Preserve Your Earning Power with Competitive CD Rates
The Federal Reserve’s recent decision to lower the federal funds rate has sent deposit account rates on a downward trend. However, it’s still possible to lock in a competitive return on a certificate of deposit (CD) and safeguard your earning potential.
High-Yielding CD Options Abound
Despite the decline, CD rates remain relatively high, especially for shorter terms. You can find rates of 4.00% APY or higher for terms of about one year and under. Even longer-term CDs offer attractive rates, with the best available rates hovering near 3%-4% APY for terms of three years or more.
Top CD Rates Available Today
NexBank offers the highest CD rate of 4.27% APY on its 1-year CD term, although it requires a substantial minimum opening deposit of $25,000. Marcus by Goldman Sachs and Synchrony Bank follow closely with rates of 4.25% APY on their 1-year and 13-month CD terms, respectively.
Understanding CD Rates and the Federal Funds Rate
CD rates are closely tied to the federal funds rate. When the Fed increases its target rate, deposit account rates tend to follow, and vice versa. With the Fed’s recent rate cuts, CD rates have begun to fall, making now a prime opportunity to lock in today’s higher rates.
Is a CD Right for You?
Before investing in a CD, consider the following 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, which often offer more competitive rates and lower fees. Online institutions, in particular, can provide higher rates due to lower operating costs.
Take Advantage of Competitive CD Rates Today
With CD rates trending downward, now is the time to act. Compare multiple CD account options, consider your financial goals and liquidity needs, and lock in a competitive return on your investment.
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