Some CDs are paying 5% or more, but as Lionel Poudevigne tells us, they're not the right investment vehicle for everyone.
It’s no secret that certificates of deposit are paying impressive yields — some are offering 5% or more . That helps explain why there’s been a huge influx of dough going into CDs recently. Indeed, earlier this year CDs saw a 1,046% increase from $36.5 billion in April 2022 to $418.4 billion in January 2023, according to data from the Federal Reserve.
Given these rate increases, demand for CDs has increased over the last year. “With the Fed combating inflation, many institutions are incentivizing consumers to save their money by offering really favorable rates and terms on CDs, driving significant demand for guaranteed high-rate products. Locking in a high rate now will help consumers earn more money even if rates start to drop in the coming months,” says Poudevigne.
CDs are not the right vehicle for everyone As appealing as high interest rates can be, CDs aren’t necessarily the most sensible choice for everyone, particularly those with more immediate cash needs. “CDs might not be the right product for a consumer that needs access to their money easily at any time,” says Poudevigne.
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