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What is a good CD interest rate?

CDs offer significantly higher interest rates than traditional savings accounts. Getty Images/iStockphoto

While recent interest rate hikes have hurt borrowers across the board, the news hasn't been all bad. Because of the Fed activity, the benefits of high-yield savings and certificate of deposit (CD) accounts have increased exponentially. 

Both account types come with unique benefits and advantages, many of which are especially appealing in today's economic climate. Many account holders may be looking for any edge they can get and, considering the average savings account interest rate hovers around 0.43%, they aren't getting the help they need by keeping their money untouched. 

Fortunately, a certificate of deposit account can help protect and grow your money, assuming you secure a favorable interest rate. To get the most value out of these types of accounts, it helps to first understand what a good CD interest rate is. 

You can easily check today's CD interest rates here now.

What is a good CD interest rate?

As with interest rates on savings and high-yield savings accounts, the higher the interest rate, the better it generally is. To determine what a "good" rate is, simply compare what CDs are currently offering to what you can get with a regular savings account.

Savings account interest rates currently hover around 0.43%, while interest rates on CDs are around 4.5% to 5% or higher, depending on the lender and other factors. This makes now a great time to open a certificate of deposit account. Simply put: If you're not putting some money into a CD or some other high-interest account, you're leaving money on the table. 

Just make sure to shop around before signing on the dotted line. By researching all viable options, you'll improve your chances of securing the highest rate out there. But be sure to look at the fine print. Some banks may charge you fees or penalties that can eat into your interest rate. A lender offering a high rate isn't necessarily better than one offering a lower rate with no fees.

Explore your CD options online now to see how much more you could be earning.

CD benefits to know

Higher interest rates aren't the only benefit certificate of deposit accounts offer. Here are two other major benefits those considering a CD should know:

  • Locks in your rate: You may be able to earn more interest with a high-yield savings account or some other savings vehicle, but that will probably only be temporary. That's because high-yield savings account interest rates are not locked in and go up or down based on the market and Fed activity. A CD doesn't work that way. The interest rate you secure when you open the account will be the same one honored throughout the CD's full term. So don't worry about market activity — with a CD, your money will earn interest no matter what happens in the market. 
  • Protects your money: Not only will a CD protect you against an unfavorable rate environment, but it will also protect your principle by locking your money away for the full term. You can't access the money unless you're willing to pay a penalty to get it. So, if you're having trouble saving money, a CD may be worth it for you. The money you deposit will be the same amount you withdraw when the term ends (plus however much interest you make).

Explore your CD options now to get started!

The bottom line

Those looking to both protect and grow their money should strongly consider opening a CD. These sorts of accounts are currently offering interest rates exponentially higher than traditional savings accounts. But the benefits don't end there. They're also reliable, as the interest rate you get when you sign up will be the interest rate honored throughout the CD's full term. And because you won't be able to access it without penalty, you can rest assured knowing your money is safe (and growing) without interruption. 

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