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Why you should open a 3-month CD today
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Rates have increased significantly over the last few years due to the Federal Reserve attempting to temper inflation. The trend started in March 2022, when high post-pandemic inflation levels led the Fed to increase its target federal funds rate. And, the Fed then opted to increase its benchmark rate several more times before pausing rate hikes temporarily.
And, in general, that strategy appears to be working — at least somewhat. The inflation rate is cooling, but it hasn’t quite reached the Federal Reserve’s 2% goal. According to recent data, the inflation rate is now 3.1%.
Nonetheless, as inflation moves in the right direction, the Federal Reserve has decided to keep rate hikes paused over the last few months, leaving the benchmark interest rate at a 23-year high. And, you may be able to use today’s high interest rates to your advantage with the help of a 3-month certificate of deposit (CD) — which gives you an effective way to earn high returns on your savings.
Get more out of your savings with a 3-month CD today.
Why you should open a 3-month CD today
A 3-month CD allows you to take advantage of today’s high rates without having to lock your money up for more than a few months. Here’s why this type of CD makes sense now:
Rates are currently high on 3-month CDs
One good reason to open a 3-month CD right now is that APYs are high on the best accounts. Some of the best 3-month CDs are available at Popular Direct (5.00% APY) and Alliant Credit Union (4.25% APY). Both of these options have rates that outpace inflation, so you can use them to offset the losses from inflation and earn a positive return.
Tap into today’s high rates with a 3-month CD now.
Rates are expected to drop in the future
At 3.1%, the current inflation rate is still above the Federal Reserve’s 2% target. However, it’s significantly lower than the 9.1% inflation rate from June 2022, which suggests that the Fed’s efforts to hamper inflation are working.
If inflation continues to cool, the Fed will likely reduce its target federal funds rate soon. In fact, many experts expect the Federal Reserve to start rate cuts in June.
And, if you were to open a 3-month CD today, it would mature in late May. At that point, you could reassess the inflationary environment and decide whether it makes sense to lock in a higher rate for a longer term.
CD accounts are generally safe
“CDs, or certificates of deposit, are typically a safe way to increase your savings rate of return especially if you are averse to investing in stocks or bonds,” says Yosh Miller, CEO and founder of Hadley, a savings app.
CDs provide safety in two ways.
“When you open a certificate of deposit, you essentially deposit money with a bank that will give you a rate of return for an agreed upon term,” says Miller.
CDs typically come with FDIC or NCUA insurance, too, which protects you from losses of up to $250,000 per account in the event your financial institution becomes insolvent or goes out of business.
CDs can promote savings discipline
A 3-month CD may also be an effective tool to help you achieve your short-term savings goals. For example, if you want to take a vacation in three months, you could deposit the money you’re using to cover the expense in a 3-month CD. When you do, you’ll agree to keep your money in the account for the entire term.
If you tap into your CD early, you may have to pay an early withdrawal penalty. That could make it less appealing to tap into your funds early and increase the likelihood of meeting your savings goals.
The bottom line
Inflation is still above the Federal Reserve’s target and returns on leading deposit accounts are still competitive. It may be wise to open a 3-month CD to take advantage of today’s rate environment ahead of any potential rate changes in June.
North Pole, Alaska — ‘Twas the week before Christmas and plenty was stirring at the Santa Claus House in the city of North Pole, Alaska.
The iconic Christmas-themed store checked its list twice, realizing that it is far more naughty than nice if any of the gifts it sends out arrive late to their destinations around the globe.
“People are used to waiting until the very last minute to shop online, which presents a challenge for us having to process that order and ship it out from Alaska,” said Paul Brown, manager of the Santa Claus House, which for decades has been sending thousands of annual Santa letters to children worldwide.
In North Pole, which is located about 13 miles southeast of Fairbanks, candy canes double as street lights, and Christmas takes on special meaning for resident and FedEx driver Bill Soplu.
“Yeah, this is a wonderful time of the year,” Soplu said. “Everybody’s so happy right now, so it makes our job a lot easier.”
The cold weather doesn’t diminish Souplou’s cheer.
“Just the other day it was 30 above, you know, and then you wake up the next morning, it’s 30 below,” he said.
Nor do the moose.
“We don’t want to mess around with those guys,” he adds.
The gifts Soplu is delivering come from an airfield 20 miles down a frozen road. There are only a few hours of daylight in Fairbanks during the winter months, and the temperature hovers around zero.
An average of 3,000 packages a day come through Fairbanks during the holiday season. Capt. Joseph Erikson is a delivery pilot for FedEx.
“I know there’s a good chance there’s a special present on that plane, and it’s important to get that to that family,” Erikson told CBS News.
Before they reach Fairbanks, shipments from around the world first come through a sprawling FedEx sorting center at Ted Stevens Anchorage International Airport.
During the holidays, there are 33 delivery planes a day which fly in and out of Anchorage carrying about 80,000 packages. The planes run around the clock so gifts can span the globe in as little as 24 hours.
“We’ve been putting these plans in place for months so we can make sure we’re getting those packages to our customers,” said David Lewis, senior manager for surface operations for FedEx in Alaska.
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Houston — Donna Thomas is a pollution warrior in Houston, Texas. She wears a mask because she believes a lifetime of breathing polluted air in her community contributed to a stroke four years ago.
Near her home, Thomas points out Texas’ largest coal-fired power plant.
“It’s the oldest thing you can be burning in our neighborhoods. It’s dangerous,” Thomas said.
To respond to communities like hers, the Environmental Protection Agency under President Biden created a new Office of Environmental Justice. It is staffed by 200 people and funded by more than $2.8 billion that goes directly to “disadvantaged, marginalized, and over-polluted communities,” including support for projects that allow neighborhoods to monitor their own air quality.
But Project 2025, a possible roadmap for President-Elect Donald Trump, recommends “eliminating the EPA’s stand-alone Office of Environmental Justice.”
“We already know that everybody’s concerned. We want our EPA to be stronger,” Thomas said.
But that is unlikely, as Trump has vowed to “cut ten old regulations for every one new regulation.”
Many business and industry leaders say environmental regulation is anti-competitive and costs them money. In his first term, Trump cut 100 environmental regulations. Just last week, he posted on social media that “any person or company investing one billion dollars… in the United States, will receive fully expedited approvals and permits, including…all environmental approvals.”
Daniel Cohan, a professor and researcher at Rice University, sits on one of the EPA’s scientific advisory boards and is skeptical of the claim that environmental regulations stifle business.
“We’ve seen the oil and gas industry prosper and produce more oil and gas than ever before, even with EPA regulations,” Cohan said.
Since the EPA first started regulating clean air in the 1970s, emissions of the most common air pollutants have dropped by almost 80%. But around Houston, there’s still a long way to go. Each year, the pollution from that power plant is responsible for 177 premature deaths, a 2018 Rice University study found.
In a statement to CBS News, the plant owner, NRG, wrote: “…We have a strict policy of complying with all environmental rules and regulations and proud of our environmental record.”
Thomas believes that protecting the environment isn’t a partisan issue.
“Whether you’re a Democrat or Republican, you should be protected from all the environmental issues, but you’re not because there’s no justice out here for people,” Thomas said.
And she’s convinced over the next four years that environmental regulation and enforcement will be harder to come by.
