Long Term CDs: 3 Reasons to Open One Now

When it comes to smart personal financial decisions, time is of the essence. choice of When to buy a house, for example, can save you a significant amount of money – or cost you a proportionate amount. In today’s current rate environment, much higher than in years and with inflation rising in the background, savers need to decide where they will put their money – and time their investments accordingly.

Fortunately, there are a number of savings vehicles available today that can both protect and grow your funds. High Yield Savings Account And Certificate of Deposit (CD), for example, both offer exponentially higher interest rates than regular accounts. CDs, however, come with different terms (or lengths), which ultimately affect your earnings.

Long term CD, in particular, is particularly interesting now open. Below, we’ll break down the three main reasons why you should consider opening one now. Start by exploring your CD account options here to see how much interest you can earn

3 reasons to open a long-term CD now

Here are three reasons you should look into opening a long-term CD now.

Interest rates may peak

They announced the Federal Reserve last week Keeping interest rates unchanged, putting them at a 5% to 5.25% benchmark. The announcement follows 10 rate hikes from March 2022. Although interest rates are unlikely to fall in the short term, they have already peaked. This is arguably the best reason to open a long-term CD now.

By opening a CD over a three- to five-year term, you can lock in a higher rate and earn interest at that rate for years to come—no matter what happens in the broader rate environment during that time. So if rates stay where they are, or if they drop in the future, you’ll still be growing your savings at that higher rate.

Now here’s how much you can earn with a long-term CD.

You want more predictability

Stock market can provide a great return on your investment. It can wipe it all out in a bad year. Trillions in retirement savings were lost last year alone.

In this context, it makes sense if you want more reliability and predictability with your money. A long-term CD can offer just that. Since you won’t be able to withdraw from it without penalty, you’ll be able to accurately budget how much you’ll earn each month and year. And it will not be affected by any economic factors beyond your control. While the funds won’t be readily available to use, that tradeoff may be worth it if you can secure some much-needed predictability.

You can take a ladder approach to earn more

If you are not sure which rate the market has reached the top? What if you think rates may rise again and you’re worried about locking in your money at a lower rate? If this is a problem for you, consider Your CD ladder So they expire at different times.

Lock in an amount for five years with a long-term CD at today’s high rates. At the same time, open a short-term CD with other funds at a different rate. This will allow you to monitor the wider rate environment without completely losing access to your money. When the short-term CD expires, you can renew it or transfer the funds elsewhere. In the interim, long-term CDs will continue to earn interest at that higher rate.

Learn more about your CD rate options here now.

Bottom line

Today’s rate climate is unlike anything we’ve seen in the recent past. That is why it is so important for savers to be cautious and time their investments as smartly as possible. A long-term CD can help your bottom line by providing security and greater returns.

These rates may have already peaked, making now a perfect time to lock in that high figure But long-term CDs also have other benefits, such as providing some much-needed predictability in an otherwise volatile rate environment. They can be laddered against each other to give savers flexibility if rates rise again in the next few months.

Check out your long-term CD options here and start earning more interest today