Inflation has been stubbornly high for a long time. So if it’s been a struggle to save money, that’s understandable. But if you’ve finally managed to save up some cash in the bank, you may have a solid opportunity to grow your savings nicely.
Today’s CD rates are the highest they’ve been in years. But there’s reason to believe they’ll soon start to fall. If you want to take advantage of them, the time to move is now.
Open a 5% CD while you can
Any money you have earmarked for your emergency fund should be kept in a regular savings account. And the reason is that you need access to those funds at all times.
On the other hand, money you have available beyond what you need for financial emergencies is money you can do other things with. If you’re working toward a long-term goal, like retirement, then investing your money is generally your best move. But if it’s a short- or medium-term goal you’re working toward, then a CD could be a great solution.
Our Picks for the Best High-Yield Savings Accounts of 2024
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American Express® High Yield Savings APY 4.25%
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APY 4.25%
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Min. to earn $1 |
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CIT Platinum Savings 
APY 5.00% APY for balances of $5,000 or more
Min. to earn $100 to open account, $5,000 for max APY
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APY 5.00% APY for balances of $5,000 or more
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Min. to earn $100 to open account, $5,000 for max APY |
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UFB Portfolio Savings Account 
APY 5.15%
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APY 5.15%
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Min. to earn $0 |
With CDs, you don’t take on the risk of losing money like you do in a stock portfolio. You get more of a guaranteed return than with a savings account, since you’re locking in a specific interest rate for a predetermined period.
Let’s say you have $10,000 to put into a CD. If you open one with a 12-month term and a 5.00% APY, you’re looking at earning $500 in a year. Knowing you’re guaranteed that specific amount of interest could make it easier to pull off whatever goal you’re trying to achieve.
Of course, you may be inclined to keep your money in regular savings so you have the option to withdraw it at any time. If your savings account has a 4.00% APY, then you could earn $400 in interest over the next year, which is still a decent sum.
But that 4.00% APY isn’t set in stone. And given that the Federal Reserve is likely to start cutting interest rates soon, you’re taking a risk by keeping money in a regular savings account. With a CD, you can lock in a fabulous rate and supercharge your savings.
The one pitfall you might encounter with a CD is needing to take an early withdrawal and facing a penalty because of that. But if you set up a CD ladder, you can minimize that risk.
A CD ladder has you taking your money and dividing it into different CDs with staggered maturity dates. For a $10,000 deposit, instead of opening a single 12-month CD, you could open four $2,500 CDs with maturity dates in three months, six months, nine months, and 12 months. This way, you get access to a portion of your money every three months.
Of course, you may also decide to move forward with a 12-month CD if that’s the best rate available today and you’re confident you have separate funds you can tap in a pinch. But either way, get moving on opening that CD.
The Federal Reserve meets in September, so its first rate cut in years may only be about a month away. You might as well open a CD before that happens to lock in the best rate available.
These savings accounts are FDIC insured and could earn you more than 10x your bank
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you more than 10x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.
