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A certificate of deposit (CD) account is a relatively easy type of savings vehicle to manage. You deposit a certain amount of money into it, keep it in the account untouched for a select period (or term), and then withdraw it upon maturity, gaining access to both your deposit and any interest earned during that time. But while the account operates in a relatively standard way, it should still be approached strategically, especially in today’s unique economic landscape.
With another Federal Reserve meeting set for the end of July, then, and with talk over potential interest rate cuts rising (which could impact CD rates), savers may be best served by making some strategic moves first. Below, we’ll detail three CD moves savers should make now, before the July 29 Fed meeting formally kicks off.
Start by seeing how high a CD rate you’d currently qualify for here.
CD moves savers should make before the July Fed meeting
Here are three smart CD moves savers should strongly consider making before the July Fed meeting:
Calculate their deposit amount and term length
CD early withdrawal penalties can be expensive, potentially negating all or most of the interest earned to date on the account. To avoid having to pay this fee, savers looking to open a CD while rates are still high should start by carefully calculating their deposit amount and term length. These savers should be positioned to deposit as much money into an account as they can, but they should also be positioned to leave it there untouched until the account matures. If you can’t, you may need to adjust your deposit amount or term length – or both. Just be sure to complete these calculations now, before the rate climate potentially changes – and your interest-earning potential wanes – at the end of July.
Explore CD rates and terms here now.
Shop for banks online
If you’re looking for the highest CD rate possible ahead of future rate climate changes, then forego your local banking branch location and instead shop for banks online. These institutions don’t have the expenses of maintaining a physical location and, accordingly, are often able to pass on those savings to account holders via higher rates on CDs and other accounts. And with the possibility of a rate cut looming, if not for July then later this summer, it’s critical that you find the highest rate possible right now. Online banks can help accomplish this goal.
Lock in a high rate when located
Once you find that high-rate CD account online, and once you’ve determined the amount of money you can afford to deposit (and the term in which you can keep it in), you must lock in the rate as soon as you can. While many experts don’t expect the Fed to cut rates when it meets again this July, comments made after that meeting could be powerful enough to shake the rate climate, particularly if they imply that rate cuts are likely for the central bank’s next meeting in September. So don’t wait for that possibility to become a reality. Lock in a high rate when located and protect your money (and earn interest) even in the face of rate cuts ahead.
The bottom line
With CD interest rates still comfortably in the 4% range but the reality that these rates won’t remain this high for much longer, savers will need to be strategic in their approach. That extends to making the above three moves now, before the July Fed meeting. But, depending on your financial circumstances, goals and budget, it may involve even more steps to take. Still, it wasn’t that long ago that rates here were hovering around 1% so it’s worth taking the time to get things right. No one knows when this opportunity will present itself again so you’ll want to take advantage with a CD account while you still can.
