What’s new: The Federal Reserve announced its plan to temporarily pause additional interest rate hikes. After a year of consistent, considerable growth in interest rates, the market may begin to cool.
What that means for you: In this unpredictable financial landscape, finding stable and secure investment options is paramount. Certificates of Deposit (CDs) are a tried and true blend of stability, guaranteed returns, and peace of mind.
The recent pause follows ten consecutive rate increases implemented by the Fed to curb inflation. Two more interest rate hikes are expected throughout summer and fall. Over the past year, average CD rates have increased from 0.3% alongside the Fed’s rate hikes. As the rate hikes wind down, interest rates on products like CDs are likely to level out.
The bottom line: CD rates are competitive right now. Consumers can make their savings work harder by taking advantage of the current interest rate climate.
Stability in Uncertain Times
The global economy has experienced significant volatility in recent years. The pandemic, the accompanying boom in the housing market, and record-breaking inflation are just a few of the highlights. CDs provide a stable and secure investment in uncertain times. They are low-risk investments offered by banks and credit unions, providing a fixed interest rate over a predetermined term.
Experts continue to predict the US will enter a recession this year. Surveys show that 64% of experts believe that there will be a recession in 2023. CDs offer a reliable investment, allowing you to leverage higher interest rates without taking on significant risk.
One of the most appealing aspects of investing in a CD is the assurance of guaranteed returns. Unlike stocks or mutual funds, where returns are subject to market fluctuations, CDs offer a predetermined interest rate.
Since last year, average interest rates on CDs have increased from a national average of 0.3% to 1.72%. As a credit union, SECU offers market-competitive CD rates of up to 4.25%. This means that regardless of how the market performs, you can expect a fixed return on your investment.
We don’t know what the economy will look like in three months, 2 years, or 5 years. With SECU CDs, you know what you’re going to get – market-competitive rates on savings for Maryland families.
Diverse Range of CD Terms
CDs offer a wide range of terms, typically ranging from a few months to several years. Short-term CDs are ideal for individuals looking to park their money for a short period, while longer-term CDs offer higher interest rates and are suitable for those with longer investment horizons. The flexibility of CD terms allows investors to align their investments with their financial goals and cash needs.
SECU has a wide range of CD terms, including:
- Short-term CDs, ranging from 3 to 11 months
- Long-term CDs, ranging from 1 to 5 years
- Explore all SECU terms
With so many term options, CDs are a strong investment for both beginner and experienced investors alike. Their stability and competitive interest rates make them a stable investment for experienced investors and a smart savings tool for beginners.
CDs help establish good financial habits by protecting investors from dipping into their funds before the maturation date. Beginners can set financial goals and build their savings by leveraging the variety of options available.
Higher Interest Rates Compared to Savings Accounts
Traditional savings accounts offer flexible access to your savings, making them the perfect place to stash emergency funds. Traditional savings accounts provide minimal interest. Currently, the average interest rate on traditional savings accounts is 0.25%.
CDs, on the other hand, typically offer higher rates, allowing you to earn more on your investment. You can find competitive CD rates that outperform regular savings accounts with some research and comparison.
CDs are the perfect tool for achieving specific financial goals. What financial goals are on your list?
- Save for a down payment on a home
- Plan a dream vacation
- Purchase a new car
- Anticipate future educational expenses
Investing in a CD can help you get there. The designated end date of a CD allows you to plan your finances with certainty and ensures the funds will be available when you need them.
CD rates have been rising since last year, but they’re likely to level out soon. SECU CDs offer stability, guaranteed returns, and competitive interest rates. Whether you’re an investor seeking security or someone with specific financial goals, now is a great time to invest in a CD. Take advantage of the current interest rate climate while it’s still hot. Schedule an appointment with a virtual member advisor to find the best CD for your savings goals and budget needs.