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3 smart CD moves to make this June
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June is officially in full swing. With the start of summer just weeks away, the weather outside is becoming more inviting for many. But, June isn’t just a good time to enjoy the outdoors with your children or go on a nice hike through the woods. It’s also a good time to think about your savings and moves you can make to build upon the money you’ve set aside, particularly in today’s unique climate marked by stubborn inflation and elevated interest rates.
This is where certificates of deposit (CDs) can be valuable. Leading products in this category offer impressive returns – many of which are over 5%. But, there’s a tradeoff. In order to tap into the returns a CD has to offer, you’ll need to be willing to lock your money in the account for the account’s entire term. That could be anywhere from a few months to several years, depending on the account you choose. Of course, you can still access your money if you need to, but if you do so early, you may be penalized.
Nonetheless, these accounts are valuable tools that, when used properly, can have a meaningful impact on your financial wellbeing. So it’s important to know what smart CD moves to make this June?
Compare today’s leading CDs to earn more on your money now.
3 smart CD moves to make this June
There are several moves you can make with a CD to boost the returns on your savings while planning for your financial future.
Start shopping now
If you don’t already have a CD, you’re missing out on the interest these accounts can provide. And, thanks to the Federal Reserve’s federal funds rate being frozen at a 23-year high, that interest can be impressive.
But, interest rates typically move in upward and downward cycles. And, if the upward cycle we’ve experienced for the last couple of years is coming to an end, you may not have much longer to lock in today’s high rates with a CD. So, don’t hesitate – start shopping for strong return rates now.
Find out how strong your CD returns can be today.
Be prepared to move mid-month
The interest rates on consumer accounts, like CDs, are often dependent on a benchmark rate known as the federal funds rate. That’s the rate the Federal Reserve controls – typically increasing it when inflation is too high and lowering it when inflation is too low.
That’s an important consideration as we move into June. That’s because the next inflation report is scheduled to be released on the morning of June 12, 2024 and the Federal Reserve will hold its Federal Open Market Committee (FOMC) meeting between June 11 and June 12, 2024.
It’s important to note that inflation cooled in April – albeit not by much. If the report that’s being released on June 12, 2024 shows cooling of inflation in May, the Fed could cut its federal funds rate. And, if that happens, consumer rates may fall as well – which could mean today’s high CD rates quickly become a thing of the past.
So, be prepared to move by June 12, 2024 as waiting any longer to open your CD could mean missing out on the opportunity to tap into today’s high rates.
Use it as a tool to achieve short-term savings goals
Many consider the fact that CDs require you to lock your money up for the account’s term a negative. But, that feature can be a positive too. After all, if you have to pay a penalty to access your money early, you may be less likely to do so, making it more probable that you’ll achieve your savings goals.
“CDs, like many things should be part of a sound savings strategy, particularly when you have money earmarked for expenses over a certain time frame,” explains Aaron Cirksena, founder and CEO of the financial planning firm, MDRN Capital. He explains that money you’ll need in the near term and up to three years from now should be invested to earn more money for you. “However you would like to see that money earn more than a traditional savings account so CDs are a great way to increase the yield on that savings while still keeping the funds nice and safe.”
And, that may be particularly important this June. After all, we’re about six months away from the holiday season. So, investing money you have earmarked for the holidays into a six-month CD now could help you earn a meaningful return on that money while ensuring that it’s available when you need it late this year.
Use a CD to help you achieve your savings goals now.
The bottom line
CDs are versatile financial tools that have the potential to expand your earnings on your savings. And, there are a few wise moves you should consider making with CDs this June. In particular, start shopping for one now and be prepared to make a move by the middle of the month. With the upcoming inflation report and Fed meeting, there’s no telling how long today’s high rates will be available. Moreover, consider using a CD to help you achieve your holiday savings goals as well as any other savings goals you may have. Compare today’s leading CDs to earn more on your savings now.
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Both home equity loans and home equity lines of credit (HELOCs) offer homeowners access to their accumulated home equity at a much cheaper price point than many alternative credit options. While credit card interest rates sit just under 24% now – a record high – and personal loan interest rates hover around 12%, qualified homeowners can secure a home equity loan with a rate of 8.38% now and a HELOC at 8.53%. That equates to significant savings each month – and over the typical 10 or 15-year repayment period home equity loans typically come with.
