, find out if your card has the coverage you need. You can check your card’s benefits to see if it includes primary car rental coverage. If it does, it’s a good idea to read the fine print for exactly what the insurance covers, as well as any coverage limits.

• Calling your credit card company, as well as your car and home insurance companies, with any questions can give you a full picture of whether or not added car rental insurance is necessary for your situation.

You may also be able to waive roadside service if you have a membership to another roadside assistance company.

3. Looking Beyond Airports and Hotels

Because of the fees associated with renting from an airport or hotel — which can add as much as 26% to your total bill — it may be cheaper to rent from an outpost within the city.

The flip side is that it’s less convenient, and you may need to take a taxi or use a rideshare service to get to and from the car rental agency.

Comparing costs of rentals both at the airport and within 20 miles (adding in the cost of getting to that other location) can help you assess whether giving up some convenience will pay off.

4. Signing Up for Loyalty Programs

Before you rent a car, it can be helpful to sign up for several loyalty programs across rental companies. (To avoid junk mail, consider creating a separate email address to register for loyalty programs.)

Some rental car programs will give you an automatic percentage off just for being a member. Other rental car programs may give additional perks, such as upgrades or separate lines at the agency, which can help you avoid the hassle.

5. Using Your Memberships

There are various ways to snag a reduced price on your car rental, including working your memberships.

Many big-box stores and wholesale clubs have ties with rental car companies that can net you significant discounts if you’re a member. Auto clubs (like AAA), trade associations, unions, as well as AARP, may also offer rental car perks and discounts, including insurance on rental cars.

Shop around, and don’t be surprised if the most enticing deals and ways to spend less emerge from an unexpected source.

6. Booking Early

Reserving a car as soon as you know your travel dates can be a money-wise move. Here’s why: Rental car companies often keep a limited number of cars in their fleets. As a result, they need to estimate demand several weeks ahead of time. To encourage customers to book early and help them manage their pool of vehicles, they may offer lower rates when you reserve in advance vs. last-minute.

Booking a car in advance can help you not only get a better deal but also help to ensure you’ll get the car you want. This can help you avoid paying for a Suburban when all you need is an economy car.

If you do book early, consider searching prices again right before your trip.

• If you find a better deal last-minute, you may be able to request a price adjustment from your original agency.

• Or you may be able to cancel your current reservation and book a cheaper reservation at another company.

Before you book, you may want to read through the cancellation policy and make sure there is no penalty for canceling.

7. Shifting Your Dates

Prices of rental cars can fluctuate based on demand, and these fluctuations can sometimes be significant.

Of course, you can’t always change the days of your trip. But as a frugal traveler, you may want to weigh the cost-benefit of not having a rental car for a few days to score a lower rate.You could reap significant savings.

The cheapest day to rent a car can vary depending on market demand, but you may see lower rates on weekdays versus weekends, according to AAA.

8. Noting Any Damage Before You Drive Away

You may be eager to get on the road, but it’s a good idea to do your due diligence and make sure you point out and/or document any damage to the car when you receive it. Consider the following:

• No matter how minor a scratch or ding, you could get charged for the damage unless you account for it on your rental agreement prior to driving away.

• You may be asked to mark damage on the car rental agreement, but you may also want to take photos as well. That way, there is less likely to be any dispute about the extent of any damage or markings.

9. Paying Tolls in Cash if You Can

Rental car companies commonly tack on fees for using their transponder (the gizmo that lets you whiz past toll booths), in addition to the toll itself.

You may also have to pay a daily convenience fee for having the transponder even if you don’t use it.

To avoid using the rental company’s transponder, try these hacks:

• Pay cash at tolls that still accept it. For cashless tolls, you may be able to pay online later.

• It may also be possible to use your own transponder. Some transponders (such as E-ZPass) can be used in multiple states, so it could be worth doing your research beforehand to see if your personal transponder is accepted.

• For a longer-term rental, you might consider buying a transponder or toll pass that is accepted in the state where you’ll be driving. In many cases, the fee for the pass goes into your account as credit for tolls.

10. Bringing Your Own Car Seat

Rental car companies may offer infant and child car seat rental options, but the additional charges can add up. You might pay $10 to $15 per day, per seat, plus tax, up to a cap of $84, give or take.

