3 great ways to boost your CD returns this March
Following almost two years of elevated inflation and higher interest rates meant to combat it, March 2024 was supposed to be the month borrowers would finally get some relief. With inflation on a downward trend, many were optimistic that this month would be the first — but not the only — time the Federal Reserve would cut rates in 2024. But following two disappointing inflation reports showing inflation stubborn for December and January, that optimism was put on hold. Most now expect rate cuts to come in May or June instead.
While higher rates aren't ideal for borrowers, they've been a boost for savers with high-yield savings and certificates of deposit (CD) accounts. But with this rate-climate volatility, there are some strategies savers should pursue to protect and increase their returns. For CD account-holders, who will benefit from a locked rate in a changing environment, it's essential to know the ways to boost CD returns this month.
Start by exploring your CD account options here to see how much more you could earn.
3 great ways to boost your CD returns this March
Here are three effective ways to increase what you can earn with a CD this month.
Shop around
Just like you'd shop around for the best mortgage rate, you should do the same to find the highest CD interest rate. Many banks are offering competitive returns right now, with some climbing past 6% and others at 7% for select savers.
But you won't know exactly what you can earn until you start researching your options. You may even be able to find a CD with a high rate and no fees, allowing your bottom line to grow undisturbed. And some banks will allow you to withdraw your funds early, without penalty.
To obtain these sorts of account types, you'll need to do a little work by shopping around. But that work will pay off when you locate the right lender.
Use an online bank
Online banks have been able to offer higher returns for CDs than their counterparts with physical locations, and that dynamic is unlikely to change in March. Strongly consider using an online bank instead of one with a local branch.
Since these sorts of banks don't have the overhead costs of maintaining multiple physical locations they're often able to pass on those savings to savers in the form of higher interest rates. So don't be afraid to use an online lender, especially considering that you're unlikely to need the funds until they mature anyway.
Choose a short-term CD
Typically, savers could rely on a greater return the longer they left their money in a CD. So, you'd get a higher rate on a 3-year CD versus a 3-month one, for example. But in today's unpredictable economic climate that's not the case.
Many lenders are now offering better rates on short-term CDs instead of long-term ones. So if the goal is to earn the highest rate possible — even if it's for an abbreviated time frame — choose a short-term CD over a long-term one.
And if you're worried about rates changing during that term, consider laddering more than one account so that they expire at different times, giving you the flexibility to reinvest the expired funds at a different rate.
The bottom line
The Federal Reserve is set to meet again on March 19 and March 20, and interest rates will be on everyone's mind. So don't wait for the rate climate to change. By shopping around for lenders, using an online bank and choosing a short-term CD over a long-term one this March savers can earn significant returns immediately and in the months to come, regardless of predicted rate cuts. That makes a CD a rare win-win in an otherwise still uneven economic environment.
