How to Open a CD and Lock In Today's Rates
Certificates of deposit (CDs) offer guaranteed returns. With rates at multi-decade highs, now may be the time to lock in.
Financial Writer
What Is a CD?
A certificate of deposit (CD) pays a fixed interest rate for a set term — anywhere from 3 months to 5 years. In exchange for the locked rate, you agree not to withdraw the money early (or pay a penalty if you do).
Why CDs Make Sense Right Now
With savings rates potentially declining as the Fed adjusts policy, locking in a 4.5–5.0% CD rate for 12–24 months guarantees that return regardless of future rate cuts. This is called "rate lock" strategy.
CD Laddering Strategy
Instead of putting all your money in one CD, split it into multiple CDs with different maturity dates (3-month, 6-month, 12-month, 24-month). As each one matures, you reinvest at whatever rate is available — reducing interest rate risk while maintaining liquidity.
No-Penalty CDs
Marcus and Ally offer no-penalty CDs that let you withdraw early without fees. The trade-off is slightly lower rates, but the flexibility is often worth it.
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