With inflation affecting everything from grocery shopping to veterinary bills, millions of Americans find themselves looking for new ways to cut corners and save money. While the interest rate environment has deterred prospective homebuyers and owners looking to refinance, the news hasn’t been all bad. Interest rates on high-yield savings accounts and certificates of deposit (CDs) have increased significantly in recent months, giving account holders a fresh opportunity to grow their savings.
To do this successfully, account holders should aim to secure an account with a high interest rate and little (or no) maintenance fees and penalties. But how can you find a CD with a good interest rate? That’s what we will answer in this article.
If you think a CD makes sense for you then start exploring your options now to see how much more you could be earning.
How to get a good CD interest rate
There are multiple ways to secure a good CD interest rate. Here are three to know:
Pay attention to the economy
This may seem obvious but there are better times to open a CD than others. When interest rates were hovering near record lows in 2020 the amount of interest you could earn on a CD was negligible. But as the economy has rebounded from the heights of the pandemic and inflation has increased the Fed has raised interest rates to compensate. This has had a profound effect on CDs with interest rates currently in the 3.5% to 4.5% range (or higher). Compare that to what can be earned with a traditional savings account (with a rate of 0.33%) and it’s obvious that you’re leaving money on the table by not opening a CD now.
And don’t forget – CDs offer locked rates so even if inflation were to drop in the upcoming months and interest rates leveled off you’d still be set with the rate you opened the account with. Start exploring your CD options now and earn more interest.
Shop around
Just like you wouldn’t necessarily purchase the first home you toured or the first car you test-drove you shouldn’t automatically open a CD with your current banking institution. Shop around first to see what’s available on the market. You may be able to get a better interest rate elsewhere. There are multiple lending institutions – both online and with physical locations – currently offering competitive CD interest rates. So do your homework and research your options. Your current institution may be your best bet but it’s also possible that you can find a higher rate somewhere else. You won’t know which is best, however, until you research all of your options.
Check rates here now or use the table below to start shopping around for CDs.
Consider the length
Historically, CDs with longer lengths offer higher interest rates than those with shorter terms. So, if you want a CD that earns more interest then consider leaving your money in the account for a longer period (think years instead of months). That said, the rate environment is still volatile and banks are reacting to it in real time so you can potentially secure a higher rate for a shorter period in today’s climate, too. Explore all of your options before signing on the dotted line. The length of your CD will go a long way in determining how much interest you earn on the account.
The bottom line
While CD rates were lower in recent years the current rate environment has made them a viable option for many account holders. To secure a good rate those interested should pay attention to the economy so that they can open an account when rates are highest. They should also shop around to find an institution offering the highest rate (with little or no fees). Prospective account holders should also look into the length of a CD as it could affect what the bank is willing to pay in interest.
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