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Why a long-term CD is better than these 3 alternatives now
If you’ve been looking for a safe and reliable way to protect your savings in 2023 and 2024, a certificate of deposit (CD) account was often one of the optimal ways to do so. Interest rates on CDs, whether short-term (under 12 months) or long-term (over 12 months), were exponentially higher than they had been a few years earlier. And rates on these accounts are fixed, meaning they would remain what they were when the account was first opened, despite any volatility in the larger rate climate.
However, as the economy has changed, inflation has dropped and interest rate cuts have been issued, a long-term CD has become the clear choice. Whether with an 18-month CD or something with a term of 2 years or more, a long-term CD is now arguably better than many popular alternatives. Below, we’ll compare this unique savings vehicle versus three other account types.
See how much more you could be earning with a long-term CD here today.
Why a long-term CD is better than these 3 alternatives now
Not sure if a long-term CD is the right choice for you? Compare it to these three other options to better understand why it may be:
High-yield savings accounts
High-yield savings accounts operate like regular savings accounts, albeit with higher interest rates. Even with two Federal Reserve interest rate cuts already issued in 2024, it’s still possible to find a high-yield savings account with an interest rate close to 5% right now. And, unlike CDs, you won’t need to lock your money in the account to earn that high rate. Finally, thanks to its variable rate nature, if rates rise again in the future, rates on these accounts will increase independently, too.
Why a long-term CD is better: A long-term CD is arguably preferable to high-yield savings accounts largely thanks to the fixed rate it comes with. While long-term CD rates are competitive but not quite as high as high-yield savings accounts, the rate will remain the same until the CD matures. And with additional interest rate cuts likely, possibly as soon as this month, you’ll likely earn more by locking your funds into a long-term CD than you would by taking a risk with a variable rate high-yield savings account.
Compare your CD and high-yield savings account options online now.
Traditional savings accounts
If you have your money in a traditional savings account and have had difficulty finding any interest you’ve earned on your money to date, it’s easy to understand why. According to the FDIC, the average interest rate on a traditional savings account is just 0.43% right now. Like high-yield savings accounts, rates on traditional savings accounts are also variable. So that 0.43% rate right now could be even lower in 2025.
Why a long-term CD is better: Just compare the potential rates. You can get a 4.20% rate on a 3-year CD and a 4.35% rate on a 5-year CD now – that’s 876% and 911% better than what traditional savings accounts offer now.
Short-term CDs
Short-term CD accounts have slightly higher interest rates than long-term CDs now and savers won’t have to worry as much about any early withdrawal penalties, as it’s generally easier to keep your money locked away for three months or six months than it is for 18 months or in 2-year CDs. So, if you’re looking for a quick way to earn today’s elevated rates, a short-term CD is one of your better options.
Why a long-term CD is better: Crunch the numbers. A $10,000 deposit into a 6-month CD at a 4.50% rate results in a minimal $222.52 earned upon account maturity. However, the identical deposit in a 2-year CD at 4.20% results in a $857.64 return. So, if you can comfortably afford the part with your money for a longer time, you’ll be rewarded with a much higher return.
The bottom line
While every saver’s financial situation differs, there’s a compelling case to be made for opening a long-term CD over many popular alternatives now, heading into 2025. With this type of account, savers can earn a high rate – and keep it for potentially years to come. Just be sure to weigh the initial deposit versus your ability to maintain the account for the full CD term to improve your chances of long-term financial success.
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Memphis police discriminate against Black people and use excessive force, Justice Department report finds
The Memphis Police Department uses excessive force and discriminates against Black people, according to the findings of a U.S. Department of Justice investigation launched after the beating death of Tyre Nichols after a traffic stop in 2023.
A report released Wednesday marked the conclusion of the investigation that began six months after Nichols was kicked, punched and hit with a police baton as five officers tried to arrest him after he fled a traffic stop.
The report says that “Memphis police officers regularly violate the rights of the people they are sworn to serve.”
“The people of Memphis deserve a police department and city that protects their civil and constitutional rights, garners trust and keeps them safe,” Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division said in an emailed statement.
The city said in a letter released earlier Wednesday that it would not agree to negotiate federal oversight of its police department until it could review and challenge results of the investigation.
City officials had no immediate comment on the report but said they plan to hold a news conference Thursday after Justice Department officials hold their own news conference in Memphis on Thursday morning to address the findings.
Police video showed officers pepper spraying Nichols and hitting him with a Taser before he ran away from a traffic stop. Five officers chased down Nichols and kicked, punched and hit him with a police baton just steps from his home as he called out for his mother. The video showed the officers milling about, talking and laughing as Nichols struggled with his injuries.
