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With inflation rising again, the returns on CDs will likely remain high.
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Those hoping for a further reduction in inflation were disappointed this week after the latest report from the Bureau of Labor Statistics showed inflation rising by 3.2% in February. That’s up from the 3.1% rate in January and still more than a full percentage point above the Federal Reserve’s target 2% goal. While it’s come down significantly from 9.1% in June 2022, an upward trend is not positive, particularly for those hoping for interest rate cuts.The benchmark interest rate range is currently sitting at a 23-year high and with this week’s disappointing inflation report, it’s unlikely that the Fed will reduce that rate when they meet again on March 19. That noted, while higher interest rates are problematic for borrowers, they’re a boost for savers with certificates of deposit (CD) and high-yield savings accounts. And with inflation still elevated, there are some compelling reasons to open one (or both) of these accounts now. Below, we’ll break down three reasons why you should open a CD now that inflation is up.See how much you could be earning with a top CD here now.Why you should open a CD with inflation upHere are three compelling reasons why you should open a CD following this week’s inflation report.Rates are highCD interest rates have been higher than usual, thanks to the Fed’s numerous rate hikes. It makes sense to take advantage of these unique circumstances if only to buffer the negative results of inflation felt elsewhere. With the right CD and the right rate and term, savers can potentially earn hundreds or even thousands of extra dollars over the next year. It’s simple to find a CD with a 5% interest rate now, particularly if you use an online lender. Select savers may even qualify for an account with a 6% or 7% interest rate. Get started with a CD here now.Rates will likely remain higher for longerNow that progress with inflation has seemingly stalled, rates will likely remain higher for longer. This could be a benefit for those who want to open a CD now but are worried about losing out on accounts with higher rates to come. But if rates stay elevated for a longer period, savers won’t have to worry about acting too soon.
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