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In today's cold but still inflationary economy, in which interest rate are at their highest point in decades, there aren't many loan options worth looking into. However, when it comes to saving and earning high interest rates, there are many types of accounts to choose from, ranging from high yield savings a money market a certificates of deposit (CD) accounts All three accounts offer savers safe and effective ways to grow their funds.
CDs, especially, have some of the highest fees possible. And those rates are locked in, allowing savers to determine exactly how much they'll have earned once they get their CD. matured. Some savers have chosen to choose Short duration CD (expiring in less than 12 months) to earn higher interest rates over a condensed period of time. But a 6-month CD is worth it now, especially for a five-figure deposit $10,000? This is what we will detail below.
See how much you could earn with a $10,000 CD deposit here.
Is a $10,000 6-month CD worth it now?
Here are three reasons why a $10,000 deposit in a 6-month CD may be right for your current financial needs:
It won't lock up your money for long
While all CD accounts will lock in your money for a predetermined period, 6-month CDs only do so for half a year, giving you the flexibility to move your funds elsewhere after the CD has matured . This is especially important in the current rate climatein which both increases and cuts in interest rates are at stake.
If interest rates are lowered during those six months, you'll still earn the highest rate you opened the account with. But if they do go up, you'll just have to wait a few months for your CD to mature to take advantage of the new, higher rate. And in the meantime, you'll earn 5% or more on your money, many times more than the 0.45% fee savers can get in traditional savings accounts right now.
Get started with a 6 month CD online now.
It will help you overcome the uncertainty of the rate
Not only are traditional savings account rates much lower than CD rates right now, but those rates are variable. So they could drop further in the coming months. And while high-yield savings accounts have high rates, they also adjust frequently based on market conditions.
And no one knows what market conditions are expected this summer. With inflation still more than a point above the Federal Reserve's 2% target and only one Fed meeting scheduled between now and the end of July, savers may be better off weathering the current uncertainty in the stock market rate depositing $10,000 over a 6-month period. CD than they would with another type of account.
You will earn hundreds of dollars
Some of the best 6-month CDs are offering rates between 5% and 5.35% right now. That equates to $246-$264 earned simply by depositing $10,000 into one of these accounts now. And if you want to deposit more money or spend time looking for a 6-month CD with an even higher rate, you'll earn even more.
Just understand that you may have to pay taxes on CD interest earned, so you'll want to weigh the pros and cons carefully. Still, if you're looking for a safe and predictable way earn a few hundred dollarsa $10,000 6-month CD is a smart choice to pursue.
The bottom line
A $10,000 deposit into a 6-month CD is a smart and safe way to grow and protect your money right now. By doing this, you won't lock in your funds for an extended period, but you'll still overcome some rate uncertainty during that period. Ultimately, you can make hundreds of dollars (if not more) depending on the lender used. For all these reasons and compared to multiple alternatives, it may be worth opening a CD with this amount and within this time frame right now. Just be sure to weigh the pros and cons of a CD account against your larger financial goals, as an early withdrawal of your money could result in a penalty.
