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One great perk of opening a CD versus a savings account now
Inflation has caused a series of economic issues in recent years. Besides higher prices for groceries and gas, it has also resulted in higher interest rates and elevated costs for borrowers.
But the news hasn’t been all bad. For savers, the interest rate climate of 2023 and 2024 has been a major boost to their finances. Returns on certificates of deposit (CDs) and high-yield savings accounts have surged over the last two years, with both accounts offering savers APYs of 4% or higher right now.
CDs and high-yield savings accounts aren’t the same, however. The pros and cons of each vary, but there is one significant perk of opening a CD versus a savings account that’s particularly pertinent in today’s unique rate climate. Below, we’ll break down that advantage and a few others to opening a CD right now.
Ready to get started? See how much more you could be earning with a CD today.
One great perk of opening a CD versus a savings account now
Today’s rate environment is unusual because rate cuts are expected this year — but no one knows when or by how much. There was some hope that the first cut to the benchmark interest rate range — currently at a 22-year high — could come as early as March 2024.
However, that was deflated after two consecutive reports showed inflation higher than many had anticipated. While rate cuts may still come, they’re now likely to come later in the spring or in the summer.
What does this have to do with opening a CD versus a savings account now? CDs have rates that are locked (and, they’re generally higher than the best high-yield savings accounts). Select savers may even qualify for an account with a 6% or 7% APY right now.
And if they open the account now, whether the CD term is for a few months or a few years, that rate will remain the same even in the face of expected rate cuts. This is a major advantage in today’s rate climate in which rates are high now but expected to fall later in the year.
By contrast, rates on high-yield savings accounts are variable, meaning that they’re subject to change as the rate environment evolves. So, while high now, they will fall when rate cuts are issued.
But if you wait to open a CD when that happens the returns on CD accounts will also have been cut. It makes sense, then, to take advantage of the locked CD rate perk and open an account now while rates are still up.
Get started with a high interest-earning CD here.
Other CD perks to know now
While the locked interest rate is a major advantage, it’s not the only one. Here are two other CD perks to know now:
- Higher rates: While the best high-yield savings account rates are competitive, they’re generally not as high as the very best CDs. A simple search online will show that the returns on CDs right now are the best they’ve been in years. And compared to the 0.47% that a regular savings account comes with, you’re essentially losing money by not making the switch.
- Predictable returns: Because the rates on CDs are locked savers will be able to accurately predict the returns on these accounts. So, for example, a CD with a 5% interest rate and a $2,500 deposit will earn $125 after 12 months. A CD at the same rate with a $5,000 deposit will earn double that amount and so on. This predictability is a major advantage compared to high-yield savings accounts and it makes CDs a safe and smart way to save for a major expense in the future.
The bottom line
Both CDs and high-yield savings accounts are smart options to pursue in today’s rate climate but only one will have the enduring returns that savers can predict (and rely on). The locked nature of CD rates is a major perk compared to savings accounts in any rate environment, but especially now when rates are high but are expected to drop as the year evolves. As with all financial considerations, however, make sure you’re comfortable leaving your money untouched in a CD before opening one, otherwise you could get hit with an early withdrawal penalty.
CBS News
Biden’s top hostage envoy Roger Carstens in Syria to ask for help in finding Austin Tice
Roger Carstens, the Biden administration’s top official for freeing Americans held overseas, on Friday arrived in Damascus, Syria, for a high-risk mission: making the first known face-to-face contact with the caretaker government and asking for help finding missing American journalist Austin Tice.
Tice was kidnapped in Syria 12 years ago during the civil war and brutal reign of now-deposed Syrian dictator Bashar al-Assad. For years, U.S. officials have said they do not know with certainty whether Tice is still alive, where he is being held or by whom.
The State Department’s top diplomat for the Middle East, Barbara Leaf, assistant secretary of state for Near Eastern Affairs, accompanied Carstens to Damascus as a gesture of broader outreach to Hay’at Tahrir al-Sham, known as HTS, the rebel group that recently overthrew Assad’s regime and is emerging as a leading power.
Near East Senior Adviser Daniel Rubinstein was also with the delegation. They are the first American diplomats to visit Damascus in over a decade, according to a State Department spokesperson.
They plan to meet with HTS representatives to discuss transition principles endorsed by the U.S. and regional partners in Aqaba, Jordan, the spokesperson said. Secretary of State Antony Blinken traveled to Aqaba last week to meet with Middle East leaders and discuss the situation in Syria.
