3 important reasons to lock in a CD rate today
The decisions you make about where to invest your hard-earned money can greatly impact your financial security and future goals. For example, it can be a gamble to invest in stocks in a tumultuous stock market. You could win big if the timing is right. But if it's not, you may lose a lot more than you bargained for.
One good investment option that often flies under the radar is a certificate of deposit (CD). Unlike many other types of investments, CDs are a safe investment and they offer a range of other unique benefits to investors and savers too, especially now.
If you're looking for the right investment or savings vehicle, there are numerous reasons why a CD could make sense. But it's important not to wait to invest in one; there are a few good reasons you should take steps to lock in a CD today.
Explore the CD rates and terms you could get today here.
3 important reasons to lock in a CD rate today
If you're thinking about putting your money in a CD account, here are a few important reasons to lock in a CD rate right away.
CD rates are exceptionally high right now
Timing can be crucial when it comes to making the most of your savings. And, the timing is great for CDs right now, because rates are remarkably high due to the Fed's numerous rate hikes over the past year.
By locking in a high CD rate today, you have a unique opportunity to secure a generous return on your investment. Many CDs come with fixed APYs of 5% or higher currently, so it's a smart time to lock in a rate.
It's not just long-term CDs offering these high rates, either. Many short-term CDs offer rates that are equally high — if not higher — which allows you to choose the CD length that works best for your finances without sacrificing your high interest rate.
Learn more about how a CD could make sense for your money right now.
You'll lock in the same rate for the entire term
One of the most attractive features of a CD is its fixed interest rate, which stays the same throughout the entire CD term of the investment. This predictability is a valuable asset, especially in times of economic uncertainty.
With a fixed-rate CD, you're shielding your money from the potential downsides of interest rate fluctuations that can affect other types of investments. Even if the broader interest rates in the market drop, your CD rate remains untouched, continuing to grow your savings at the agreed-upon rate.
This stability can help you plan your finances with confidence, knowing exactly how much your investment will yield at the end of the term.
CD rates could drop in the future
While current CD rates may seem exceptionally attractive, they are not guaranteed to remain at these levels indefinitely. Economic conditions, central bank policies and global events can all influence interest rates. And some experts say CD rates may have peaked — or are likely to in the near future. So, it's important to recognize that the high rates being offered today might not be available in the future.
By locking in a CD rate today, you're essentially safeguarding your future earnings from the risk of declining rates. Even a slight drop in rates can significantly impact the potential returns on your investments. But if you lock in a top rate now, you're ensuring that you won't miss out on the opportunity to secure a favorable rate for your savings.
The bottom line
Seizing opportunities to maximize your savings is crucial to your overall financial plan. And, right now, CD rates offer a remarkable opportunity to secure high returns on your investments, providing a safe and predictable avenue for growth.
By locking in a CD rate today, you can take advantage of the favorable rates, ensure a fixed return for the entire term and shield yourself from the potential risk of future rate drops — three big benefits, whether you're a seasoned investor or just starting to build your financial foundation.
