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Why now could be the time to open a Certificate of Deposit

March 18, 2024
If you've been considering opening a certificate of deposit (CD), you may want to consider doing it soon. Over the past two years, interest rates on CDs have increased as the Federal Reserve (the Fed) has increased. However, if you're worried about interest rate cuts, there's a smart money move you can make to help your savings grow faster in 2024 and beyond.  

The Fed announced on Wednesday, March 20 that it left the policy rate, federal funds rate, unchanged for the fifth straight meeting. Furthermore, Chair Powell laid out the risks of cutting rates too soon versus cutting too late, explaining that the Fed is still in wait-and-see mode.

By opening a CD now, you can lock in today's rate. Your rate will be guaranteed for whichever term you select, regardless of what the Fed decides to do.

"Amidst market volatility CDs offer a safe haven, providing assurance and security for individuals looking to protect their hard-earned savings."

Robert Sousa, Director of Asset & Liability Management
Why now is the opportune moment to open a CD:
  1. Protection against market volatility: Volatile markets can be nerve-wracking. CDs offer a safe haven from market turbulence, providing a fixed interest rate over a specified term. 
  2. Guaranteed returns: When you open a CD, you lock in a predetermined interest rate for the duration of the term. This certainty allows you to know exactly how much you’ll earn by the end of the CD term.
  3. Competitive interest rates: CDs continue to offer competitive rates compared to traditional savings accounts.
  4. Diversification: CDs complement a diversified savings strategy by providing stability. By allocating a portion of your savings to CDs, you can balance higher-risk assets with low-risk options, ensuring a well-rounded savings approach.
  5. Flexible term options: Whether you’re saving for a short-term goal or planning for the future, CDs offer flexibility in terms of duration. With terms ranging from a few months to several years, you can select a CD that aligns with your timeline and goals.
  6. FDIC insurance: One of the most significant advantages of investing in CDs is the protection offered by the Federal Deposit Insurance Corporation (FDIC). FDIC insurance covers up to $250,000 per depositor, per insured bank, providing an additional layer of security in your investment. 
Remember, your money matters -- and it's important to make the most of it. If you need help or would like to discuss what product may be best for you, please make an appointment, call, or visit us today. 
by Middlesex Savings Bank