The upcoming Federal Reserve decision to lower its benchmark rate is drawing attention from consumers, as it could have significant implications on various financial aspects. Whether you are a saver, investor, or borrower, a reduction in the federal funds rate is expected to create a ripple effect on your finances.
Savers have recently enjoyed high yields on savings accounts and CDs due to a previously high federal funds rate. However, with the Fed’s decision to lower the benchmark rate in recent months, many banks have responded by reducing their deposit account yields. The most recent rate reductions totaled three-quarters of a percentage point, with expectations of a further 25 basis points cut this week, leading to potential decreases in deposit account APYs.
In a declining rate environment, fixed-rate CDs can offer a bright spot for savers. By securing a high yield now, you can continue to earn that APY over the CD’s term, even if your bank lowers APYs on new CDs. If you are considering a high-yield CD, there are various options with different term lengths available from reputable, federally insured banks and credit unions.
Here are some top CD options to consider:
– Bank5 Connect: 6-month CD
– APY: 4.50%
– Minimum deposit: $500
– Potential interest with a $10,000 deposit: $223
– Bankrate rating: 3.9 stars out of 5
– CIBC Bank USA: 1-year CD
– APY: 4.31%
– Minimum deposit: $1,000
– Potential interest with a $10,000 deposit: $431
– Bankrate rating: 4.6 stars out of 5
– Bread Savings: 2-year CD
– APY: 4.00%
– Minimum deposit: $1,500
– Potential interest with a $10,000 deposit: $816
– Bankrate rating: 4.0 stars out of 5
– TAB Bank: 3-year CD
– APY: 4.03%
– Minimum deposit: $1,000
– Potential interest with a $10,000 deposit: $1,258
– Bankrate rating: 4.5 stars out of 5
These CDs offer competitive yields and terms, providing potential opportunities for savers in the current market environment.
Synchrony Bank offers a competitive 5-year CD with an APY of 4.00%. There is no minimum deposit requirement, making it accessible to all customers. With a $10,000 deposit, you could earn $2,167 in interest. Synchrony Bank’s CDs are highly rated by Bankrate, with a 4.8-star rating for their CD offerings and a 4.2-star overall rating. Additionally, Synchrony Bank stands out as one of the few banks still offering high-yield five-year CDs.
In addition to traditional CDs, Synchrony Bank also provides unique CD options such as an 11-month no-penalty CD and a two-year bump-up CD. When considering a CD, it’s important to look at factors like APY, term length, and minimum deposit requirement. Shopping around for the highest APY can lead to significantly higher earnings, especially with online banks offering rates well above the average. Consider your financial goals and timeline when selecting a term length, as early withdrawal penalties can impact your earnings.
Some banks have minimum deposit requirements, but Synchrony Bank does not, offering flexibility to customers. Utilizing tools like Bankrate’s CD calculator can help you plan for the future value of your CD. While CD rates have been gradually decreasing in 2024, competitive APYs still remain higher than in previous years. Keep an eye on potential rate changes from the Federal Reserve and continue to explore options that meet your financial needs.
CD enthusiasts are looking ahead to 2024 as the anticipated year of the CD. Securing a fixed-rate CD at this moment, one that offers a competitive yield and aligns with your preferred term, provides the opportunity to enjoy that annual percentage yield (APY) until the CD reaches maturity. This means that, even if financial institutions continue to decrease the rates they offer on new CDs, you can still reap the benefits of the higher APY you locked in.