Still, borrowing from your home equity isn’t risk-free, either. If you fail to repay all that you’ve borrowed (with interest), you could risk losing your home in the exchange. But even if you can comfortably manage your home equity loan payments, there are some other notable risks to avoid, particularly in today’s evolving economic climate with inflation rising and interest rates being reduced. Below, we’ll break down three home equity loan risks to know going into 2025.
Start by seeing what home equity loan rate you could lock in here now.
3 home equity loan risks to know going into 2025
Borrowing with a home equity loan can be both smart and effective, especially in today’s unique economic climate. To make it more valuable, homeowners should be aware of these risks (and take steps to avoid them):
Interest rates could rise
The hope that inflation would cool in a straight line downward – and that interest rates would follow – hasn’t played out in recent months. Inflation rose in October and again in November and now sits at 2.7%, almost a full percentage point above the Fed’s 2% goal. So waiting for a lower home equity loan rate to materialize in 2025 is risky when you can secure one close to 8% right now.
Unlike mortgage interest rates, which are driven by a variety of factors, home equity loan rates track closely alongside the federal funds rate. So if rate cuts are paused or hiked again next year, interest rates on home equity loans could rise. And they will rise on HELOCs, which have variable interest rates that change each month. Understanding this dynamic, then, prospective borrowers can avoid this risk altogether by locking in a low home equity loan interest rate now – and refinancing it should rates fall by a considerable degree in the future.
Get started with a home equity loan online today.
Home values could change
Your home equity is calculated by deducting your current mortgage balance from your estimated home value at the time of application. But home prices can change and what your home is worth now may not be what it’s worth in six months or in December 2025. That’s a positive if your home value is on the rise as it could allow you to borrow even more money (the average home equity amount currently sits at around $320,000) but it’s a major risk if your home value drops.
A significant value decrease could lead you to be “underwater” by owing more to the lender than your home is worth. This is particularly risky with home equity loans, which offer borrowers a lump sum of money versus a HELOC that functions as a revolving line of credit. So, before applying, make sure that your home value is secure and, preferably, on the rise.
Your debt could increase
If you use your home equity loan to pay off or to consolidate high-interest rate debt, like credit cards, then you could make strides toward boosting your financial health. But if you use it for the wrong reasons, like paying for depreciating assets such as cars or one-time expenses like weddings, you could put yourself into a growing debt spiral that will be difficult to get out of. So make sure you’re using your home equity loan for safe and effective purposes (like home repairs and renovations, which come with potential tax benefits) and avoiding using it in ways that could lead to your debt becoming harder to pay down than it already is.
The bottom line
A home equity loan offers borrowers access to a large, potentially six-figure sum of money, at an interest rate much lower than some popular alternatives. But it does come with risks that homeowners will need to navigate around, too. By being aware of these risks going into 2025 and by utilizing your funds for the most appropriate and secure reasons, you can position yourself for sustained home equity borrowing success both in the new year and in the years that follow.
Learn more about borrowing with a home equity loan here now.
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Texas man fights to reunite with wife and kids, including newborn twins, who were unexpectedly deported to Mexico
A Texas man is fighting to get his wife and four children back after he says they were unexpectedly deported to Mexico.
Federico Arellano is a U.S. citizen, and says three of his four kids are too. He says there has been a misunderstanding and that his family was misled.
Now, a video call is the only way he’s been able to see his family.
Agents deport family
ICE agents deported Arellano’s wife, Christina Salazar, and their four kids to Mexico last week after they say they were told to come to the ICE field office in Houston to discuss Salazar’s immigration case.
“They told me that they were going to take her to Mexico because she had a deportation order,” Arellano said.
A judge signed off on the order in early October after Salazar missed an immigration hearing. The family says Salazar was recovering from giving birth to premature twins and doctors recommended she recover at home during that time.
Arellano said he informed the court about the situation and claims they reassured him by phone the date could be rescheduled.
Nearly two months later, Arellano said agents detained his wife and then their four children.
Immigration attorney Isaias Torres, who represents the family, said he has not seen an instance like this one that involves a family.
“I’ve seen criminals, ardent criminals, people with prior deportation. … I don’t understand why this happened,” Torres said.
Hopes to reunite
A video call is now the only way Arellano can see Salazar and their kids for the foreseeable future.
“I’m alone. I have no one to help me with my kids here and they are really sick,” Salazar said in a video call from Reynosa, Mexico.
Attorneys for the family said they are reaching out to members of Congress for help. ICE and the DOJ have not responded to CBS News for a request for comment.
Meanwhile, Arellano said he just wants his family back.
“To get them back and of course they return to me just as they were taken away. I want them to return to me,” he said.
