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Why you should open a CD with your tax refund
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Tax season is upon us and many Americans are awaiting a refund. While it can be easy to spend that money on unnecessary purchases, it can be smart to use your tax refund to put yourself on better financial footing.
After all, if invested properly, the money you receive from your tax return could grow more meaningful over time. And, one compelling way to get more out of your refund is to put it into a certificate of deposit (CD).
Open a CD today to lock in today’s high returns.
Why you should open a CD with your tax refund
If you have a tax refund coming your way, it may benefit you to use the money to help you achieve your financial goals. Here are a few reasons a CD may be a great place to deposit the money from your refund:
CDs offer the potential for excellent returns
The Federal Reserve began increasing interest rates in March 2022 in response to high inflation levels. The Fed then raised its benchmark rate several times thereafter, pushing the federal funds rate to a 23-year high, where it sits today.
That’s important because interest rates for lending and deposit accounts are impacted by changes made to the federal funds rate. And, because that rate was hiked numerous times, many of today’s CDs offer impressive returns. For example, many 1-year CDs come with APYs over 5%.
Compare CD accounts now to find the right option for your needs.
High rates won’t last forever
“This is a nice time to give some serious consideration to a CD if you are a risk-averse investor,” says Matt Willer, managing director and partner at Phoenix Capital Group. “Rates appear to be heading down toward the end of 2024, so locking in a reasonable rate prior to that is advantageous.”
The idea that rates could drop can make CDs even more attractive, as you lock in the rate for the full CD term when you open the account. So, you can use a CD to lock in today’s impressive rates — protecting you from future rate decreases that occur during the CD term.
CDs are a safe place to store your cash
CDs are safe savings vehicles for two reasons. First, these accounts are typically FDIC- or NCUA-insured up to $250,000 per depositor, per account. So, if your financial institution becomes insolvent, this insurance covers the money you have deposited in your CD. And CDs also come with fixed interest rates. So, you’ll know exactly how much money you’ll earn when you open your account.
CDs can act as a safe-haven asset
In today’s high-rate environment, using your tax return to open a CD could help diversify your investment portfolio with a safe-haven asset.
“The markets have been on a straight path to new highs,” says Willer. “It might be a nice time to take some volatility off as we get closer to the elections and navigate through domestic and international uncertainty.”
CDs could help you achieve your savings goals
Finally, a CD may help you achieve your savings goals. That’s because, when you open your CD, you typically agree to keep your money in the account for the full term. If you decide to access your money early, you generally pay a penalty to do so.
And, if you’re required to pay a penalty to access your money, you’ll be less likely to tap into it before your account matures. As such, a CD can help you achieve your savings goals.
The best part is that CDs come in various terms. So, you should be able to find options to help you achieve your goals, whether they’re short-, mid- or long-term.
The bottom line
The average tax refund for the week of February 16 was over $3,200, according to the IRS. And while the idea of spending that cash may seem appealing, investing it into a CD could have a meaningful impact on your long-term financial stability.
The International Brotherhood of Teamsters says workers at seven Amazon facilities will begin a strike Thursday morning in an effort by the union to pressure the e-commerce giant for a labor agreement during a key shopping period.
The Teamsters say the workers, who authorized walkouts in the past few days, are joining the picket line after Amazon ignored a Dec. 15 deadline the union set for contract negotiations. Amazon says it doesn’t expect any impact on its operations during what the union calls the largest strike against the company in U.S. history.
The Teamsters say they represent nearly 10,000 workers at 10 Amazon facilities, a small portion of the 1.5 million people Amazon employs in its warehouses and corporate offices.
Amazon is ranked No. 2 on the Fortune 500 list of the nation’s largest companies.
At a warehouse in the New York City borough of Staten Island, thousands of workers who voted for the Amazon Labor Union in 2022 and have since affiliated with the Teamsters. At the other facilities, employees – including many delivery drivers – have unionized with them by demonstrating majority support but without holding government-administered elections.
The strikes happening Thursday are taking place at an Amazon warehouse in San Francisco and six delivery stations in southern California, New York City, Atlanta and the Chicago suburb of Skokie, Illinois, according to the union’s announcement. Amazon workers at the other facilities are “prepared to join” them, the union said.
“Amazon is pushing its workers closer to the picket line by failing to show them the respect they have earned,” Teamsters General President Sean M. O’Brien said in a statement.
“If your package is delayed during the holidays, you can blame Amazon’s insatiable greed. We gave Amazon a clear deadline to come to the table and do right by our members. They ignored it,” he said.
The Seattle-based online retailer has been seeking to re-do the election that led to the union victory at the warehouse on Staten Island, which the Teamsters now represent. In the process, the company has filed a lawsuit challenging the constitutionality of the National Labor Relations Board.
Meanwhile, Amazon says the delivery drivers, which the Teamsters have organized for more than a year, aren’t its employees. Under its business model, the drivers work for third-party businesses, called Delivery Service Partners, who drop off millions of packages to customers everyday.
“For more than a year now, the Teamsters have continued to intentionally mislead the public – claiming that they represent ‘thousands of Amazon employees and drivers’. They don’t, and this is another attempt to push a false narrative,” Amazon spokesperson Kelly Nantel said in a statement. “The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union.“
The Teamsters have argued Amazon essentially controls everything the drivers do and should be classified as an employer.
Some U.S. labor regulators have sided with the union in filings made before the NLRB. In September, Amazon boosted pay for the drivers amid the growing pressure.
NEW YORK — The Teamsters union is launching a strike against Amazon at numerous locations across the country, including in Maspeth, Queens.
The Teamsters are calling it the largest strike against Amazon in United States history, and it’s set to begin at 6 a.m. Thursday. In addition to New York City, workers will be joining picket lines in Atlanta, Southern California, San Francisco and Illinois.
In a video announcement released Wednesday night, workers voiced their frustrations.
“Us being strike ready means we’re fed up, and Amazon is clearly ignoring us and we want to be heard,” one worker says in the video.
“It’s really exciting. We’re taking steps for ourselves to win better conditions, better benefits, better wages,” another worker in the video says.
The union says it represents about 10,000 Amazon employees and that Amazon ignored a deadline to come to the table and negotiate. The $2 trillion company doesn’t pay employees enough to make ends meet, the union asserts.
At the height of the holiday season, many are wondering what this means for packages currently in transit.
Teamsters President Sean O’Brien said, “If your package is delayed during the holidays, you can blame Amazon’s insatiable greed.”
Amazon says Teamsters are misleading the public
An Amazon spokesperson says the Teamsters are misleading the public and do not represent any Amazon employees, despite any claims.
“The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union,” the spokesperson said in a statement.
An Amazon representative says the company doesn’t expect operations to be impacted.
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