In addition to the cost, you may not necessarily know the size and reliability of a rental car seat.

Obviously, it is not always convenient to bring your own seat, but it may be a better bet when possible. Even though car seats are bulky, airlines typically don’t charge baggage fees on them.

11. Think Small and Simple

This one may be obvi, but renting a larger or premium car will likely jack up your costs considerably. Though this is a no-brainer, it’s easy to creep into higher pricing tiers as you scroll through the options and see a cool SUV or convertible next to that economy sedan you originally thought you wanted to book.

For example, a recent search on Kayak found that rental cars can range from $22 to $150 a day or more in Los Angeles, depending on the company, location, and car itself (from compacts to SUVs, from minivans to luxurious convertibles). That’s a major difference!

Recommended: How to Make Money Fast

12. Let One Person Do the Driving

It’s not always possible, of course, to have a single driver (say, if you’re criss-crossing the United States), but for shorter distances, having just one driver can help you save money.

Many rental car agencies will add $3 to $11 or more a day for an additional driver who is not a spouse, domestic partner, or business partner. This can vary by state and have a maximum charge per rental period So, if you are on a trip with a friend and the distances are fairly short (perhaps zipping between Miami and the Florida Keys), having just one driver can help cut rental car costs.

The Takeaway

Car rentals often end up costing more than you expect, due to add-on costs and the details of when and where you rent a vehicle. To get the best deal on a rental, it’s a good idea to do some research in advance so you can get the best rates and opt out of the extras you don’t need.

You can also explore other ways to get a good deal, such as looking for discounts through clubs and organizations you already belong to, shifting your dates slightly, and trying other clever hacks. This can help you keep more money in the bank vs. overspending on your wheels.

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FAQ

How can you get a discount on a rental car?

Strategies for getting a discount on a rental car include comparing prices using online aggregator sites, booking early, being flexible about when and where you pick up and drop off the vehicle, and looking for memberships (like AAA) and perks (like credit card points) that can help you lower costs.

Is it cheaper to rent a car by the week or by the day?

It’s typically cheaper to rent a car by the week. You may even find that paying to rent a car for a week when you only need the vehicle for five days is more affordable than renting it for five single days.

How can you get around car rental fees?

It’s important to do your research about what fees may be added and see how you can minimize them. For instance, does your car insurance or your credit card offer insurance coverage when you rent a car? Can you bring your own car seat vs. renting one if traveling with a child? Can you avoid the surcharge often charged when you rent at the airport by instead taking a short cab or bus ride to another location? These moves can help lower costs.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBNK-Q125-025

Feb

2025

APR vs Interest Rate

By Dana Webb | Debt Payoff, Student Loans, student_loan, Terminology | No Comments

When the interest rate and annual percentage rate (APR) are calculated for a loan — especially a large one — the two can produce very different numbers, so it’s important to know the difference when evaluating what a loan will cost you.

Basically, the interest rate is the cost of borrowing money, and the APR is the total cost, including lender fees and any other charges.

Let’s look at interest rates vs. APRs for loans, and student loans in particular.

Key Points

• The interest rate is the cost of borrowing the principal amount, expressed as a percentage.

• The annual percentage rate (APR) includes the interest rate plus additional fees, providing a total cost view.

• Higher interest rates result in higher monthly payments and total costs over the loan term.

• Additional fees in the APR include closing costs, origination fees, and mortgage points.

• Considering both interest rate and APR is crucial for making informed loan decisions.

What Is an Interest Rate?

An interest rate is the rate you pay to borrow money, expressed as a percentage of the principal. Generally, an interest rate is determined by market factors, your credit score and financial profile, and the loan’s repayment terms, among other things.

How Interest Rates Work

Most people who take out a home mortgage loan opt for a fixed-rate mortgage. The borrower repays the amount borrowed, plus interest, in equal monthly installment payments over a period of 10, 15, 20, or 30 years. The higher the interest rate, the more they will pay each month and over the life of the loan. To see how interest rates affect payment amounts, try plugging different rate numbers into a mortgage calculator.

Some homebuyers opt for an adjustable-rate mortgage. In this scenario, there is typically an introductory period with an interest rate that might be lower than the available rate on a fixed-rate loan. But after that, the rate can periodically adjust (up or down), following market rates.

