With inflation cooled but still in the background and interest rates high, savings can make a big difference.
There are plenty of ways to save; some people may explore new passive income streams while homeowners may lean on their investment via a refinance or a home equity line of credit (HELOC). Others may be looking to protect and grow the money they have saved by opening a high-yield savings account or certificate of deposit (CD) account.
CDs are a particularly appealing alternative for account holders. These high-yield accounts can protect your existing savings while also growing them at a higher rate than regular savings accounts can offer. There are multiple benefits to opening a CD, especially in the current economic climate.
Check today’s CD interest rates now to see how much more you could be earning!
Why you should open a CD now
Here are three reasons why you should open a CD today.
You’ll earn more interest
Every dollar counts and a CD can help you earn many more dollars than a traditional savings account. Interest rates on savings accounts currently hover around 0.40% nationally, according to the FDIC, but rates for CDs are 4% to 5% or even higher depending on the lender.
To put the difference into context, say you have a $5,000 deposit. A one-year CD with a 4.5% interest rate would grow that $5,000 to $5,225 over 12 months while a savings account (at 0.40%) would boost that same deposit to just $5,020.
Begin exploring your CD options here and start earning more interest now.
You can rely on the rate
Unlike high-yield savings accounts with variable interest rates, which fluctuate based on the economy and the Federal Reserve’s rate movements, rates for CDs are locked so they’ll remain steady and untouched over the entire term. The rate your account earns when you sign up will be the rate your CD expires with — injecting some much-need predictability into your personal finances. This is particularly beneficial when the projection for future rate increases is unknown. Even if rates drop in the next few months your CD will still be locked in at that initial high rate.
So even if rates on other products fall over the lifetime of your CD, you can rest assured knowing that your money will continue to earn interest at today’s high rates.
Your money is safe
It’s always smart to protect your money but especially so in today’s market. It’s beneficial to have a way to protect your money — even from yourself.
CDs require you to lock in your deposit for the agreed-upon term length when you open the account. You won’t be able to access your money throughout that term unless you’re willing to face a penalty fee for doing so (although there are some no-penalty CDs you may want to explore). While that means it’s important to only put money into the CD that you don’t need immediate access to, it can also be a great incentive to make sure you don’t spend the cash elsewhere.
Compare some of today’s best CD options now!
The bottom line
In today’s economic climate many Americans are looking for any edge they can get.
Certificate of deposit accounts can help you stay ahead with higher interest rates that you’ll maintain throughout the full CD term despite any market fluctuations or economic changes. These accounts can also safeguard funds you may have otherwise spent if they were accessible in a regular savings account.
If you’re looking to jumpstart your savings and stay prepared, now is a great time to open a CD.
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