3 Reasons to Burn Another CD Before 2024 Ends

It’s hard to believe that we are in the second half of November. Before you know it, you’ll be opening gifts and toasting to the new year.

At this point, you may have a number of year-end financial tasks to check off your list. One task you might consider is opening a certificate of deposit (CD) before the end of 2024. Here are a few great reasons to do this.

1. CD rates remain strong

You may know that the Federal Reserve has already cut its benchmark interest rate twice this year, and more rate cuts are expected in the coming months. But don’t take this to mean that CDs are no longer worth opening.

It’s true that the days of 5% CD rates are largely behind us at this point. However, you can still install a CD in the 4% range, which is a pretty good deal in itself. A 4.5% rate for a 12-month CD and a $10,000 deposit puts $450 in your pocket.

Our Picks for the Best High-Yield Savings Accounts of 2024

American Express® High Yield Savings APY 4.00% Price information 4.00% annual return as of November 22, 2024 Member FDIC.	APY 4.00% Price information 4.00% annual return as of November 22, 2024	Min. to win $0
Capital One 360 ​​Performance Savings APY 3.90% Price information Check the Capital One website for the most up-to-date prices. Declared Annual Percentage Yield (APY) is variable and accurate as of November 21, 2024. Rates may be changed at any time before or after account opening. Member FDIC.	APY 3.90% Price information Check the Capital One website for the most up-to-date prices. Declared Annual Percentage Yield (APY) is variable and accurate as of November 21, 2024. Rates may be changed at any time before or after account opening.	Min. to win $0
Western Alliance Bank High Yield Savings Premier APY 4.46% Price information Annual percentage yield (APY) is accurate as of November 7, 2024 and is subject to change at the Bank’s discretion. Check the product website for the most current APY rate. The minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to win $500 to open, $0.01 for max APY Member FDIC.	APY 4.46% Price information Annual percentage yield (APY) is accurate as of November 7, 2024 and is subject to change at the Bank’s discretion. Check the product website for the most current APY rate. The minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	Min. to win $500 to open, $0.01 for max APY

But today’s CD rates may not last very long. CDs tend to pay less as the Fed continues further rate cuts. So if you have money to put into a CD, you probably don’t want to wait. Click here for a list of today’s best CD deals to find the best bang for your buck.

2. You don’t have such a long savings window

Even if you can find a CD in the 4% range today, you should know that the stock market will reward you more seriously over time. Over the last 50 years, the average annual return for the S&P 500 is 10%; this takes into account losses as well as gains.

But the key to success as a stock investor is to give yourself plenty of time for your portfolio to appreciate and weather market downturns. If you don’t have that long of a window ahead of you because you’re saving for a specific goal, like buying a new car or home, then a CD is a better bet.

With a CD, you don’t risk losing any of the money you deposit, provided you limit your deposits to $250,000 and stick with an FDIC-insured bank.

Of course, if you’re saving for a goal that will happen in about seven years or more, then it might pay off. deposit your money into a brokerage account and invest instead. However, if you have limited time to grow your money, a CD is a more suitable choice.

3. You’re retiring in 2025 and want a safe place for your money

If your financial plans for the new year include quitting your job and starting retirement, you may be excited for that final countdown. However, in this case, you may also want to postpone investing the money you have today.

When you retire, you may need this money to cover your expenses because you will no longer be earning a paycheck from a job. And in this case, opening a CD at this stage of the game is a much safer bet than investing your money in stocks.

To be clear, this doesn’t mean that if you have an IRA full of stocks, you should cash it all out right away. You may want to delay investing instead new There is money in stocks because of the risks.

At this point, you still have a few weeks left to crack a CD until the end of 2024. But know that the longer you wait, the more you risk losing a good rate. So if you’re sure a CD is right for you, it’s best to take action as soon as possible.