Did You Miss the Boat on Opening a CD Before Rate Cuts? Here's What to Do Now

Motley Fool09-24

KEY POINTSEven after Fed rate cuts, some of the best one-year CDs are still paying 4.00% to 4.50% APY.Unless you have lots of cash, your savings should probably stay in a high-yield savings account ...

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Here's What to Do Now","media":"Motley Fool","content":"<div>\n<p>KEY POINTSEven after Fed rate cuts, some of the best one-year CDs are still paying 4.00% to 4.50% APY.Unless you have lots of cash, your savings should probably stay in a high-yield savings account ...</p>\n\n<a href=\"https://www.fool.com/the-ascent/banks/articles/did-you-miss-the-boat-on-opening-a-cd-before-rate-cuts-heres-what-to-do-now/\">Source Link</a>\n\n</div>\n","source":"fool_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Did You Miss the Boat on Opening a CD Before Rate Cuts? 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Here's What to Do Now\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-09-24 21:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/the-ascent/banks/articles/did-you-miss-the-boat-on-opening-a-cd-before-rate-cuts-heres-what-to-do-now/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>KEY POINTSEven after Fed rate cuts, some of the best one-year CDs are still paying 4.00% to 4.50% APY.Unless you have lots of cash, your savings should probably stay in a high-yield savings account ...</p>\n\n<a href=\"https://www.fool.com/the-ascent/banks/articles/did-you-miss-the-boat-on-opening-a-cd-before-rate-cuts-heres-what-to-do-now/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1201861165.SGD","symbol_name":"Natixis Harris Associates Global Equity PA SGD","start_time":0,"source_url":"https://www.fool.com/the-ascent/banks/articles/did-you-miss-the-boat-on-opening-a-cd-before-rate-cuts-heres-what-to-do-now/","article_id":"2469849900","we_media_id":null,"thumbnails":["https://g.foolcdn.com/image/?url=https%3A%2F%2Fm.foolcdn.com%2Fmedia%2Faffiliates%2Fimages%2F32_R1FIKwj.width-1200.png&op=resize&w=165&h=104"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2469849900","pubTimestamp":1727184600,"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"Feeling regrets about not opening a CD before the Fed's 0.50% rate cut? 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Read on for a few good places to put your savings.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1201861165.SGD":"Natixis Harris Associates Global Equity PA SGD","IEF":"债券指数ETF-iShares Barclays 7-10年","BK4516":"特朗普概念","LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","LU0211331839.USD":"FRANKLIN MUTUAL GLB DISCOVERY \"A\" (USD) ACC","IEI":"iShares Barclays 3-7 Year Trea","BK4585":"ETF&股票定投概念","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","NVDA":"英伟达","CD":"秦淮数据","IE00B19Z3581.USD":"Legg Mason ClearBridge - Value A Acc USD","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","COF":"第一资本","BK4116":"互联网服务与基础架构","BK4166":"消费信贷","IE00B19Z3B42.SGD":"Legg Mason ClearBridge - Value A Acc SGD","BK4588":"碎股","BND":"债券指数ETF-Vanguard美国","SHY":"债券指数ETF-iShares Barclays 1-3年国债","LU1861217088.USD":"贝莱德金融科技A2","LU1861220207.SGD":"Blackrock FinTech A2 SGD-H","LU0648000940.SGD":"Natixis Harris Associates Global Equity RA SGD","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","GOVT":"iShares安硕核心美国国债ETF","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","LU0130103400.USD":"Natixis Harris Associates Global Equity RA USD"},"translate_title":"您是否错过了在降息前打开CD的机会？现在该怎么做","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BND":1,"CD":1,"US7Y.BOND":0.9,"US6M.BOND":0.9,"COF":0.9,"US5Y.BOND":0.9,"US3Y.BOND":0.9,"US30Y.BOND":0.9,"US2Y.BOND":0.9,"US12M.BOND":0.9,"US10Y.BOND":0.9,"NVDA":0.8,"SHY":0.6,"US912797GW17.BOND":0.6,"US912797HE00.BOND":0.6,"GOVT":0.6,"TNmain":0.6,"UBmain":0.6,"ZBmain":0.6,"ZFmain":0.6,"ZTmain":0.6,"IEF":0.6,"IEI":0.6},"content_text":"KEY POINTSEven after Fed rate cuts, some of the best one-year CDs are still paying 4.00% to 4.50% APY.Unless you have lots of cash, your savings should probably stay in a high-yield savings account with no early withdrawal penalties.For a relatively low-risk alternative to CDs, consider investing in bonds.Before the Fed cut interest rates by 0.50% on Sept. 18, savers had a golden opportunity to open a certificate of deposit (CD). If you had opened a long-term CD (like 12 months or longer) right before the Fed rate cuts, you might have been able to lock in a 0.50% higher APY than is available now.Think of it this way: Getting 0.50% higher yield on a $10,000 deposit in a CD for 12 months would have earned you an extra $50 of interest