While finding and freeing Tice and other American citizens who disappeared under the Assad regime is the ultimate goal, U.S. officials are downplaying expectations of a breakthrough on this trip. Multiple sources told CBS News that Carstens and Leaf’s intent is to convey U.S. interests to senior HTS leaders, and learn anything they can about Tice.
Rubinstein will lead the U.S. diplomacy in Syria, engaging directly with the Syrian people and key parties in Syria, the State Department spokesperson added.
Diplomatic outreach to HTS comes in a volatile, war-torn region at an uncertain moment. Two sources even compared the potential danger to the expeditionary diplomacy practiced by the late U.S. Ambassador Christopher Stevens, who led outreach to rebels in Benghazi, Libya, in 2012 and was killed in a terrorist attack on a U.S. diplomatic compound and intelligence post.
U.S. special operations forces known as JSOC provided security for the delegation as they traveled by vehicle across the Jordanian border and on the road to Damascus. The convoy was given assurances by HTS that it would be granted safe passage while in Syria, but there remains a threat of attacks by other terrorist groups, including ISIS.
CBS News withheld publication of this story for security concerns at the State Department’s request.
Sending high-level American diplomats to Damascus represents a significant step in reopening U.S.-Syria relations following the fall of the Assad regime less than two weeks ago. Operations at the U.S. embassy in Damascus have been suspended since 2012, shortly after the Assad regime brutally repressed an uprising that became a 14-year civil war and spawned 13 million Syrians to flee the country in one of the largest humanitarian disasters in the world.
The U.S. formally designated HTS, which had ties to al Qaeda, as a foreign terrorist organization in 2018. Its leader, Mohammed al Jolani, was designated as a terrorist by the US in 2013 and prior to that served time in a US prison in Iraq.
Since toppling Assad, HTS has publicly signaled interest in a new more moderate trajectory. Al Jolani even shed his nom de guerre and now uses his legal name, Ahmed al-Sharaa.
U.S. sanctions on HTS linked to those terrorist designations complicate outreach somewhat, but they haven’t prevented American officials from making direct contact with HTS at the direction of President Biden. Blinken recently confirmed that U.S. officials were in touch with HTS representatives prior to Carstens and Leaf’s visit.
“We’ve heard positive statements coming from Mr. Jolani, the leader of HTS,” Blinken told Bloomberg News on Thursday. “But what everyone is focused on is what’s actually happening on the ground, what are they doing? Are they working to build a transition in Syria that brings everyone in?”
In that same interview, Blinken also seemed to dangle the possibility that the U.S. could help lift sanctions on HTS and its leader imposed by the United Nations, if HTS builds what he called an inclusive nonsectarian government and eventually holds elections. The Biden administration is not expected to lift the U.S. terrorist designation before the end of the president’s term on January 20th.
Pentagon spokesperson Pat Ryder disclosed Thursday that the U.S. currently has approximately 2,000 US troops inside of Syria as part of the mission to defeat ISIS, a far higher number than the 900 troops the Biden administration had previously acknowledged. There are at least five U.S. military bases in the north and south of the country.
The Biden administration is concerned that thousands of ISIS prisoners held at a camp known as al-Hol could be freed. It is currently guarded by the Syrian Democratic forces, Kurdish allies of the U.S. who are wary of the newly-powerful HTS. The situation on the ground is rapidly changing since Russia and Iran withdrew military support from the Assad regime, which has reset the balance of power. Turkey, which has been a sometimes problematic U.S. ally, has been a conduit to HTS and is emerging as a power broker.
A high-risk mission like this is unusual for the typically risk averse Biden administration, which has exercised consistently restrained diplomacy. Blinken approved Carstens and Leaf’s trip and relevant congressional leaders were briefed on it days ago.
“I think it’s important to have direct communication, it’s important to speak as clearly as possible, to listen, to make sure that we understand as best we can where they’re going and where they want to go,” Blinken said Thursday.
At a news conference in Moscow Thursday, Russian President Vladimir Putin said he had not yet met with Assad, who fled to Russia when his regime fell earlier this month. Putin added that he would ask Assad about Austin Tice when they do meet.
Tice, a Marine Corps veteran, worked for multiple news organizations including CBS News.
CBS News
12/19: CBS Evening News – CBS News
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Delivering Tomorrow: talabat’s Evolution in the Middle East
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