The federal reserve’s decision to cut interest rates has already affected the big bank’s decision-making process.
It should also affect you. (MarketWatch)
As a result, people will earn less substantial returns when they take out a CD these days than they would have at the start of 2019. But that doesn’t mean they should shift away from this savings tool.
In fact, CDs may be a better bet, Geller said. “If you can get a good high-yield now and you’re guaranteed to receive this rate for the next three to five years, you’re going to ride the next recession with a relatively high rate,” he said.
Many people make the mistake of moving their cash into liquid accounts, such as high-yield money-market and savings accounts, particularly as the threat of a recession looms, Geller said.
The yield on those accounts isn’t guaranteed like it is with a CD. He estimates that Americans lost billions of dollars in interest by giving into this money anxiety during the last recession.