income.However, CDs aren't the best choice for every person's cash. And the good news is, even if the Fed keeps cutting interest rates for the rest of 2024 and into 2025, you still have good account options for your savings.Let's look at a reason why you shouldn't feel bad about not opening a CD before the Fed rate cuts, and learn what to do with your cash instead.Our Picks for the Best High-Yield Savings Accounts of 2024Capital One 360 Performance SavingsAPY4.25%Rate infoCircle with letter I in it.See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening.Min. to earn$0Open Account for Capital One 360 Performance SavingsOnCapital One'sSecure Website.Member FDIC.APY4.25%Rate infoCircle with letter I in it.See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening.Min. to earn$0Discover® Online SavingsAPY4.20%Min. to earn$0Open Account for Discover® Online SavingsOnDiscover Bank'sSecure Website.Member FDIC.APY4.20%Min. to earn$0American Express® High Yield SavingsAPY4.25%Rate infoCircle with letter I in it.4.25% annual percentage yield as of September 24, 2024Min. to earn$0Open Account for American Express® High Yield SavingsOnAmerican Express'sSecure Website.Member FDIC.APY4.25%Rate infoCircle with letter I in it.4.25% annual percentage yield as of September 24, 2024Min. to earn$0High-yield CDs have one big downsideIt's true that if you had timed the Fed's decision-making perfectly, you could've earned an extra 0.50% APY on a CD. But CDs have one big downside to go with those temptingly high fixed APYs: When you open a CD, you have to lock up your money.That's right. CDs won't let you take your money out until the end of the term. If you take your cash out too soon, you have to pay an early withdrawal penalty that can gobble up most (or all) of the interest you were hoping to earn.Is losing the flexibility of how to use your cash worth an extra 0.50%? For many Americans, I would vote no. Most Americans don't have enough cash to make a CD worthwhile. The typical American has $8,000 of cash in the bank, including checking accounts and savings accounts.Unless you have tens of thousands or hundreds of thousands of dollars to put into a CD, unless you're so financially secure that you are 100% sure you won't need to access your CD cash until the term is up, in my opinion, CDs are too risky. The risk of having to pay that early withdrawal penalty is not worth the slightly higher yield.What to do instead of opening a CD: Just keep your emergency fund and other short-term cash savings in a high-yield savings account or money market account. The best high-yield savings accounts give you similarly high APYs compared to the best CDs, and you can take your cash out anytime without penalty.Want decent short-term yields? Buy bondsOpening a CD can be a good move if you want to lock in a fixed APY on your savings. Even if interest rates go down while your money is in the CD, your rate of interest earnings will stay the same.For example, if you open a 2-year CD with a 4.00% APY in September 2024, your CD will keep earning that same 4.00% APY for the next two years, even if the Fed cuts interest rates by another 1.50% during that time.But CDs aren't the only game in town for earning a decent yield on medium-term savings. If you're willing to tolerate some risk and want easier access to your cash, you can invest in bonds.What to do instead of opening a CD: Choose a low-cost, diversified bond index fund and invest in a mix of government and corporate bonds. For example, the Vanguard Total Bond Market ETF (BND) has delivered year-to-date returns of 4.83% (market price) as of Sept. 20, 2024. The Wealthfront Automated Bond Portfolio was earning 5.16% variable APY as of Sept. 10, 2024.But keep in mind that bonds are not risk-free. Bond prices and yields can go down as well as up; unlike opening a CD, when you invest in bonds, exact returns are not guaranteed.But if you like the idea of earning a decent yield on your savings for the next year or two or three, without the early withdrawal penalties of CDs and without the volatility and higher risks of stock investing, investing in bonds can be a good alternative to CDs.Bottom lineIt's not too late to move your cash savings, even if you missed your chance to lock in a high-yield CD before the Fed rate cuts. If you can truly afford the risk of having to pay early withdrawal penalties, the best CDs are still paying pretty decent APYs (4.10% to 4.50% APY for a 1-year CD) and are worth looking into.But if you want alternatives to CDs, you could consider investing in bonds -- or just open a safe, reliable, liquid savings account.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2469849900"}