What Is APR?

If a loan were to have no other fees, hidden or otherwise, the interest rate and APR could be the same number. But because most loans have fees, the numbers are usually different.

How APRs Work

An APR is the total cost of the loan, including fees and other charges, expressed as an annual percentage. Compared with a basic interest rate, an APR provides borrowers with a more comprehensive picture of the total costs of the loan. The bulk of mortgage fees come in the form of closing costs and origination fees. Generally, closing costs average 3% to 6% of your mortgage loan principal, but each lender is different. Some borrowers also pay for mortgage points, also known as discount points, to lower the interest on their home loan. All of this would factor into the APR. Understanding these costs can help you get a clear picture of the total cost of a loan.

The federal Truth in Lending Act requires lenders to disclose a loan’s APR when they advertise its interest rate. In most circumstances, the APR will be higher than the interest rate. If it’s not, it’s generally because of some sort of rebate offered by the lender. If you notice this type of discrepancy, ask the lender to explain.

APR vs. Interest Rate Calculation

The bottom line: The interest rate percentage and the APR will be different if there are fees (like origination fees) associated with your loan.

How is APR Calculated?

To calculate APR, you first need to add the interest and the total fees for your loan. Then you divide by the principal amount borrowed. Divide the result by the total number of days in your loan term (for a 20-year loan, for example, you would divide by 7,300). Multiply the result by 365 (to get a yearly number) and then again by 100 (to arrive at an APR percentage).

Here’s the APR formula:

APR = ((Interest + Fees / Loan amount) / Number of days in loan term) x 365 x 100

Let’s say you’re comparing loan offers with similar interest rates. By looking at the APR, you should be able to see which loan may be more cost-effective, because typically the loan with the lowest APR will be the loan with the lowest added costs.

So when comparing apples to apples, with the same loan type and term, APR may be helpful. But lenders don’t always make it easy to tell which loan is an apple and which is a pear. To find the best deal, you need to seek out all the costs attached to the loan.

You may find that a low APR comes with high upfront fees, or that you don’t qualify for a super-low advertised APR, reserved for those with stellar credit.

How Are Interest Rates Calculated?

Calculating the total interest you’ll pay on a home loan is pretty simple with online tools. You can see the total interest you’ll pay on a loan quickly by plugging your loan amount, interest rate, and loan term into a mortgage calculator. (If you want to see what your monthly payment will be when you factor in property taxes and home insurance, use a mortgage calculator with taxes and insurance.)

How APR Works on Home Loans

Not all homebuyers understand the true cost of their mortgage loans. If you’re considering multiple loan offers (perhaps you’ve gone through mortgage prequalification with a few lenders), you can look at the APRs on the offers to compare them against one another.

One caveat regarding APR: Because fees associated with a home mortgage are usually paid at the beginning of the loan, the APR won’t reflect the true annual cost of the loan if you sell the property or refinance before the mortgage term is up.

How Interest Rates Work on Home Loans

Most home mortgages are amortizing loans, so although the monthly payment on a fixed-rate loan remains constant, the amount of interest you’ll pay with each payment will differ. Typically, more of a borrower’s monthly payment is made up of interest early in the life of the loan; as the loan ages, the reverse is true and more of the payment chips away at the principal. An amortization table for your loan should be provided in your loan documents.

Benefits of Government-Backed Mortgages

Some would-be homeowners find themselves comparing different types of mortgages (as well as different interest rates and APRs) when considering how to finance their purchase, and government-backed mortgages will have a different profile than conventional loans.

A government-backed mortgage such as an FHA loan or a VA loan may have a low down payment (or no down payment), which is a key benefit, especially for first-time homebuyers, who typically have fewer resources to pull from. It may also have different upfront fees than a conventional mortgage. An FHA loan, for example, usually requires mortgage insurance. If the borrower makes a down payment of 10% or more, after 11 years the lender can remove the mortgage insurance requirement, but many borrowers need to refinance to get rid of the insurance payment. The cost of this mortgage insurance factors into the APR.

