While recent interest rate hikes have hurt prospective homebuyers, as well as homeowners looking to refinance, the news hasn’t been all bad. Because of the Fed activity, the benefits of high-yield savings and certificates of deposit (CD) accounts has increased exponentially.
Both account types come with unique benefits and advantages, many of which are especially appealing in today’s economic climate. Many account holders may be looking for any edge they can get and considering that the average savings account interest rate hovers around 0.33%, they aren’t getting the help they need by keeping their money untouched.
Fortunately, a certificate of deposit account can help protect and grow your money, assuming you have a favorable interest rate. In order to get the most value out of these types of accounts it first helps to understand what a good CD interest rate is.
You can easily check today’s CD interest rates to determine if it makes sense for you or simply use the table below to explore some local options.
What is a good CD interest rate?
As with interest rates on savings and high-yield savings accounts, the higher the interest rate the better it generally is. To determine what a “good” rate is simply compare what CDs are currently offering to what you can get with a regular savings account.
Savings accounts are currently hovering around 0.33% while interest rates on CDs are around 3.5% to 4.5% or higher depending on the lender and other factors. This makes now a great time to open a certificate of deposit account. Simply put: If you’re not putting some money into a CD or some other form of high-interest account then you’re leaving money on the table.
Just make sure to shop around before signing on the dotted line. By researching all viable options you’ll improve your chances of securing the highest rate out there. But be sure to look at the fine print. Some banks may charge you fees or penalties that can potentially eat into your interest rate. This could be the difference between a lender that offers a high rate and one that provides a lower rate with no fees.
Explore your CD options online now to see how much more you could be earning.
CD benefits to know
Higher interest rates aren’t the only benefit certificate of deposit accounts offer. Here are two other major benefits those considering a CD should know:
- Locks in your rate: You may be able to make more interest with a high-yield savings account or some other savings vehicle but that will probably only be temporary. That’s because high-yield savings account interest rates are not locked in and will go up or down based on the market and Fed activity. A CD doesn’t work that way – the interest rate you secure when you open the account will be the same one honored throughout the CD’s full term. So don’t worry about market activity, with a CD your money will earn interest no matter what happens in the market.
- Protects your money: Not only will a CD protect you against an unfavorable rate environment it will also protect your principle by locking your money away for the full term. Account holders won’t be able to access the money unless they’re willing to pay a penalty to get it. So, if you’re having trouble saving money a CD may be worth it for you. The money you deposit will be the same amount of money you withdraw when the term ends (plus however much interest you made).
Explore your CD options now to get started!
The bottom line
Those looking to both protect and grow their money should strongly consider opening a CD. These sorts of accounts are currently offering interest rates exponentially higher than those that accompany traditional savings accounts. But the benefits don’t end there. They’re also reliable as the interest rate you get when you sign up will be the interest rate honored throughout the CD’s full term. And because you won’t be able to access it without penalty you can rest assured knowing that your money is safe (and growing) without interruption.
Thanks for reading CBS NEWS.
Create your free account or log in
for more features.
Source : https://www.cbsnews.com/news/whats-good-cd-interest-rate/