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Why you should open a CD this January

Interest rates on CD accounts may fall in 2024, making January an opportune time to lock in today's high rates. Getty Images

The start of a new year offers many opportunities, not least of which is the chance to boost your finances. This can take many forms, from increasing your insurance protections to cutting unnecessary spending or increasing the returns you're currently getting on your savings. One excellent way to do the latter is by opening a high-yield savings or certificate of deposit (CD) account now.

A CD is especially beneficial for Americans currently thanks to their elevated interest rates. But, like all financial products and services, the timing needs to be right to get the greatest return and lowest risk. This makes January 2024, in particular, a great time to do both with a CD. Below, we'll detail three reasons why you should strongly consider opening an account this month.

See how much more you could be earning with a CD here now.

Why you should open a CD this January

Here are three great reasons why you should open a CD this January.

Interest rates are high

If you've applied for credit recently, then you already know that interest rates are elevated at the moment. And while that may make borrowing more expensive, it also equates to substantial returns for savers. 

You may be able to find a CD with an interest rate close to 6% right now. Some savers may even qualify for a 7% CD account rate. That could quickly add up to hundreds if not thousands of extra dollars earned over time, depending on whether you choose a long-term or short-term CD

Compared to the minimal 0.46% accompanying most regular accounts, then, you're essentially losing money by not transferring some or most of your funds into one of these accounts now.

Get started with a top-earning CD here.

But rates may fall soon

Interest rates on CDs and other products are only as high as they are right now due to the Federal Reserve and their increases in an attempt to rein in inflation. But inflation has been dropping in recent months and the Fed hasn't issued a bump to their benchmark rate range since July 2023. And many are predicting rate cuts to come later in 2024, perhaps as soon as the summer. 

When that happens, rates on CDs will drop as well. So, it makes sense then to open a CD now while rates are still high. By acting in January, you can secure a great rate and keep it for as long as you prefer, as rates on CDs are locked. With CD terms ranging from a few months to a few years, you can earn great returns for the foreseeable future, even if rates start to drop soon.

The alternatives aren't as beneficial

As noted, you're losing money by keeping your funds in a regular savings account with today's average 0.46% interest rate. And while high-yield savings accounts have much higher rates, they generally aren't quite as high as the best CD accounts. Even high-yield checking accounts currently come with high rates, but they aren't as easily accessible and are unlikely to be as competitive as the best short-term CD. 

With these alternatives in mind, then, you should consider opening a CD now while you can still lock in the high rates available from 2023.

Learn more about your CD options today.

The bottom line

Timing is everything, especially when it comes to making the right personal financial decisions. And January 2024 is a great time to open a CD account. Because of the elevated interest rates most accounts come with — and because those rates will very likely fall later this year — many would benefit by locking in a high rate now. And compared to the alternatives like a low-earning regular savings account or an inaccessible high-yield checking account, a CD could be the best option for millions of savers to pursue this month.

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