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Should you deposit $10,000 into a CD?

There aren’t many sure bets right now. Borrowing costs are up for everything from mortgages to credit cards to personal loans. After months of cooling, inflation ticked up in July and again in August, and interest rates could be following later this year (they’re already at a 22-year high). But when inflation is high and rates are up there with it, savers just need to take a few extra steps to protect their money.

One great way to do so is by opening a high-yield savings or certificate of deposit (CD) account now. Rates on both accounts are exponentially higher than they were just a few years ago, making them one of the few reliable options currently available for savers. But to get the most out of them — particularly when opening a CD — you’ll want to make sure to deposit the right amount at the right time.

So, should you deposit $10,000 into a CD today? Or are you better off exploring some alternatives? Start by exploring CD interest rates here to see how much more you could be earning.

Should you deposit $10,00 into a CD?

For many investors, $10,000 is a substantial amount of money. You’ll want to be smart about where you put it. That being said, if it’s in a regular savings account now, you’re likely losing money (the average rate for these accounts is 0.43%). With that understanding, there are some compelling reasons to deposit this amount into a CD instead. Here are three to know:

You’ll earn significantly more interest

CD accounts are having a moment in the spotlight now. So, take advantage and maximize your earning potential. A $10,000 deposit in a regular account will have grown by just $43 over twelve months.

But if you put it into a CD, many of which are offering rates at 5.50% or higher, you could make an extra $550 over that same time frame. That’s almost 13 times the difference between accounts — simply by moving some of your money into a different type. It’s easy to get started. Learn more here now.

It will be protected

Everyone knows how hard it is to save money — and to keep it untouched. But a CD takes much of the hard work out of the process by securing your CD for an agreed-upon term, during which you won’t be able to touch it.

If you insist on withdrawing it before the term has expired,you’ll be penalized (usually most or all of the interest earned to date). That could prove to be a strong enough incentive to leave it alone, protecting your money from what otherwise may have been an endless cycle of withdrawals in deposits if kept accessible.

Plus, CDs are safe. They’re FDIC-insured up to $250,000 per account, per institution, giving you some extra peace of mind.

The alternatives may not be better

As mentioned above, interest rates on regular savings accounts now are minimal. And while rates on high-yield savings accounts are competitive with CDs, the interest earned there will be variable. If rates go up in the future, so will the rates on your money in a high-yield account. But if they fall — or plateau, as many expect — then so will your earning potential.

But CD rates are locked for the full term, regardless of any unfavorable rate activity during that time frame. That means you’ll continue to earn interest at the rate you opened the account with, even if that rate ceases to exist by the time the CD expires.

Do the math and research your options. A CD could be your best bet now.

The bottom line

As usual, the answer to personal financial questions is a subjective one. For some people, $10,000 into a CD simply may not be worth it. But for many others, it could be a smart move. The interest rates available are substantial and the money deposited will be protected: Both from any impulse purchases you may have made — and from the larger volatile rate environment. And in an economic climate with few good options, this could currently be your smartest path forward.

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