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The Fed raised interest rates again. Take these 3 smart steps now.

Rising interest rates can make now a great time to open a CD or high-yield savings account.

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Federal Reserve Interest rates were raised again last week, this time a range between 5% and 5.25%. It marked the 10th time the Fed has raised rates since March 2022, all set to ease the pain felt by Inflation.

“The Committee intends to achieve maximum employment and inflation at 2 percent over the long term,” the Fed said their announcement. “In support of these goals, the Committee decided to raise the target for the federal funds rate from 5 to 5-1/4 percent. The Committee will closely monitor incoming data and assess the implications for monetary policy.”

While the news of yet another rate hike may not be welcome for prospective home buyers or owners looking to refinance, there are still some ways to take advantage of higher interest rates. This includes putting your money in a different type of savings account, such as a high-yield one, among other options.

Start exploring your high-yield savings options here now and see how much more you can earn

3 Smart Moves After the Fed Raises Interest Rates

Here are three smart, timely moves after the Fed bumps interest rates

Open a high-yield savings account

A High Yield Savings Account It is exactly what it sounds like – a savings account that offers high returns on your deposits. While the average interest rate on a regular savings account is 0.39%, according to FDIC, Interest rates on high-yield accounts Faster higher and likely to go higher now that the Fed has hit rates again.

A quick search online can help you find a bank offering high-yield savings accounts at 3.5% to 4.5% or more. Apple’s new savings account, for example, is 4.15% but there may be other accounts that offer closer to 5%. That is enough money You will lose otherwise By keeping your funds parked in a regular account.

Using a $5,000 deposit as an example, that bottom line would increase to just $5,019.50 after a full year. But a high-yield account at 3.5% would be $5,175.00. And you can probably make more if you shop at a higher rate, especially after the Fed’s latest moves.

Now know more about high yield savings account here.

Figure out your home equity

The interest rate environment is not favorable for the real estate market. Higher rates make borrowing more expensive and existing mortgages less attractive to refinance. That said, there are millions of Americans who are still sitting on substantial amounts of home equity. Home prices in 40 major cities actually rose in February. CBS News As previously reported. But the long-term outlook for house prices is unknown. With the Fed’s latest moves, it’s possible that home values ​​may drop soon, making now a smart time to tap into your home equity. HELOC or Home equity loan.

Remember: Home equity isn’t just calculated by how much you’ve paid off your mortgage policy. It is also determined by the value of your home at the time of application. So if your home is still worth what it has been in recent months and years, it might make sense to take advantage now before home prices drop. You possibly can Withdraw 80% to 85% of your existing equity To use principal financing repair, renovations and costs. But if you wait, and house prices drop, you’ll have less to work with.

Start exploring your home equity options here to find out if it’s right for you

Open a CD

A certificate of deposit account, Also known as CD, one of the main advantages of a high-yield savings account is a significantly higher interest rate CDs are now included Interest rates range from 3.5% to 4.5% Although they too could see a shock courtesy of the Fed’s latest move.

said, CDs don’t work like high-yield savings accounts. You have to commit to locking your money for a certain period of time before you can access it again. If you withdraw it before that due date, you will likely forfeit most or all of the interest you have earned. But if you have money you can part with (Conditions varies from month to year), it may be worth doing this, especially if your rate is significantly higher than what you are making with your current deposit vehicles.

Check out today’s CD interest rates now to learn more.

Bottom line

The Fed’s latest interest rate hike may not be welcome news to many, but it doesn’t have to be all bad. The silver lining is that interest rates are rising for high-yield savings accounts and CDs as well, making now a good time to open one or both. It may also be worth exploring your home equity loan options because your home’s current value may not hold as much in the long term, especially in light of recent Fed activity.

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