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When it comes to pursuing financial products and services, the timing has to be just right. This is especially true for selected investment types and savings accounts. For example, if you had opened a savings account at the height of the pandemic in 2020 or 2021, the interest you earned would have been negligible and any returns would have been barely noticeable. However, if you’ve opened one in recent years, you may have earned exponentially more on your deposit simply because the interest rate environment is higher due to inflation and interest rate increases.
But what if you wanted to take action now, in October 2024? While the first interest rate reduction in more than four years was issued on September 18 – and more are likely to be released in November and December – a compelling argument can be made for opening a long-term bank certificate of deposit (CD) account now. Below we will outline three reasons why it makes sense to do this.
See here how much more you can earn on your money with a top CD.
Why you should open a long-term CD in October
Not sure if a CD, especially a long-term CD, is the right choice for your money? Here are three reasons why you should strongly consider this type of account for October:
Interest rates are still high
To be sure, interest rates are falling for both lending and savings products. But that decline is gradual and has immediate implications for vehicles like CDs and savings accounts with a high return have not been so pronounced that they have become worthless.
For example, right now you can lock in a rate of 4.75% on a 18 month CD4.50% on one 2 year old CD and 4.20% on a 3 year old CD. While these rates were slightly higher earlier this year and in 2023, they haven’t dropped so dramatically that you still potentially can’t earn an income hundredsif not thousandsdollars with the appropriate deposit. Don’t wait until they fall much further.
Get started online with a long-term CD today.
The rates are locked
CD rates are locked. That is a huge advantage in an interest rate environment that is declining. For example, by opening a 2-year CD at that 4.50% rate, you can accurately determine your exact profit once the account is debited. matured.
And you don’t have to worry about market changes or Fed rate cuts that would otherwise affect what you could earn if you take a variable rate. So with a long-term CD you get long-term protection against this volatility, as certain accounts require conditions of five years or even longer, so you can earn today’s high rates for years to come.
It is a safe way to make more money
The market and interest rate environment are both currently changing. And no one knows exactly where they’ll go or how that will affect your money. Lower inflation and lower interest rates will have a different impact on your money and retirement savings than the higher inflation and higher interest rates we have seen in recent years.
So it makes sense to hedge against this volatility by putting some (but not all) of your money in a safe account that is immune to these changes. A long-term CD account can be that safe haven. And as the economy matures, you’ll have a much better idea of ​​where things are heading economically than you probably do in October.
The bottom line
An environment of falling interest rates has several advantages, but also some clear disadvantages, such as lower returns on savings instruments. So don’t wait until interest rates drop even further. Get started now with a long-term CD. These accounts still have relatively high rates that you can lock in for several years, giving you a safe way to make more money as the higher rate environment shakes out. Just make sure you only deposit an amount that you are comfortable leaving completely in the account CD term or you run the risk of having one early withdrawal penalty to regain access to your money.
