Where to Put Your Cash After the Fed Raises Interest Rates
All the boring old ways to save money made a comeback the past 18 months as the Federal Reserve increased interest rates to fight inflation. Savers piled into government I bonds, high-yield savings accounts and staid bank certificates of deposits chasing better returns on their money. Fortunately for those who never bothered to move their cash to greener pastures, there is still time to give your savings a boost, financial advisers said.
The Fed is expected to announce another quarter-percentage-point increase Wednesday to its benchmark rate. Though higher rates make it more expensive to borrow money for a home or car, the Fed’s moves will likely make yields on savings more attractive. This would create a good opportunity for savers who may be worried they missed out to lock in higher CD rates that can pay off if rates drop in coming months and years, advisers said.
“Whether you’re a Gen-Z fresh out of college or a new retiree, CDs have suddenly become very attractive," said Lou Liberatore, director of research at Alexandria Capital, an investment and wealth-management company. CDs pay higher interest than savings accounts, but require savers to commit to locking up cash for a set period, typically six months or a year. Pulling out money early incurs a fee.
No-penalty CDs waive the fees, but typically yield less in exchange for allowing you to pull money out six to seven days after opening the account. Like a bank account, CDs are insured by the Federal Deposit Insurance Corp. for up to $250,000.
Read more on livemint.com
