Time-Sensitive Opportunity: Lock in High CD Rates Before They Drop
The Federal Reserve’s recent decision to lower the federal funds rate for the third time this year has sent deposit account rates tumbling. However, savvy savers can still capitalize on competitive returns by investing in a certificate of deposit (CD) today.
CD Rates Remain Attractive, But Won’t Last Forever
Despite the decline, CD rates remain high by historical standards, particularly for shorter terms. You can still find rates of 4.00% APY or higher for terms of about one year and under. Although interest rates for longer-term CDs aren’t as high, the best available rates still hover near 3%-4% APY for terms of three years or more.
Top CD Rates Available Today
NexBank is currently offering the highest CD rate of 4.27% APY on its 1-year CD, although it requires a substantial minimum opening deposit of $25,000. Synchrony and Marcus by Goldman Sachs follow closely, offering 4.25% APY on their 13-month and 1-year CDs, respectively.
Why CD Rates Are Tied to the Federal Funds Rate
CD rates are directly linked to the federal funds rate. When the Fed increases its target rate, deposit account rates usually follow suit, and vice versa. With the Fed’s recent rate cuts, CD rates have begun to fall, making it essential to act quickly to secure today’s higher rates.
Is a CD Right for You?
Before investing in a CD, consider the following key factors:
- Interest rates: CDs are more attractive when interest rates are high or trending downward, as they lock in the current rate for the entire term.
- Financial goals: CDs are a safe investment choice for preserving capital and earning a steady return, but may not be suitable for long-term goals like retirement.
- Liquidity needs: CDs require locking in your money for a set period, so consider your liquidity needs before investing.
Where to Find the Best CD Rates
Don’t settle for mediocre rates from your current bank. Explore online banks, credit unions, and community banks that offer competitive rates and better terms. Online banks, in particular, can provide higher rates due to lower operating costs.
Act Now to Secure Higher CD Rates
With CD rates trending downward, it’s crucial to act quickly to lock in today’s higher rates. Compare multiple CD account options, and consider investing in a CD that meets your financial goals and liquidity needs.
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