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Why you should open a 3-month CD this May
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With persistent inflation still weighing on household budgets, many savers are on the hunt for opportunities to make their money work harder. And, while there are lots of smart account options that currently outpace inflation, including high-yield savings accounts and money market accounts, certificates of deposit (CDs) offer a few unique benefits in today’s elevated rate environment.
You have a wide range of CD terms to choose from, from a few months to several years, but a 3-month CD could be an especially attractive option right now for those looking to maximize their returns while maintaining flexibility. After all, these short-term deposit accounts currently offer some of the most competitive rates available while providing a safe haven for cash.
But that’s not the only reason to consider a 3-month CD in May. Here, we’ll take a closer look at why opening this type of CD could be a wise move for many savers today.
See what CD accounts offer the best rates online now.
Why you should open a 3-month CD this May
There are a few good reasons why you may want to consider opening a 3-month CD this May, including:
Today’s 3-month CD rates are very high
Perhaps the most compelling reason to consider a 3-month CD right now is the elevated rates many banks and credit unions are offering on these short-term accounts. As financial institutions compete for depositors’ funds in today’s high-rate environment, they’ve raised CD yields to very attractive levels.
For example, it’s not uncommon to find 3-month CDs paying annual percentage yields (APYs) well north of 4% or even 5%. To put those numbers in perspective, the current national average rate on regular savings accounts is just 0.46%.
By opting for a 3-month CD over a traditional savings account, you can substantially increase your earnings potential. For example, if you invested $10,000 at 0.46% for three months, you’d earn just $11.48 in interest over that time. But if you put that same $10,000 into a 3-month CD paying 4.5% APY, you’d earn $110.65 over the same period – or about 10 times the return.
Compare today’s top CD accounts and start earning more here.
Interest rates could climb soon
While recent inflation reports have shown some deceleration in price growth compared to the last couple of years, the path forward remains clouded. According to the latest inflation data, the current inflation rate is 3.5%, higher than the Federal Reserve’s 2% target rate. And, if upcoming data suggests that inflationary pressures are proving stickier than expected, the Fed has signaled its willingness to continue raising interest rates to bring inflation under control.
This potential for further rate hikes could translate to even higher yields on deposit products like CDs. By opening a 3-month CD with a favorable rate now, you position yourself to start earning a high rate now and potentially benefit from those rate increases when your short-term CD matures in just a few months.
Your CD rate is locked
A key benefit that CDs have over high-yield savings accounts is that the former allows you to lock in a fixed rate for the entire term of the account. With savings accounts, rates are variable and can fluctuate at the discretion of the bank based on market conditions.
In an uncertain rate environment like the current one we’re facing, this rate protection can be invaluable. While yields on savings products will likely decline if the Fed eventually shifts to cutting rates, your CD annual percentage yield (APY) will be guaranteed regardless of what happens with interest rates during the CD term.
This certainty and predictability around your return can provide valuable peace of mind, especially for more risk-averse savers. You’ll know exactly how much interest you’ll earn, allowing you to plan accordingly.
The shorter term allows for easy access
While longer-term CDs will guarantee your rate for a longer period, 3-month CDs strike an ideal balance between competitive yields and easy access to your funds. With such a short commitment, you’ll be able to reevaluate your savings strategy and potentially capitalize on new rate opportunities in just a few months.
This liquidity can be particularly advantageous right now given the rapidly evolving economic landscape. By opting for a 3-month CD over another CD term, you won’t have to worry about your money being inaccessible for an extended period if your financial circumstances change or market conditions shift.
And, the 3-month term allows you to reinvest the money deposited into your CD relatively quickly. So, if interest rates continue climbing, you can capture those higher yields by promptly opening a new CD or exploring other savings vehicles once your existing CD account matures.
How to find the best 3-month CD today
With the clear advantages a 3-month CD can offer in the current environment, the next step is finding the account that will maximize your earnings. These tips can help you find the most competitive 3-month CD rates:
Shop around at online banks
While many brick-and-mortar banks offer decent CD rates, you’ll often find the highest yields at online banks. These internet-only institutions typically have lower overhead costs, allowing them to pass along more favorable returns to customers.
Don’t overlook credit unions
Credit unions can also be a great source for high 3-month CD yields. As not-for-profit cooperatives, credit unions often pay out higher rates than traditional banks in an effort to provide the best returns for their member-owners.
Look for sign-up bonuses and promo rates
To attract new customers, some banks periodically offer promotional rates or cash bonuses on newly opened CDs. While these teaser rates may only apply for a single term, they can help boost your overall earnings, so it’s worth checking for these offers before locking in a new 3-month CD.
The bottom line
With a well-researched CD strategy, this May could be an ideal time to put your money to work. And, by taking advantage of the attractive 3-month CD rates available now while positioning yourself to potentially benefit from future rate increases, you can make the most of your savings in the coming months.
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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