12/12/2023 0 Comments Mymoney higher oneIf the interest on the new CD for that timeframe is higher than the fees you’d pay, you’re good to go. To decide if it’s worthwhile, compare the early withdrawal penalty from your current CD. ![]() Should you withdraw early from a CD to take advantage of higher rates? We spoke with the experts to find out everything you need to know before breaking a CD to get a better return before rates drop. But consider if your CD has an early withdrawal penalty, and how much interest you’ll need to pay, to see if a new CD rate can help you earn a big enough return to justify paying the penalty. While you’ll miss out on interest for the remainder of the term, if you can lock in a higher rate, this is probably beneficial. “You might have a good reason, but you’ll miss out on some of the fun.” While breaking a CD for another higher rate CD may help you capitalize on even better interest rates, there’s a cost to consider. “The decision to break a CD before its maturity date is akin to deciding whether to leave a party early,” said James Allen, CFP and founder of Billpin. ![]() ![]() But while rates remain high, is it worth it to break an existing CD? But with year-over-year inflation slowing to 3% and the Federal Open Market Committee meeting next week, experts predict CD rates will start dropping later this year. Some online-only banks are offering over 5.00% APY right now for short-term CDs, while longer terms are around 4%. If you locked in a certificate of deposit or CD last year, you may be missing out on a bigger return.
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