Withstill humming along in the background — and the higher interest rates meant to combat at a — many consumers are taking a closer look at their personal finances.
With inflation eroding the purchasing power of the dollar, and uneven investment performance, it’s vital to make sure your personal savings are stored in the right place. And it’s becoming increasingly obvious that a 0.43% interest rate, isn’t the best place for your money. In fact, if you’re keeping your money in a regular savings account in 2023, you’re likely .with its minimal
But with limited extra cash, where should you be putting your money? Is athe smart move now, or should you put your extra cash into a instead?
Should you put extra cash in a CD or savings account?
Not sure if your extra money will be better served in a CD or savings account? Here’s what to know.
When you should put extra cash in a CD
You should strongly consider putting your extra cash in a CD if you’re looking to make the most interest possible. CDs come withthan high-yield savings accounts do, making them an easy way to earn more money without much effort on your behalf.
To fully earn that interest, however, you’ll need to keep your money in the CD for the full agreed-upon. If you withdraw it early, you could get penalized some (or all) of the interest earned to date. Because of this deterrent, CDs can also be smart for those who otherwise may subject their funds to a constant cycle of deposits and withdrawals.
A CD is also good to hold your extra cash if you’re concerned about a potential interest rate drop in the future. CDs maintain their rate throughout the full term, regardless of what happens in the larger rate environment. So, if you open atoday and rates drop during month three, you’ll still earn that higher rate.
When you should put extra cash in a savings account
On the other hand, if you want to maintain some level of flexibility and access, you may be better served by depositing your extra cash into a high-yield savings account., albeit with a higher interest rate. This will allow users to withdraw and add to their accounts as they see fit, making them a better option for those looking to turn their extra cash into .
They’re also better positioned to earn additional interest. Since high-yield savings accounts come with variable interest rates, users will be able to earn an even higher interest rate in the future should the larger rate environment continue to head upward. And considering there are multiple high-yield savings accounts with an APY ofor more currently, this could add up to substantial savings over time.
The bottom line
There is no right or wrong answer as to which savings vehicle is better for your extra cash. If truly in doubt, savers may want to consider So explore your CD and high-yield savings account options today and turn that extra cash into greater long-term savings.between both account types to earn the benefits each is known for. However, by simply keeping your extra cash in a regular savings account, you’re losing money and not making the best of today’s elevated rate environment.
https://www.cbsnews.com/news/should-you-put-extra-cash-into-a-cd-or-savings-account/ Should you put extra cash into a CD or savings account?