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Federal Meeting Results in CD with 5-Year Term Being Optimal Investment Choice

Secure exceptional interest rates offered for a half-decade, as the Fed's rate reduction in September leaves you with the opportunity to secure 5-year Certificates of Deposit at record highs.

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Investing in a 5-Year Certificate of Deposit could be your top choice post-Fed meeting
Investing in a 5-Year Certificate of Deposit could be your top choice post-Fed meeting

Federal Meeting Results in CD with 5-Year Term Being Optimal Investment Choice

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In the current economic climate, savvy savers are seeking the best ways to grow their funds. The good news is that both Certificates of Deposit (CDs) and high-yield savings accounts are offering competitive rates, providing opportunities for inflation-beating yields.

Current CD rates have surpassed those of the past decade, with the best 1-year CD rates hovering around 4.4%. Even 5-year CDs are still above 4%, making them an attractive long-term investment. For instance, LendingClub offers an 8-month CD at 4.45%, while some banks provide 5-year CDs with rates above 4%. However, it's essential to research current offers from online banks and credit unions for the best rates meeting the $500 minimum deposit criterion.

On the other hand, high-yield savings accounts offer a flexible and accessible option for those requiring regular access to their savings. These accounts, such as the ones offering 4.35% APY, are ideal for stashing emergency funds, vacation savings, or other cash that needs to be readily available. One advantage of these accounts is that they allow for no penalty for dipping into savings as needed.

Shorter-term CDs, like 3-month or 6-month CDs, also offer competitive yields, with rates similar to 1-year CDs. If flexibility is needed with funds, a shorter-term CD can be a great alternative.

The Federal Reserve recently voted to drop interest rates to the 4.00% to 4.25% range, but economists expect the Fed to continue cutting rates later this year, as suggested by the Fed Watch Tool's 74% chance of another rate cut in October.

To find the best fit for your savings, the Bankrate tool can help you compare CD rates and high-yield savings accounts. It's also crucial to understand APY (Annual Percentage Yield) to score the highest rates.

Remember, understanding your financial preparedness for an emergency is just as important. Knowing if you're truly ready for unexpected events can help you make informed decisions about where to store your savings.

Here are some of the top 5-year CD accounts you can open today:

  1. Ally Bank: 4.50% APY, $0 minimum deposit
  2. CIT Bank: 4.65% APY, $1,000 minimum deposit
  3. Synchrony Bank: 4.65% APY, $2,000 minimum deposit
  4. Discover Bank: 4.60% APY, $2,500 minimum deposit
  5. Barclays Bank: 4.45% APY, $5,000 minimum deposit

Inflation currently sits at 2.9% as of August, making it essential to find ways to grow your savings and keep up with rising costs. By considering both CDs and high-yield savings accounts, you can make informed decisions about where to store your cash to maximise your returns.

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