CD Rates Could Fall After Nov. 7 for This Key Reason

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Want to get ahead of falling CD rates? Read on to see why it pays to take action before Nov. 7. [[{“value”:”

When the Federal Reserve announced a half-point interest rate cut in mid-September, it didn’t exactly take economists by surprise. The Fed was expected to lower its benchmark interest rate due to cooling inflation. And it won’t be at all shocking to see the Fed make a rate cut again at its next meeting, which is scheduled for Nov. 6-7.

The Fed’s rate cuts are good news for people who are looking to borrow money. But they’re not the best thing for people with money in the bank.

CD rates have already fallen in the wake of the Fed’s September rate cut. And they’re likely to fall again after Nov. 7, assuming the Fed makes another cut at that time. You may want to open your next CD before that happens — but only if a CD actually makes sense for you.

It pays to get moving on opening a CD

The 5% CDs savers enjoyed earlier this year are already pretty hard to come by. But you can still get pretty close to 5% if you shop around. Click here for a list of the best CD rates available now.

If you wait beyond the Fed’s next meeting, you may find that you’re looking at a lower APY on a CD. And while a CD might still be worth it at that point, why get stuck earning less interest on your money when taking action now could help you earn more?

Before you rush to put all of your money into a single CD, though, consider a CD ladder instead. With a CD ladder, you split your money into multiple deposits and sign up for various maturity dates.

In other words, instead of putting $3,000 into a 12-month CD, you could put $750 into a 3-month CD, 6-month CD, 9-month CD, and 12-month CD. This gives you the benefit of having a portion of your money free up at regular intervals so you’re less likely to get hit with a penalty for an early CD withdrawal.

Is a CD right for you?

You may be eager to open a CD before rates fall further. But before you do, ask yourself these questions:

Is the money I’m thinking of putting into a CD, cash I might need for unplanned bills? If so, it should sit in a high-yield savings account so you have access to it at all times without worrying about a penalty.Is the money I’m thinking of opening a CD with, cash I might need for a planned expense? If your car has been giving you trouble or you’ve been talking about replacing your washing machine at home, you may want to leave that money in a savings account.Is the money I’m thinking of depositing in a CD, cash I won’t need for about seven years or longer? In that case, you may want to open a top-rated brokerage account and invest it instead. The S&P 500’s average annual return over the past 50 years is about 10%, which beats the top CD rates you might still find today by a mile.

Remember, even if CD rates fall after the Fed’s next meeting, they’re not necessarily going to plunge overnight. If you’re not quite ready to open a CD, don’t sweat it.

Perhaps you’re waiting on your year-end bonus from work to come up with the money, or some holiday cash gifts you intend to save. The point, rather, is that if you have the money on hand now and you’re convinced a CD is right for you, then it pays to open one sooner rather than later.

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