![]() Gonzalez says you should be sure to see whether the CD charges any monthly maintenance fees or penalties. Otherwise, there can be regret after the fact if those terms were not fully understood,” says Hamrick. “The point of fine print is that it should be understood before the decision to use a financial product like a CD. “Searching for the term length is a good starting point when choosing a CD,” she says, adding that “you’ll also need to remember that your initial deposit is also your only deposit, and you cannot make any additional deposits over time.”Īdditionally read the fine print on the CD to ensure you know all the fees, penalties and rules. When looking for a CD, WalletHub analyst Jill Gonzalez says the first step is to decide how long to commit to locking up your money in other words, what length of term you are looking for. ![]() “Seeing as the Fed recently paused rate hikes, it’s indicative that they’re close to their target inflation rate of 2%,” Ayoola says, adding that “there’s no guarantee CD rates will continue to climb, so people should utilize these peculiarly high rates while they’re available.” What to know before you get a certificate of deposit ![]() NerdWallet personal finance writer Elizabeth Ayoola adds that because of this continued pressure on inflation, all eyes now for what’s ahead should be on the central bank. “We will probably only know that after we’ve arrived.” “Between the rising yields in financial markets and the Federal Reserve’s devotion to a ‘higher for longer’ mantra, we have yet to see a confirmed peak in rates,” says Bankrate Washington Bureau Chief Mark Hamrick. These fixed-date offers may only continue to become more attractive in the months ahead, some pros say. Some institutions will continue to provide more generous returns than others in order to attract money, including some that might have previously gone into other assets including equities.” ![]() “Typically, financial institutions raise savings rates as they anticipate borrowing demand,” Hamrick explains, adding however that it’s “a bit of a mixed bag at the moment … given falling demand and availability of credit. ““There’s no guarantee CD rates will continue to climb, so people should utilize these peculiarly high rates while they’re available.” ” - NerdWallet personal finance writer Elizabeth Ayoola Because a higher funds rate means bank and credit union debt obligations have become more costly, Hamrick says many smaller institutions have responded by making savings products increasingly lucrative to new depositors with hopes of rolling them into their various accounts along the way. Indeed, now you routinely find certain CDs paying 5% or higher, and you can see some of the best CD rates you can get now here. Over the past 12 months, the central bank has increased the benchmark funds rate to 5.25%-5.5% from nearly zero a year ago. So why have savings rates climbed so much in such a short period of time? For starters, elevated inflation has triggered persistent rate hikes from the Fed. Even shorter term CDs such as those with 6-month terms have reached an average of 1.36% APY from as low as 0.07% and 0.34% last year, respectively. 18 from just 0.60% this time last year, according to the Federal Deposit Insurance Corporation, or FDIC. In the past year, 12-month CDs have climbed to 1.76% APY on average through Sept. Savings rates for many deposit accounts have continued to climb over the past year. Why are certificate of deposit rates going up, and will CD rates continue to rise? Here’s what to know about the CDs with the best annual percentage yield, or APY, in October 2023, and we list some of our top finds below.
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