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CD rates are high. Here's how you can benefit now.

The highest CD rates are currently between 4.5% and 5%. Getty Images/iStockphoto

One positive effect of the Fed's ongoing rate hikes is that you can earn more money on your savings. Savings rates are tied to the federal funds rate, so the higher the Fed raises rates, the more interest you stand to earn on the money you deposit.

One way to capitalize on this is by opening a certificate of deposit (CD). CDs can offer higher interest rates than even high-yield savings accounts in exchange for agreeing to keep your money in the account for a set term.

Plus, if you open a CD with an FDIC-insured bank, your money is protected by up to $250,000 per account if the bank fails (if you open a CD with a credit union, it's similarly protected if the credit union is NCUA-insured).

With rates especially high, now is a great time to open a CD. In this article, we'll explore how to make the most of this type of account.

Compare current CD rates online now to see how much more you could be earning!

CD rates are high. Here's how you can benefit now.

The highest CD rates are currently between 4.5% and 5%. Here's how to maximize your earnings.

Shop around for the best rates

Don't settle for the first CD you come across. Rates are high across the board, but they can vary significantly from institution to institution. To get the biggest return on your money, take the time to research what's out there. You can start by comparing CD rates online now.

Bear in mind the highest rates often come with longer terms, so make sure you're comfortable with the length of the CD you choose. If you have to pull money from your CD before the term ends, you'll face penalty charges.

Watch out for early withdrawal penalties

Rates are only part of the equation when it comes to finding a CD that will deliver the most benefit for you. Should you need to access funds in your account before the CD's term expires, you'll incur early withdrawal penalties, which can eat into your earnings.

While there are some no-penalty CDs out there, you'll likely face this fee if you want a CD with a high rate. You can minimize your losses by looking for CDs with lower fees. For example, CIT Bank's six-month CD carries an early withdrawal penalty of only three months' interest, while Bread Savings' one-year CD has a penalty of 180 days' interest (although it offers a higher rate in exchange).

If you think you might need it in the near future, consider investing in a shorter-term CD so your funds are available sooner.

View current CD rates here to see how much you could be earning on your savings.

Create a CD ladder

Another way to take advantage of high CD rates is to create a CD ladder. CD laddering is a strategy where you invest in several CDs with different maturity dates. For example, you might invest in a one-year CD, a two-year CD and a three-year CD. When the one-year CD matures, you reinvest the money into a new three-year CD. When the two-year CD matures, you reinvest the money into a new three-year CD, and so on.

This strategy helps you take advantage of high rates while still keeping some of your money accessible in case you need it. And, if rates go even higher in the future, you can lock in those higher rates when you open the next rung in your ladder. Again, shop around for rates anytime you open a new CD. The institution that held your original CD may no longer be the best for reinvesting your funds.

The bottom line

CD rates are currently high. You can benefit the most from this by reviewing these top options, considering a CD ladder and being aware of any early withdrawal penalties. By following these tips, you can maximize your earnings and take full advantage of the high CD rates on offer today.

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