Why you should open a CD this April
April is often thought of as a prime time for homebuyers and the real estate market but, this year, it could also mark a great time to invest your money with a certificate of deposit (CD) account. By opening one of these accounts now savers will gain some protection against today's cooled but still stubborn inflationary environment — while growing their savings at a rate that outpaces the inflation rate.
Like all investments and savings accounts, however, there are better times to open a CD than others. And while the economic climate of the last two years has been favorable for these account types, that window of opportunity could be closing soon, making this April an ideal time to get started. Below, we'll detail three important reasons why savers should open a CD this month.
Why you should open a CD this April
Here are three reasons why you shouldn't wait for May to open a CD.
Rates are high now
CD interest rates may come down later this year but they're still high currently, with many hovering close to 6%. That's a lot of money that can be earned simply by transferring your existing funds from one account to another. With the right CD deposit and interest rate, savers can potentially make hundreds, if not thousands, of dollars on their money right now. And because these rates are locked for the full CD term, you'll earn those returns even if the Federal Reserve were to cut interest rates (and CD rates would fall in tandem).
Get started with a high-earning CD here today.
Rates could plateau — or drop — at the end of the month
The Fed is set to meet again at the end of April, and that's why many aren't predicting an interest rate cut announcement then, an implication that rate cuts are likely for the summer could hurt what lenders offer for CDs in May, June and beyond. Even if rates plateau at that point, they may still not be as beneficial as what can be secured in the early weeks of the month before that possibility looks more realistic.
While potential rate cuts won't start dramatically — and how they ultimately influence what's offered on CDs may be minimal — every dollar counts, particularly if you can earn more simply by being a bit more proactive at the start of April instead.
Your regular savings account is losing money
If you're losing money, no matter how, it makes sense to put a halt to that practice immediately. And, if you have your money saved in a traditional savings account, that's precisely what is happening right now.
The average interest rate on this type of account is less than 1% or just 0.47% right now, according to the FDIC. That's far below today's 3.2% inflation rate and multiple times less than what can be secured with a CD found with an online lender now. It makes sense, then, to start earning more with your money by opening a CD in the early days of this month.
The bottom line
This April is a great time to open a CD and it may be one of the last months to truly take advantage of today's interest rate cycle. By opening an account now savers can still secure a high rate of interest and they can do so by getting under the wire, before predicted interest rate cuts later this spring and summer. Finally, by opening a CD this April they'll also put an end to the barely existent returns they've been accustomed to with their regular savings account — and they'll instead start earning significantly more right away.
