Procrastinated on Opening a CD? Here’s Why It’s Not Too Late

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CD rates are still pretty strong. Read on to see why you should open one now, though, rather than wait. [[{“value”:”

For much of 2024, it was easy enough to lock in a 5% CD. But at this point, 5% CDs are harder to find.

The good news is that you can still score a pretty good rate on a CD. If you procrastinated on opening one, you’re not out of luck.

But you also don’t want to wait too long to open your next CD. If you do, you may get stuck with a rate you’re less happy with.

Why you shouldn’t wait to open a CD

The main reason CD rates are down a bit from where they were earlier in the year is that the Federal Reserve made its first benchmark rate cut in mid-September. But the Fed is scheduled to meet again on Nov. 6-7. And there’s a good chance the Fed will announce a follow-up rate cut.

It’s smart to open your next CD before the Fed has an opportunity to cut rates again. In fact, some banks might preemptively lower their CD rates ahead of that early November meeting in anticipation of another rate cut.

If you’re interested in a CD, don’t delay. Check out this list of the best CD rates and lock yours in before rates take another dive.

Is a CD right for you?

A CD is a good place to put money you have earmarked for a short-term goal. If you think you’ll be ready to buy a new car at the end of 2025 or in early 2026, you may want to open a 12-month CD now to earn some extra interest on your down payment.

But a CD is not the best place to put money you’re saving for a far-off goal, like retirement, or college if your kids are very young. In these situations, investing your money is generally a better bet because the stock market has historically delivered higher returns than CDs.

Over the past 50 years, the S&P 500’s average yearly return has been 10%, accounting for years when the market did well and years when it did poorly. We don’t know what return stocks will average over the next 50 years, but there’s no reason to assume it won’t perform similarly.

CD rates are higher than normal

Meanwhile, today’s CD rates are much higher than the norm. You can still lock in a CD at somewhere around 4.5% or 4.75%. For a $5,000 deposit, that means earning $225 or about $237 on a 12-month CD. But if you have money you don’t plan to use for many more years, you may want to skip the 4.5% or 4.75% CD and instead put money into a stock portfolio immediately so you can have the chance to generate stronger returns.

If you invest $5,000 in an S&P 500 index fund that delivers a 10% annual return, in 15 years, it’ll be worth about $20,900. But if you wait even one year to make that investment and only get to invest your $5,000 over 14 years at 10%, you’re looking at $19,000 instead. That $1,900 difference is way more than what you’ll make in the next 12 months on a 4.5% or 4.75% CD. So you may want to open a great brokerage account instead of tying your cash up in a CD.

It’s natural to be bummed about missing out on the top CD rates that were available through the summer. But don’t beat yourself up if you didn’t get around to opening a CD until now. Today’s rates are not a bad deal at all. But get moving on that CD so you don’t end up regretting your decision to wait even longer.

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