3 surprising things about CD accounts savers should know

When it comes to your everyday banking needs and uses, most people are familiar with how their regular savings and checking accounts operate. What they may not be as well-versed in, however, are the potential returns they can secure with their savings as well. This is especially good information to have now, with inflation still stubborn (if cooled) and interest rates higher than they've been in decades. This has caused the cost of everyday living and borrowing to skyrocket in the last year and a half. Against this backdrop, then, Americans should take a closer look at how their banking can be adjusted to better offset losses felt elsewhere.

One effective way to do so today is by opening a certificate of deposit (CD) account. These accounts offer interest rates many times more than the average rate on a regular account, and they come with unique protections and advantages that you simply won't find by leaving your money untouched in traditional accounts. That said, there are some surprising things about CD accounts that savers should know to more effectively reap the rewards that a top-earning account can provide.

Start by exploring your CD account options here to see how much interest you could be earning.

3 surprising things about CD accounts savers should know 

Here are three surprising things you may not have known about CDs.

Rates are the highest they've been in years

CD accounts of October 2023 are not the same CD accounts of October 2022 or even 2021 or 2020. In fact, interest rates on CDs are the highest they've been in quite some time, with many accounts offering 5.5% or more right now. You may even be able to find a CD with a 7% interest rate if you look around. 

That's a substantial amount that you could be earning by simply transferring your funds from one account to a CD. Depending on the amount you deposit — and the rate you secure — that could add up to hundreds of dollars more on your savings each year. Compared to the minimal 0.46% that accompanies most regular savings accounts, you're losing money by not making the switch.

Get started with a top-earning CD account here now.

You don't always have to an early withdrawal penalty

CDs are known for their terms and higher rates … and their penalties for withdrawing money early. But did you know that you don't always have to get penalized for making an early withdrawal? In fact, multiple CDs on the market now come with no penalties — either for withdrawing your money before the term is up or for other reasons. 

Granted, these CD accounts tend to come with lower returns than more traditional CDs, but they do exist and they could be beneficial for those savers who want to earn a competitive CD rate but may need to take out their funds before they expire. 

Rates are better on short-term CDs now

Historically, rates on long-term CDs were higher than their short-term counterparts. It's easy to understand why. By locking your money away for a longer period of time, the bank was rewarding you with a better rate than those who put their money into an account for a brief stint. 

However, due to the volatility of today's market, rates are currently (usually) better on short-term CDs (12 months or less) than they are on long-term ones. That doesn't mean that you still can't secure competitive rates on long-term CDs, too — you can. Just understand that rates are generally higher now on short-term CDs.

Explore your short-term CD rate options here now.

The bottom line

A CD account can offer protection at any time but, in today's volatile market, they're especially beneficial. To take advantage of this opportunity, savers should familiarize themselves with the ins and outs of this savings vehicle and understand some nuances, like the higher interest rates compared to what was recently available. It's also beneficial to understand that not all CDs come with early withdrawal penalties. And it's helpful to know that the better rates now are generally on short-term CDs.

Have more questions about your CD account options? Learn more here today.