The Takeaway

APR vs. interest rate is a key factor you’ll want to consider when deciding on a loan, because the APR reflects the fees involved in the loan. Even when it comes to government-backed home loans, fees are part of the story. So don’t just look at a loan’s interest rate — take the time to compare the APR as well.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What’s a good APR?

A good APR will depend on your individual profile as a borrower, with your credit score being a key factor. To see how the APR you’re being offered on a home loan compares with the national average, search for “national average XX-year mortgage APR” (with XX being your loan term in years). Then look at the percentages side by side.

What’s a good interest rate?

A good interest rate is one that’s below the posted national average interest rate for your loan type when you search online. Borrowers with less-than-stellar credit scores won’t qualify for the best rates, however, so what’s a good interest rate for you will depend on your personal credit score and financial profile.

Does 0% APR mean no interest?

Zero percent APR means that no interest is charged for a set period of time. This is a term commonly seen on credit card offers and car loans. If you go this route, make sure you note the length of the no-interest promotional period and that you make your payments on time during the period, as missing payments can trigger interest to build on the debt.

Does refinancing your mortgage help lower rates?

Refinancing your mortgage may help lower your interest rate if rates have dropped since you initially purchased your home, or if your credit score and other aspects of your financial profile have improved significantly. It’s important to consider closing costs associated with a refinance, however, before deciding that it makes sense to chase a lower rate.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOHL-Q125-064

Feb

2025

23 Ways to Cut Back on Spending and Expenses

By Kelly Boyer Sagert | Budgeting & Goals | No Comments

If you are looking for some relatively painless ways to spend less, read on. There are all kinds of ways to slash expenses that don’t require much, or any, sacrifice. These can include trimming back some of your recurring bills to tweaking your typical shopping habits. You’ll even learn smart ways to avoid the temptations that can lead to overspending.

Ready to improve your cash flow? Here are 23 simple ideas for how to cut back on spending.

Key Points

• There are many relatively painless ways to spend less and keep more of your cash.

• Cancel unused subscriptions to save money.

• Reduce housing costs by downsizing or getting a roommate.

• Use the library for free books, magazines, and DVDs, and minimize streaming services.

• Consider unsubscribing from shopping apps, shopping emails, and following influencers who encourage you to spend money.

23 Ways to Cut Down Your Spending

Ready to start saving money? Pick and choose among these ideas to find the tips that suit you best.

1. Canceling Subscriptions

There’s a decent chance that you are leaking money on a subscription service that you are not getting much value from.

Scan your checking account and credit card statements for things you’re paying for on a recurring basis and consider canceling anything you don’t really need.

That might mean magazines or newspapers you rarely read, online software you aren’t using, and/or shopping services and other memberships that aren’t worth it anymore.

If you’re looking to save money faster, you might cut down on multiples. For instance, do you really need membership at two different yoga studios? Just one might be fine, and you’ll wind up with more money in your checking account.

2. Cutting the Cord

If you’re paying a high price for cable each month, you may want to think about switching to a streaming TV service. This budget-cutting move could save $40 to nearly $100 per month.

Just don’t let that get out of hand. You likely won’t save on streaming services if you sign up for Netflix, Max, Hulu, and a couple of others.

If you are not quite ready to cut the cord, you may still be able to shrink this monthly line item just by calling your cable service provider and asking for a better deal. Research better deals available elsewhere and cite those when talking to a customer service representative.

3. Revisiting Your Cell Phone Plan

Another way to significantly cut monthly spending is to take a closer look at what you’re paying for your cell phone service and exactly what you are getting.

You can then compare this with the competition and, if you see a better deal, call your provider and see if they will match it.

If you don’t see much wiggle room, you might consider going with one of the smaller MVNOs (mobile virtual network operators) that lease coverage from the major carriers, such as Cricket Wireless, Metro, and Visible.

Or, if you just need a basic plan, you can look into Consumer Cellular or H2O Wireless, which often offer affordable cell phone plans for individuals.

Before switching carriers, however, it’s a good idea to make sure that the carrier has strong coverage in your area. Saving money is great, but may not be worth it if you don’t get quality service.

4. Getting Into the Meal-Planning Habit

An easy way to cut back on food spending is to make a meal plan and a firm shopping list before you go to the grocery store. To cut spending even more, you can check your store’s weekly ads and plan meals around what’s on sale that week.

