How to choose a long-term CD

Federal interest rates hit a plateau (at least for now), Long term CD A new application is being accepted for many savers.

The rate increase is slow and the amount that banks offer Certificate of Deposit (CD) Level off, you’re probably considering the best way to lock in a great rate for the longest time. But because they can affect your financial situation for years to come, it’s important to choose your long-term CDs wisely.

Everything from how you plan to use your savings balance to interest rates, penalties and more can affect the long-term CD you choose. Now maybe a Great time to lock in a long-term CDBut you’ll get the most benefit if you take the time to compare your options to find the best one for your personal goals

Explore your CD rate options now to see how much more you can earn

How to choose a long-term CD

Although there’s no exact length to define long-term CDs, the most common — and highest-earning — options you’ll find today are typically three years to five years.

One of the most important things to consider when you’re choosing a long-term CD is, of course, interest rate. Some CDs in this range earn 4.5% APY or more. Although long-term CDs often yield higher yields, short-term CDs currently carry a slightly higher APY than long-term CDs. So if you’re looking for a longer CD with the best interest rate, you might consider a two- or three-year CD.

Another thing you should account for Your own timeline. If you have a goal for the amount you plan to put into your CD, use that as a determining factor. Long-term CDs still carry penalty fees, so if you have to withdraw your funds early, you may lose some (or all) of the interest you’ve earned. On the other hand, if you know you have a long time before you need the money, you’ll get more value over time by locking in the longest term at the highest rate available.

Find out how much you can earn on long-term CDs by exploring today’s top rates here!

Why now is a good time to lock in a long-term CD

After more than a year of federal interest rate hikes, we may be reach a peak. Although the Federal Reserve could still raise rates again this year, June interest rate break Indications that the company may be ready to slow down.

As a result, interest rates are increasing High Yield Savings Account And CDs may no longer rise at the rate we’ve seen over the past few months. That means now could be a great time A high rate lock as long as possible

Say, for example, you locked in a five-year CD today with an APY of 4.3% and an opening deposit of $5,000. By the time the CD matured, you would have earned over $1,000 in interest for a total balance of about $6,171.

If you lock in a short-term CD, you may be able to score a higher rate today — but there’s no guarantee you’ll get a competitive rate when the CD matures. For example, you can currently find one-year CDs that earn 5.25% APY. But if rates hold steady or even decline over the next few months, CD rates could be much lower within a year and even lower beyond that.

If you don’t need access to money in the short term, you can increase your income today over time over a longer period. Learn more about the best CD rates you can use to increase your balance here today.

Bottom line

Long-term CDs can make a great option for your savings, as we’ve really seen rates go up, or if you want to make sure you’ll be able to earn today’s high rate long into the future. Choosing the right CD Will depend on a few different factors — the interest rate you’re looking for, how long you can lock your balance and possible penalties. But by giving a little thought to your financial goals and researching the long-term CDs available now, you can ensure you get the best interest rate on your cash for years to come.

Start earning more with one of the best CD rates now!