CDs Still a Smart Investment Despite Lower Rates

In recent years, certificates of deposit (CDs) have been a popular savings option for those looking to park their money safely and earn a good return. A year ago, the national average rate for a 12-month CD was 1.86%, according to the Federal Deposit Insurance Corporation (FDIC). At the same time, you could find numerous top-performing CDs offering yields over 5%, depending on the term.Today, CD rates generally aren't as high as they were during their recent peak.

The Federal Reserve's recent decisions to lower the federal funds rate have influenced the rates offered on CDs and other deposit accounts. Currently, the average yield on a 12-month CD is slightly lower at 1.83%, but the best CD rates are now in the 4% range.Despite the lower rates, CDs are still a smart investment, providing a safe way to earn a predictable yield on funds you want to shield from market volatility. The key is to choose the right CD term to maximize earnings while meeting your goals. With multiple term lengths to choose from, expert guidance can help you select the best CD term for your situation.Find out how much you could earn with the right CD account today.What are the best CD term lengths to open before the new year?When choosing a CD term, consider your goals and how soon you'll need to access your funds. Remember, CDs typically offer much higher rates than regular savings accounts. For example, CDs with yields above 4% currently earn around 10 times the average savings account rate. To earn the full yield on a CD, you must lock your money in the account for its entire term. If you need to access the funds before then, you'll likely face an early withdrawal penalty. As such, it's wise to choose a CD term that matches your expected timeline for when you'll need the money.'First and foremost, a term decision on a CD should revolve around the saver's goals,' says certified financial planner Rockie Zeigler III of RP Zeigler Investment Service

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