This can be as simple as picking a few basic recipes that you want to make throughout the week. You may want to try a meal planning app, such as Mealime, among others.

Not only will this help you avoid impulse buys at the supermarket and ordering takeout, but you will likely be able to buy in bulk, cook once and enjoy the leftovers, and otherwise streamline your budget and your life.

5. Actively Paying Down Credit Cards

If you’re currently only paying the minimum on your credit cards, a big chunk of your payment is likely going toward interest and you may be doing little to chip away at the principal.

Doing this every month can increase the amount of time you’re in debt, and increase the total amount of interest you’ll end up paying. That in turn can make it harder for you to plump up your savings account.

If you can swing it, consider putting more than the minimum payment towards your bill each month. This can help you pay off credit cards faster, so you’re not spending so much money on interest.

6. Renewing Your Library Card

How else to cut back on spending? If you’re a reader and love books, a fun and easy way to cut your spending is to fish out that old library card, or if you don’t have one, stop into your local branch and apply for a card.

The library can be a great resource for more than books. For example, you can often access magazines, newspapers, DVDs, music, as well as free passes to local museums. There are also services on your computer and phone that let you stream digital media; check out Kanopy and Hoopla, for instance.

7. Carrying Cash

There’s something about using plastic that can make it feel like you are not really spending money.

That’s why an effective way to cut back on spending is to take out enough cash at the beginning of the week to cover your daily expenses for that week and then leaving your credit and debit cards at home.

Or, you might try the envelope system (a budgeting method), where you designate an envelope for each expense category, then put enough cash inside to get you through the week. When you run out, you can’t spend anymore.

Using cash can also help you become more aware of and intentional with your purchases. You see exactly what you are spending as you go through your day.

8. Eliminating Bank Fees

How to cut back on expenses can involve taking a look at just what fees your bank may be charging for your checking and savings accounts.

They might include service fees, maintenance fees, ATM fees (if you don’t use their in-network machines), minimum balance fees, overdraft or insufficient funds fees, and/or transaction fees. And all those charges can eat away at your funds.

You may be able to cut your monthly spending by switching to a less expensive bank, which could mean an online bank, which tends to offer low or no fees.

9. Clicking Unsubscribe

Do your favorite retailers fill your inbox with tempting sales alerts, whether that’s 75% off, buy-one-get-one offers, or free shipping? One effective way to cut back on spending is to get off their email lists.

Sales and great deals are happening all the time, but generally the best time to purchase something is when you really need it.

If the enticement to spend doesn’t constantly land in your inbox, you’ll be less likely to click through and buy.

Recommended: How to Deposit a Check

10. Consider a 30-Day Spending Freeze

One quick way to change your spending habits is to put yourself on a 30-day nonessential spending freeze.

Or, if that seems too tall an order, you might pick a category (such as clothing or wine) to stop spending on for a month.

A spending freeze can immediately pay off, by leaving more money in the bank (or fewer bills) at the end of the month. And, once you start seeing the payoff of not giving in to impulse buying, you may find yourself spending less even after the freeze is over.

11. Keeping Your Tires Properly Inflated

A simple way to cut weekly spending on gas is to stop into a local station that offers free air once a month, and do a quick air pressure check on your car tires. If they aren’t inflated to the optimal PSI, you’ll want to fill each one to the maximum recommended amount (as stated on the tire or in your manual).

Here’s why: You can improve your vehicle’s gas mileage by an average of 0.6% and up to 3% with proper tire pressure. Which means you’re saving money on gas.

12. Working Out at Home

Instead of paying for a monthly gym membership, consider free exercise options, such as going for a walk, run, or bike ride around your neighborhood.

You can also find at-home cardio routines, resistance workouts, yoga classes and more for free online (YouTube is a great source). If you’re missing the social aspect of the gym, you always invite friends or neighbors over to work out with you.

There are also a number of free workout apps that can help keep you motivated, such as 7 Minute Workout, Freeletics, and Nike Training Club, among others.

13. Saving Before You Spend

One of the best ways to cut monthly spending is to siphon off some savings before you even have a chance to spend it. Many experts suggest 20% of your take-home pay, as is outlined in the 50/30/20 budget rule.

