3 Smart Moves to Make With $1,000 Right Now

Having $1,000 to your name isn't a given right now. Many people are struggling with higher living costs and having a hard time saving money regularly.

But if you've got $1,000, you're in a great position to put that money to work. Here are three smart things to do with a pile of cash that size. 

1. Open a CD

In case you hadn't heard, CD rates are sitting at 5% these days -- but not for long. The Federal Reserve is expected to start lowering interest rates later this year. Once that happens, you should expect a drop in CD rates as well. 

So if you have $1,000 at your disposal and you open a 12-month CD at a 5% APY, you'll make $50. You won't get a similar guarantee out of a regular savings account, since rates there can change without warning.

However, before you put $1,000 into a CD, make sure you're happy with the amount of emergency savings you have, and that you don't have any large expenses coming up. There can be steep penalties for cashing out a CD before its maturity date, and you don't want to get hit with one of those. 

2. Pay off high-interest debt

You may like the idea of having a little extra money in the bank as a cushion. But as long as you have a three-month emergency fund, if the $1,000 you're sitting on is above that, it pays to use it to pay off a lingering credit card balance that's costing you money.

You might think that carrying $1,000 worth of credit card debt is no big deal. And if you have a 0% interest card you're planning to pay off before interest starts to accrue, maybe it's not. 

But let's say you owe $1,000 on a card with a 20% APR. Carrying that balance for 12 months will cost you $112 in interest. It's silly to pay that when you have the cash on hand to pay off the debt right away.

3. Load up on stocks

If you like the idea of turning $1,000 into a much larger sum, then you may want to put your money into the stock market. Over the past 50 years, the stock market's average annual return has been 10%. So if you put $1,000 into a portfolio of stocks and leave it alone for 30 years, you could end up with about $17,450.

Now, you may be thinking, "I don't know the first thing about buying stocks. How am I supposed to put together a winning portfolio?"

But you actually don't have to. Simply put your $1,000 into shares of an S&P 500 ETF (exchange-traded fund), and you'll effectively be investing in the 500 largest publicly traded companies -- only without having to do the work of researching those companies individually. 

If you have $1,000 to spare, it pays to use it to open a CD, pay off high-interest debt, or invest in stocks. But this advice also applies if you have less than $1,000. The key is to use your spare cash to either make money or, in the case of paying off credit card debt, save yourself a nice amount of it.