CDs and high-yield savings accounts are both offering elevated interest rates - but which one is better to open now?
The Federal Reserve's campaign to curb inflation by raising interest rates has made it challenging for homebuyers to take out an affordable mortgage. Similarly, higher interest rates have made other types of loans and credit cards more expensive.But the interest rate news isn't all bad. These elevated rates could mean it's an opportune time to earn money with certificates of deposit and high-yield savings accounts.
As Stephen Nixon, product management director of consumer savings products at Wells Fargo, notes, 'Now is a good time to invest in CDs. As interest rates rise, fixed interest rates paid on CDs also typically increase.'Currently, the best CD rates exceed 5% APY for CDs up to three years. Longer term four- and five-year CD rates tend to range between 4% and 5%. One effective savings strategy is to align your CD term with a specific goal.
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