CD Rates Are Going Up -- But Should You Open One?

CD Rates Are Going Up -- But Should You Open One?

If you've been following the news, you're probably aware of the recent string of interest rate hikes we've seen courtesy of the Federal Reserve. When rates go up, it can impact everything from bond prices to mortgages to credit cards, but what it also usually means is more favorable interest rates for bank deposits. And while savings accounts rates may only be slowly creeping their way upward, certificate of deposit (CD) rates seem to be moving a bit more quickly.

In fact, average yields on CDs are highest they've been in five years. According to data gathered by DepositAccounts, over the past nine months, the average yield for a 12-month CD climbed to 0.567%, while the average yield for a five-year CD jumped to 1.504%. And while these numbers may not seem like much to write home about, remember that CDs are a totally risk-free investment as long as you keep your balance below the FDIC insurance limit of $250,000.

IMAGE SOURCE: GETTY IMAGES.

Continue reading

Source: Fool.com