In life, timing is critical. And when it comes to money, it’s everything. From real estate purchases to investing to career decisions, the timing has to be right to truly benefit. Unfortunately, the timing as of late hasn’t been great for many Americans. Inflation is still humming along in the background (it ticked up twice over the summer) and the benchmark interest rate is at a 22-year high. Mortgage rates are also the highest they’ve been in decades. So if you’ve waited to borrow money or buy a home, your timing right now isn’t great.
There has been a silver lining to higher interest rates, however, and that’s the greater returns savers can get on their deposits. Rates on high-yield savings and certificates of deposit (CD) accounts have risen exponentially in recent months, making them a great way to hedge the wider negative effects of inflation. To get the most out of these accounts, however — you guessed it — the timing needs to be precise. And this fall is one of the very best times to open a CD.
Explore your CD account options here and start earning more money on your savings today.
Why you should open a CD this fall
CD interest ratesare currently high, with those available with online banks around 5.50% or even close to 6%. Compared to the minimal 0.45% most savers are getting with their regular savings account, the benefit is clear. CD rates are even better than most high-yield savings accounts, the latter of which tend to level off closer to 5%. With that being understood, CD interest rates won’t stay elevated forever and they’re likely to level off soon.
On Wednesday the Federal Reserve announced a pause in interest rate hikes, leaving the benchmark rate at a range of 5.25% to 5.50%. Although that’s still significantly elevated, it’s unlikely to tick up much further (most experts are only predicting one additional rate hike this year). And since the benchmark rate affects CD rates, it then makes sense to open an account now. If rates have peaked before an eventual drop in the upcoming months, the fall could be one of your last chances to secure a high rate.
By opening a CD this fall, not only are you likely to secure a better rate than if you had waited, but you’ll also enjoy the earning potential of that account for months (if not years) to come. That’s because CD rates are locked for the duration of the account’s term. So if rates are cut in 2024, as many are predicting, you’ll still be earning interest at the higher rate you opened your account with. It’s a rare win-win, and one that shouldn’t easily be discounted in today’s inflationary environment. To take advantage, however, savers should act promptly.
You can easily open a CD account online here now.
Other considerations
A higher interest rate, particularly when the forecast for additional rate hikes is unknown, is not the only benefit of a CD account. These accounts are also safe and FDIC-insured up to $250,000 per account per bank. So you won’t have to worry about any bank failures, as many did earlier this year.
But because of the way CDs are structured, these accounts can also protect you from yourself. In other words, you may have subjected your money to an endless cycle of impulse purchases and withdrawals when left too accessible. However, if you keep it in a CD, where you’ll get penalized for withdrawing your funds early, you’re more likely to leave it alone. This will allow your money to grow over time, leaving you with substantially more than you would have had if you stored it in a different type of account.
The bottom line
CD accounts are advantageous to have at many times, but they’re especially good to have now. So don’t let that opportunity time out. By opening a CD today, you’ll earn more interest on your savings than you would with almost all other options. And, depending on the length of your CD term, you’ll continue to earn that interest into the future, even when rates fall. But you’ll also be protected against bank failures (thanks to FDIC insurance) and some of your own impulse shopping purchases. Don’t wait — get started with a CD here now!