Preserve Your Earning Power with Competitive CD Rates
The Federal Reserve’s recent rate cuts have sent deposit account rates tumbling. However, there’s a silver lining: you can still secure a competitive return on a certificate of deposit (CD) and protect your earning power. In fact, the top CDs currently offer rates above 4%.
CD Rates Today: A Snapshot
Compared to traditional savings accounts, CDs typically offer significantly higher rates. As of January, the best short-term CDs (six to 12 months) generally offer rates ranging from 4.00% to 4.50% APY. The highest CD rate currently stands at 4.32% APY, offered by Nexbank on its 1-year CD, although it requires a substantial $25,000 minimum opening deposit. Marcus by Goldman Sachs offers the next-highest CD rate at 4.30% APY on its 9-month CD, with a more accessible $500 minimum opening deposit.
A Brief History of CD Rates
The 2000s saw CD rates fluctuate wildly, from the dot-com bubble to the global financial crisis of 2008. As the economy slowed, CD rates plummeted, with the average one-year CD paying around 1% APY by 2009. The trend continued into the 2010s, with rates hitting rock bottom by 2013. However, the Fed’s rate hikes between 2015 and 2018 brought some relief, and CD rates began to rise. The COVID-19 pandemic led to emergency rate cuts, but the subsequent rate hikes have pushed CD rates to new heights.
Choosing the Right CD for You
When selecting a CD, it’s essential to consider more than just the APY. Your goals, financial institution, account terms, and inflation expectations all play a crucial role in determining the best CD for your needs.
- Your Goals: Decide how long you’re willing to lock away your funds, as CDs come with fixed terms and early withdrawal penalties.
- Type of Financial Institution: Online banks often offer higher interest rates than traditional banks due to lower overhead costs.
- Account Terms: Understand the maturity date, withdrawal penalties, minimum deposit requirements, and other terms before committing to a CD.
- Inflation: Consider how inflation may impact your returns, especially for longer-term CDs.
Don’t Miss Out on Today’s High CD Rates
With CD rates beginning to decline, now may be your last chance to lock in a competitive return. Compare the best CD rates available today and ensure you’re earning the best rate possible.
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