If you’re looking to maximize your earnings from a certificate of deposit (CD) account this February, experts recommend considering short-term options. Rates on longer-term CDs have shifted, and the highest-paying ones today are those under one year – specifically four to eight months. These terms offer around 4.5% annual percentage yields, making them attractive for savers seeking liquidity in the near term.
According to CD Valet data, the top 10% of annual percentage yields for these short-term CDs hover around 4.5%. This trend is driven by changing market conditions and Federal Reserve policy shifts. Experts advise choosing a term length carefully, as interest rates can vary widely from one option to another.
When considering your options, think about your goals and the potential for rate fluctuations over time. A lower rate on a long-term CD might not be a bad thing if you plan to keep the funds untouched for a long period. Instead, explore shorter-term CDs with more attractive rates, and don’t be afraid to shop around among credit unions and online banks.
In general, these institutions tend to offer competitive rates due to their business models. Credit unions, in particular, operate on a not-for-profit model, allowing them to provide lower loan rates and higher deposit rates. By understanding where rates are headed and choosing the right term for your needs, you can maximize your earnings from a CD account this February.
Source: https://www.cbsnews.com/news/what-cd-term-is-best-this-february-experts-weigh-in