You can do this by automating your savings. This can mean you set up an automatic transfer from checking to put money in a high-yield savings account on the same day each month, possibly right after your paycheck gets deposited.

And it’s fine to start small. Whatever the amount, since it’s happening every month, it will build up before you know it.

Recommended: 50/30/20 Budget Calculator

14. Turning Clutter Into Cash

If you’re thinking of hiring a company to haul away stuff you no longer want or need, think twice. It can be easy to sell your unwanted items. There are dozens of places to sell your stuff, thanks to sites such as ThredUp, Poshmark, eBay, and Facebook Marketplace. Or you could host a yard or stoop sale (just make sure to check if you need a permit).

15. Reviewing Home and Auto Insurance

Here’s another way to cut back on spending: Review your insurance payments. You may be able to considerably cut your costs by taking some time to shop around and compare prices.

Many insurance companies also offer a discount if you bundle your homeowners and auto policies together. If you currently use two separate insurers, it can be worth asking what kind of discount each would offer if you bundled the policies together.

And you don’t have to wait until your current policy is up for renewal to change insurance providers. With most companies, you can leave at any time without having to pay for the remainder of the policy. If you find a better deal, you can also give your current insurer a chance to match their quote.

16. Drinking More Water

Getting plenty of water can not only help you stay healthy, but it can also help you cut back on spending.

When you’re food shopping, for instance, you can skip over sodas and even bottled water in exchange for free tap water at home. (If you don’t like the taste of your tap water, consider getting a pitcher with a water filter.) Dining out? You can save by ordering water instead of pricey beverages.

17. Using Apps to Earn Cash Back

You can cut your spending even after you’ve made your purchases by keeping track of your receipts and using a cash back app, such as Ibotta, Fetch Rewards, or Shopkick.

While each app works a little differently, you can generally use cash back apps to download digital coupons, purchase specific items, and then scan receipts to claim your cash back.

You may also be able to add your store loyalty card number and avoid the need to submit a receipt.

18. Shutting off the Lights

A super easy way to cut monthly spending is to simply turn off the lights whenever you leave a room or leave your home. You may not notice the impact immediately, but the savings on energy costs can add up over time.

It can also be helpful to unplug any unused electronics and chargers that aren’t in use.

19. Cutting Back on Bigger Expenses

If you’re looking to have more money after paying bills, you may want to address the biggest expenses in your overall budget. For instance, in terms of housing, you might consider downsizing, moving to a more affordable area, or getting a roommate. This could significantly reduce your monthly expenses.

Also take a look at car payments, if you have them. If they account for more than 10% of your take-home pay, consider trading in your car for one with a lower monthly payment. Or, you might want to think about buying a less expensive vehicle with cash.

20. Unfollowing Social Media Influencers Pushing Products

If you, like many people, shop from social media because you see new products being promoted, you may want to unfollow those accounts. That FOMO (fear of missing out) feeling can be powerful when you see an influencer pushing new kitchen gadgets, comfy socks, or other products. By eliminating that temptation, you can cut back on spending.

21. Uninstalling Shopping Apps on Your Phone

Shopping apps can be hugely convenient; maybe too convenient. If you find that apps encourage you to one-click your way to too many products and credit card charges, delete them. You can always reinstall them later if you have more wiggle room in your budget.

22. Buying Used and Second-Hand

A fun and frugal way to shop can be buying used and second-hand. You might hit a local thrift store for clothes, cookware, and other items. Check out a local library’s book sale for new reading material, and if you need a new kitchen appliance, see what major retailers have in their “open box” section (items that were returned with minimal or no use or perhaps floor models).

23. Do Some Bulk Buying

Check out the deals to be had by buying in bulk. That can mean joining a wholesale club, like Costco, or shopping at a local grocery store that has grains, nuts, and pasta sold from large containers to help you save at the cash register.

If you don’t have room to store, say, a pack of 12 cereal boxes or 24 rolls of paper towel, split purchases with a friend or two. You can all cut back on expenses that way.

