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With new unemployment, inflation and interest rate developments all looming this September, some savers may have forgotten that they also have another important date on the calendar. If they opened a certificate of deposit (CD) account in recent months or years, its maturity date could arrive in the month. And with many banks only offering a short grace period of approximately two weeks for savers to decide what they want to do with the funds before they rollover into a new account, it’s critical to start contemplating your next moves now, while you still have plenty of time to shift your savings strategy.
Moving your maturing CD money into a traditional savings account, however, isn’t really a viable option right now, no matter how advantageous that account may have once been. With an average rate of just 0.38%, according to an update released by the FDIC last week, leaving money there equates to a failure to outpace inflation. And with multiple, high-rate account types that can offer returns exponentially higher without restricting access the way the CD did, it’s not necessary.
So, understanding that moving your maturing CD funds into a traditional savings account isn’t viable or profitable, where should you instead move your money next? Below, we’ll outline two credible options, both of which are positioned to earn more interest if the rate climate heats up again.
See how much interest you can be earning with a top savings account online now.
Where you should move your maturing CD account money this September
Don’t let your maturing CD account money automatically rollover into a new account, especially as that can risk extending your loss of access and, potentially, lock you into an account with a lower interest rate than you’re currently earning. Instead, prepare to shift your funds into one or both of the following account types once you regain access this September:
A high-yield savings account
With a top rate of 4.10% available now, a high-yield savings account could be your next best move. With this account you’ll maintain access to your funds as you normally would with a traditional savings account, unlike the CD. And while the account does employ a variable rate that will rise or fall in response to market conditions, that’s less of a concern now with interest rates holding steady and the possibility that they could rise later this year not insignificant.
That said, not every high-yield savings account will be created equally and online banks, in particular, will often offer more competitive rates than banks with in-person branch locations. So don’t rush to open an account or transfer any money until you’ve found the right account with the right rate.
Shop for high-yield savings accounts online here.
A money market account
Money market accounts come with top rates slightly lower than the best high-yield savings accounts. And they’re also positioned to evolve based on market changes, thanks to the account’s variable rate. The one notable difference, however, is that money market accounts also offer check-writing services that neither a high-yield savings or CD account will.
So, if you want to streamline your banking needs, earn a high rate in today’s still elevated rate landscape and maintain access to your funds in case of an emergency, this could be the right account at the right time. Consider shopping around for rates and accounts the way you would with a high-yield savings account, however, before getting started. Fortunately, with online marketplaces listing rates, terms and banks in one easy-to-navigate location, it’s easier than ever to start this process right now.
The bottom line
A September CD account maturity date should serve as motivation for savers who still want to earn a competitive rate on their money to take action now. By exploring their high-yield savings and money market accounts now, they can better determine which makes the most sense for their money before it gets rolled over into a CD with a potentially lower interest rate. Just be sure to thoroughly shop for rates and accounts before making any transfers and look to online banks, specifically, which tend to offer better rates than their counterparts with in-person branch locations.
