Is a long-term CD still worth it?

Amid cooling inflation and the current pause in federal interest rate hikes (despite expectations that the Fed will raise additional rates this year), The best place to park your savings Suddenly it might seem a bit complicated.

Certificate of Deposit (CD), in particular, is a savings vehicle where timing makes a big difference. These accounts carry fixed interest rates, so the APY offered when you open your account won’t change throughout the term.

Locking your rate at the highest rate becomes even more important when your goal is to earn the current high rate as long as possible Long term CD. But there are still plenty of reasons why a long-term CD might make sense for your financial plan today.

Learn more about the best CD rates available today here.

Is a long-term CD still worth it?

Locking a Long term CD May still be a good choice in today’s rate environment. Here are some factors you may still want to consider for your portfolio.

Inflation is cooling

The latest Consumer Price Index showed inflation rising to a two-year low 3% annual rate. That means the Fed’s rate hikes are working — and if the trend continues, it could potentially lead to more extended rate hikes.

“Given that inflation is showing signs of cooling, the Fed’s interest rate hikes will likely slow and taper in the near term,” said Natalie Taylor, CFP, founder of Natalie Taylor Consulting Services.

If the Fed raises interest rates at a slower pace, it will Rate offered by the bank. So if you are looking for a lock Maximum rateCooler inflation may be a sign that we are nearing the top end of what banks will offer on long-term CDs during this cycle.

“This could mean that long-term CD rates will begin to adjust downward between now and the end of the year, so if a CD aligns with your risk tolerance and time horizon, locking in a rate sooner could benefit you.” This is what Taylor said recently CBS News.

Explore some of today’s best CD rates with varying tenure lengths now

Rates are still high

Fortunately, there is plenty of cash to be made today from long-term CDs. Depending on your tenure, you may be able to lock in Above 4.5% APY — Comparable to what variable-rate high-yield savings accounts are offering.

For example, here are some Top Long Term CD Rates Enough now:

• Bread Financial 3 Year CD: 4.75% APY
• Popular Direct 3 Year CDs: 4.75% APY
• Indiana First Internet Bank 5 Year CD: 4.59% APY
• Barclays Bank 5 Year CD: 4.50% APY

With any of these accounts, you can lock in today’s high rates for years to come. And because CDs carry fixed interest rates, you’re guaranteed that you’ll get The full amount of interest income When your CD matures (unless you withdraw early and a penalty)

Say, for example, you deposit $10,000 into a five-year CD earning 4.50% APY today. When your CD matures, your initial balance and accrued interest will total $12,461. See how much more you could earn with a top long-term CD rate today.

Construction of a CD ladder

If you’re not ready to put your entire balance into a long-term CD today, you might want to consider it Construction of a CD ladder.

With this method, you divide your total savings balance across CDs of different term lengths (one-, two-, three-, four- and five-year terms, for example). As each CD matures, you can roll it into a new CD and still retain the long primary CD.

By doing this, you’ll lock in today’s higher rate with the longer CD, but if rates rise next year, you’ll have access to a portion of your funds (in the one-year CD) in the new, higher-yielding CD. And if rates drop, you can rest assured that you still have some money to earn the highest interest for a few more years.

Consider speaking with a trusted financial advisor who can help you walk through the details of the CD ladder and whether this type of savings plan might be right for you.

Bottom line

Depending on your savings goals, Long term CD Might be worth opening today. Not only are savings rates on these accounts already high, but cooling inflation could cause banks to lower the rates they offer CDs and savings accounts Over the next few months – means we could be closer Best time to lock in a fixed rate. Even if you’re not sure you want to put your entire balance away, you can also consider building a CD ladder with accounts that mature at different times over time, including long-term CDs.