3 CD account mistakes to avoid in today's economy
CBS News • • business
Key Points:
- Inflation in the U.S. has surged to its highest level in three years, and interest rates are expected to remain elevated and stable for the foreseeable future, creating a challenging economic environment for many Americans.
- Certificate of Deposit (CD) accounts now offer attractive fixed interest rates of 4% or higher, significantly outperforming the average traditional savings account rate of 0.38%, making CDs a beneficial option for savers.
- Savers should avoid common mistakes such as not shopping around for the best online CD rates, choosing short-term CDs over long-term ones despite similar rates, and depositing more money than they can afford to lock away due to early withdrawal penalties.
- Long-term CDs provide the advantage of compounding interest over time and can protect savers from future rate declines by locking in today's high rates.
- By carefully selecting and managing CD accounts, savers can protect their principal, grow their interest earnings, and gain financial stability amid economic uncertainty.