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When it comes to finding the right financial product or service, timing is everything. And for the better part of the last two years, the time was right to open a certificate of deposit (CD) account. Whether you have chosen a Short term CD or a Long term CD and I chose to file $500 Or $5,000you were able to obtain an exponentially higher return than you could have obtained a few years earlier thanks to inflation and higher interest rates.
But the timeline for opening a CD account is changing again – and savers would be wise to do some smart gestures now while they still can.
For those who do not yet have a CD account as well as those who still want to take advantage of today’s high rates, it makes sense to open a CD account now, in the weeks leading up to the scheduled Federal Reserve meeting in November. Below we will explain why.
Find out here how much more you could earn for your money with a higher quality CD.
Why you should open a CD before the November Fed meeting
Not sure if it’s the right time to open a CD? Then consider these three factors:
Interest rates are still high
Despite the Federal Reserve Interest Rate Cut in September by half a percentage point, interest rates on CDs are still high at the moment, with many lenders offering rates between 4 and 5%. In other words, the interest rate environment has only recently started to calm down, but not to the point where CD rates are unworthy.
That said, current interest rates are unlikely to remain this high for much longer, and many may look to October 2024 as the last time they could have gotten a high rate during this particular economic cycle. So don’t wait for this to happen.
Get started now with a high-speed CD.
Rates could fall in anticipation of a cut
A formal rate cut will ensure that lenders lower rates on their products, for both savers and borrowers. But it doesn’t have to be official for lenders to anticipate any reduction. Rates could fall in anticipation of a cut, as they did in September for mortgage ratesbefore the Fed takes formal action. This same dynamic could play out with CDs during the last weeks of October. Start researching rates and lenders now, before this theoretical scenario becomes a reality.
Multiple rate cuts now seem likely
It has been difficult to predict rate cuts this year, as many started 2024 expecting them to be issued in the spring or perhaps June. But with the first official reduction finally announced on September 18 – the first in four years – the economy had the opportunity to react. And although the November and December cuts are now only expected to be 25 basis points, that will represent a full one-point reduction from the September 1 federal funds rate. This will reduce what you can earn on a CD if you wait. act after November. So if you know how much you can comfortably deposit without risking a early withdrawal penaltyit makes sense to act now, while high-priced CDs are still easy to find.
The essentials
Even though you could have opened a high-earning CD for much of 2022 and 2023, the window of opportunity hasn’t completely closed yet. By acting now, savers can still lock in a rate between 4% and 5% – and they can do both before the Fed announces another rate cut in November. And before lenders start incorporating this reduction into their offers. Just be sure to shop around for a lender with the best rates and terms and consider using a online bankingbecause they can generally (but not always) offer a more attractive return than banks with physical branches.