The Takeaway

Cutting back on spending doesn’t have to involve a complete overhaul of your lifestyle. You can focus on lowering your recurring expenses (housing, insurance, utilities) and also cut back on unnecessary spending, especially impulse buys. If you pay with cash, delete shopping apps, and unsubscribe to marketing emails, you may find there’s a lot more breathing room in your budget. And you might be able to stash more cash and earn interest.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

How do I cut back on unnecessary spending?

Often, a mix of two tactics can help you cut back on unnecessary spending. First, look at how to reduce recurring basic bills, such as dropping a streaming channel or two, lowering your car insurance, and avoiding excessive banking fees. Next, tackle daily spending. You might reduce your daily latte habit, and look for free concerts and museum nights in your area vs. pricey entertainment. Also: Don’t let yourself give in to marketing ploys, like “buy one, get one” and free shipping, which can encourage you to overspend.

How can I drastically cut my spending?

To drastically cut your spending, try creating and sticking to a budget and using cash instead of credit so you are less likely to ring up debt. Also consider deleting shopping apps, emails, and influencer accounts that encourage you to shop, and putting yourself on a one-month shopping freeze, meaning no purchases except true necessities.

How do I mentally stop spending money?

If you are overspending, think about your triggers. Do you shop when bored or as a weekend activity? Find other ways to fill your time, whether that means reading or taking up a sport. You might also try the 30-day rule, which means that if there’s something you feel you must have, you might make a note of it in your calendar for 30 days in the future. Don’t buy it unless 30 days later you still feel it’s vital. Such feelings often dissipate over time.

What Is a Dead Cat Bounce?

Knowing the Specifics

Why It Helps to Identify This Pattern

Example of a Dead Cat Bounce

Historical Dead Cat Bounce Pattern

What Causes a Dead Cat Bounce?

Get up to $1,000 in stock when you fund a new Active Invest account.*

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4 Signs of a Dead Cat Bounce

1. There is a gap down.

2. The security’s price steadily declines.

3. The price sees a monetary gain for a short time.

4. A security’s price begins to regress again.

Dead Cat Bounce vs. Other Patterns

Dead Cat Bounce or Rally?

Dead Cat Bounce or Lowest Price?

Dead Cat Bounce or Bear Market Bottom?

Investing Strategies to Avoid a Dead Cat Bounce

Limitations in Identifying a Dead Cat Bounce

The Takeaway

What Is an Equal-Weighted Index?

How Equal Weighting Works

Examples of Equal-Weight Funds

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How to Calculate Equal-Weighted Index

Advantages of Using an Equally Weighted Index

Disadvantages of Using Equally Weighted Index

The Takeaway

FAQ

How do equal-weight ETFs work?

When should you buy equal-weighted ETFs?

What is the equally weighted index return?

You may also be interested in:

12 Tips to Save Money on Car Rentals

1. Understanding All Those Add-On Costs

2. Considering Your Insurance Coverage

Increase your savings with a limited-time APY boost.*

3. Looking Beyond Airports and Hotels

4. Signing Up for Loyalty Programs

5. Using Your Memberships

6. Booking Early

7. Shifting Your Dates

8. Noting Any Damage Before You Drive Away

9. Paying Tolls in Cash if You Can

10. Bringing Your Own Car Seat

11. Think Small and Simple

12. Let One Person Do the Driving

The Takeaway

FAQ

How can you get a discount on a rental car?

Is it cheaper to rent a car by the week or by the day?

How can you get around car rental fees?

What Is an Interest Rate?

How Interest Rates Work

What Is APR?

How APRs Work

APR vs. Interest Rate Calculation

How is APR Calculated?

APR = ((Interest + Fees / Loan amount) / Number of days in loan term) x 365 x 100

How Are Interest Rates Calculated?

How APR Works on Home Loans

How Interest Rates Work on Home Loans

Benefits of Government-Backed Mortgages

The Takeaway

FAQ

What’s a good APR?

What’s a good interest rate?

Does 0% APR mean no interest?

Does refinancing your mortgage help lower rates?

23 Ways to Cut Down Your Spending

1. Canceling Subscriptions

2. Cutting the Cord

3. Revisiting Your Cell Phone Plan

4. Getting Into the Meal-Planning Habit

5. Actively Paying Down Credit Cards

6. Renewing Your Library Card

7. Carrying Cash

8. Eliminating Bank Fees

9. Clicking Unsubscribe

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