Preserve Your Earning Power with Competitive CD Rates
The recent federal funds rate cuts have sent deposit account rates tumbling. However, you can still secure a competitive return on a certificate of deposit (CD) and safeguard your earning potential. In fact, top CDs continue to offer rates above 4%.
CD Rates Today: A Snapshot
Currently, CDs offer significantly higher rates than traditional savings accounts. The best short-term CDs (six to 12 months) typically provide rates ranging from 4.00% to 4.50% APY. Synchrony’s 13-month CD takes the lead with a 4.35% APY, requiring no minimum opening deposit.
A Look Back: CD Rates Over the Years
The 2000s were marked by economic turmoil, including the dot-com bubble and the 2008 global financial crisis. CD rates plummeted as the Federal Reserve slashed its target rate to stimulate growth. By 2009, one-year CDs averaged around 1% APY, while five-year CDs yielded less than 2% APY. This downward trend continued into the 2010s, particularly after the Great Recession.
However, between 2015 and 2018, the Fed’s rate hikes led to a slight improvement in CD rates. The COVID-19 pandemic’s onset in 2020 prompted emergency rate cuts, causing CD rates to hit record lows. As inflation spiraled out of control, the Fed hiked rates 11 times between March 2022 and July 2023, resulting in higher loan rates and APYs on savings products, including CDs.
Choosing the Right CD for You
When selecting a CD, consider the following factors:
- Your Goals: Determine how long you’re willing to lock away your funds, as CDs come with fixed terms and early withdrawal penalties.
- Type of Financial Institution: Research CD rates from online banks, local banks, and credit unions, as rates can vary significantly.
- Account Terms: Understand the terms of the CD, including the maturity date, withdrawal penalties, and minimum deposit requirements.
- Inflation: Consider how CDs might not keep pace with inflation, especially for longer terms.
Take Advantage of Today’s High CD Rates
Although CD rates are beginning to decline, they remain high by historical standards. Now may be your last chance to lock in today’s competitive rates. Compare the best CD rates available today and ensure you’re earning the best return possible.
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