The economic climate has been rough for many Americans over the last year. For starters, persistenthave led the Federal Reserve to increase its benchmark rate numerous times, which has resulted in higher borrowing costs on nearly every type of loan product. And, while the inflation rate is down compared to last year, we’re not out of the woods yet.
Today’s higher borrowing costs, persistent inflation and other economic pressures have, in turn, caused many people’s budgets to be stretched thin. But the one upside is that there’s an opportunity for savers to earn big returns by putting their money in an interest-bearing account, like a.
But high-yield savings accounts aren’t the only smart bet for savers right now. Check out your top CD options here.also offer big benefits to savers — and this October is the perfect time to consider opening one. Ready to get started?
4 reasons to open a CD account this October
There are a few different reasons to consider opening a CD this month, including:
Historically high CD rates
One of the most enticing reasons to open a CD this October is that these accounts are offering historically high rates. Today, it’s not uncommon to find online CD options offering— which can result in big returns on your money.
And, what makes CD accounts particularly appealing — especially compared to— is that the rates they offer are locked for the full CD term. So, if you were to open a 12-month CD account at 5.5% in October and rates subsequently dip to 4% in the coming months, you’ll still earn interest at the elevated rate for the entire duration of your .
The potential for rates to drop
While the current high CD rates are enticing, it’s important to recognize that they won’t remain at these elevated levels indefinitely. CD rates are closely tied to the Federal Reserve’s rate decisions — and there’s a good chance that the era of rising interest rates may be drawing to a close.
After all, thesince March 2022, and while inflation ticked back up unexpectedly in July and August, it is down significantly compared to last year. So, there may not need to be another rate hike this year. And, there’s always a chance that rate cuts could happen in early 2024 — which would also cause CD rates to decline in tandem.
In other words, if you wait and the rate hikes taper off — or rates decline in the coming months — you will miss your opportunity to earn interest at today’s very high rates. But if you open a CD account this month, you’ll startnow, no matter what happens in the future.
The uncertain economic climate
There are still a lot of unknowns regarding the economy, and anything could happen in the future. Given that we’re in the midst of an unusual economic climate, it could benefit you to take steps to preserve your capital.
And, CDs provide an excellent means of doing that. Your initial deposit is protected and you’ll also earn interest on top of it.for those who want to shield their money from market or economic fluctuations while still earning a respectable return.
The need to diversify your savings strategy
Diversification is a fundamental principle in finance — and it should be a fundamental part of, too. If it’s not, you may want to consider opening a CD account in October, which can be a valuable step toward diversifying your savings portfolio.
Unlike other investments, CDs offer a low-risk option with predictable returns. This stability can help balance your overall financial strategy, reducing exposure to more volatile assets.
The bottom line
This month presents a unique opportunity to capitalize on the current high CD interest rates. While rates may not remain at these levels indefinitely, by opening a CD now, you have a chance to grow your savings significantly. And, CDs are a valuable addition to your financial toolkit in the midst of today’s economic climate. So, if you’re looking for a secure and profitable way to grow your money, it could be worth opening a CD account this October.