4 reasons a short-term CD makes sense now, according to experts

For the past few years, Americans have been taking advantage of several vehicles to earn high yields while protecting their savings. That’s because persistent inflation and elevated interest rates, while tough on borrowers, are a plus for savers yielding high returns on savings deposits like certificates of deposit (CDs) and high-yield savings accounts.

In recent months, however, inflation has cooled modestly, leading to slightly lower rates for both borrowers and savers. Accordingly, CD rates are beginning to drop.

Historically, locking in a high interest rate for the long term can be a wise move when CD rates are trending downward. That way, you’re guaranteed to earn today’s elevated interest rate even if rates fall in the future, as long as you keep your money in the account. However, some experts note there may be benefits to opening a short-term CD in today’s rate environment.

 

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