RESOLVING THE LEDGER
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If you have $20,000 sitting in an accessible savings account right now, locking it into a certificate of deposit (CD) account may not seem to be the best decision. With inflation\u00a0still sticky, interest rates poised to rise as soon as next month and stock market performance uneven, maintaining flexibility is critical for many savers now. That\u0027s especially true when it comes to a large, five-figure amount such as $20,000. An early withdrawal penalty on a CD of this size could be costly.But what if you deposited it into a 1-year account, which will mature next August? Rates on accounts of this length are some of the most competitive available now. At the same time, the term won\u0027t be so long as to prevent a savings strategy shift as soon as next summer. In the interim, you\u0027ll protect your principal and earn a competitive rate that will grow your money even further, all while allowing you to shift your focus to other, more pressing economic concerns now.Before getting started, it helps to understand the interest-earning capacity that a $20,000 1-year CD account offers savers now. Thanks to the account\u0027s fixed rate, that will be easy to determine. Below, we\u0027ll do the math.See how much interest you can be earning with a top CD account here.Here\u0027s how much interest a $20,000 1-year CD will earn if opened this AugustCD interest rates will vary based on term and the lender being used, meaning that savers looking to secure the most competitive return will need to shop around to see what\u0027s available. Committing to the first bank they find could mean leaving interest earnings unaccounted for.\u00a0Here\u0027s how much interest a $20,000 1-year CD can earn if opened this August, calculated using three of the top available rates and the assumption that the account is maintained without penalty until it matures next summer:$20,000 1-year CD at 4.15%: $830 upon account maturity$20,000 1-year CD at 4.25%: $850 upon account maturity$20,000 1-year CD at 4.40%: $880 upon account maturitySavers stand to earn a guaranteed return ranging between $830 and $880 if they open a $20,000 1-year CD account this August \u2013 and potentially more if they take the time to shop around and ultimately find an account offering an even higher rate. Fortunately, with online marketplaces making it easier than ever to thoroughly research your options, you can start this process from home or via your phone as soon as today.Start shopping for competitive CD rates and terms online now.Is a CD account safe to open now?In today\u0027s unpredictable economic climate, savers may be concerned about the safety associated with a CD account. But it\u0027s actually one of the more secure types to consider. Not only is your interest here guaranteed thanks to the account\u0027s fixed rate structure, but it\u0027s also FDIC-insured up to $250,000, giving you ample protection for a $20,000 deposit.\u00a0The fixed rate, meanwhile, isn\u0027t available with alternatives like high-yield savings or money market accounts. And insurance isn\u0027t something you can obtain by investing. So, yes, a CD account is both safe and lucrative now, as long as you can afford to temporarily part with your money to secure that competitive return.The bottom lineA $20,000 1-year CD account can produce a guaranteed return worth over $800 if opened this August. And with that interest being predictable and reliable and with a CD being FDIC-insured up to $250,000, this account type merits serious consideration now. While it may feel counterintuitive to lock a portion of your money away in today\u0027s economy, the advantages of doing so with this specific account type can easily outweigh those concerns, especially if you elected for an account that will mature in one year or less.
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