Nichols died on Jan. 10, 2023, three days after the beating. The five officers — Tadarrius Bean, Demetrius Haley, Emmitt Martin, Desmond Mills Jr. and Justin Smith — were fired, charged in state court with murder, and indicted by a federal grand jury on civil rights and witness tampering charges.
Nichols was Black, as are the former officers. His death led to national protests, raised the volume on calls for police reforms in the U.S., and directed intense scrutiny towards the police department in Memphis, a majority Black city.
The report specifically mentions the Nichols case, and it addresses the police department’s practice of using traffic stops to address violent crime. The police department has encouraged officers in specialized units, task forces, and on patrol to prioritize street enforcement, and officers and community members have described this approach as “saturation,” or flooding neighborhoods with traffic stops, the report said.
“This strategy involves frequent contact with the public and gives wide discretion to officers, which requires close supervision and clear rules to direct officers’ activity,” the report said. “But MPD does not ensure that officers conduct themselves in a lawful manner.”
The report said prosecutors and judges told federal investigators that officers do not understand the constitutional limits on their authority. Officers stop and detain people without adequate justification, and they conduct invasive searches of people and cars, the report said.
“Black people in Memphis disproportionately experience these violations,” the report said. “MPD has never assessed its practices for evidence of discrimination. We found that officers treat Black people more harshly than white people who engage in similar conduct.”
The investigation found that Memphis officers resort to force likely to cause pain or injury “almost immediately in response to low-level, nonviolent offenses, even when people are not aggressive.”
The report says officers pepper sprayed, kicked and fired a Taser at an unarmed man with a mental illness who tried to take a $2 soda from a gas station. By the end of an encounter outside the gas station, at least nine police cars and 12 officers had responded to the incident, for which the man served two days in jail for theft and disorderly conduct.
In a letter to the Justice Department’s Civil Rights Division released earlier Wednesday, Memphis City Attorney Tannera George Gibson said the city had received a request from the DOJ to enter into an agreement that would require it to “negotiate a consent decree aimed at institutional police and emergency services.”
A consent decree is an agreement requiring reforms that are overseen by an independent monitor and are approved by a federal judge. The federal oversight can continue for years, and violations could result in fines paid by the city.
It remains to be seen what will happen to attempts to reach such agreements between cities and the Justice Department once President-elect Donald Trump returns to office and installs new department leadership. The Justice Department under the first Trump administration curtailed the use of consent decrees, and the Republican president-elect is expected to again radically reshape the department’s priorities around civil rights.
“Until the City has had the opportunity to review, analyze, and challenge the specific allegations that support your forthcoming findings report, the City cannot — and will not — agree to work toward or enter into a consent decree that will likely be in place for years to come and will cost the residents of Memphis hundreds of millions of dollars,” the letter said.
The officers in the Nichols case were part of a crime suppression team called the Scorpion Unit, which was disbanded after Nichols’ death. The team targeted drugs, illegal guns and violent offenders, with the goal of amassing arrest numbers, while sometimes using force against unarmed people.
Memphis police never adopted policies and procedures to direct the unit, despite alarms that it was minimally supervised, according to the Justice Department report. Some prosecutors told department investigators that there were some “outrageous” inconsistences between body camera footage and arrest reports, and if the cases went to trial, they would be “laughed out of court.” The report found that the unit’s misconduct led to dozens of criminal cases being dismissed.
In court proceedings dealing with Nichols’ death, Martin and Mills pleaded guilty to the federal charges under deals with prosecutors. The other three officers were convicted in early October of witness tampering related to the cover-up of the beating. Bean and Smith were acquitted of civil rights charges of using excessive force and being indifferent to Nichols’ serious injuries.
Haley was acquitted of violating Nichols’ civil rights causing death, but he was convicted of two lesser charges of violating his civil rights causing bodily injury. The five men face sentencing by a federal judge in the coming months.
Martin and Mills also are expected to change their not guilty pleas in state court, according to lawyers involved in the case. Bean, Haley and Smith have also pleaded not guilty to state charges of second-degree murder. A trial in the state case has been set for April 28.
Justice Department investigators have targeted other cities with similar probes in recent years, including Minneapolis after the killing of George Floyd, and Louisville, Kentucky, following an investigation prompted by the fatal police shooting of Breonna Taylor.
In its letter, the city of Memphis said the DOJ’s investigation “only took 17 months to complete, compared to an average of 2-3 years in almost every other instance, implying a rush to judgment.”
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