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Is a $5,000 CD still worth opening now?
For the last two and a half years, approximately, the benefits of opening a certificate of deposit (CD) account have been clear. These accounts offered interest rates exponentially higher than they had been in 2020 and 2021, for example. The rates on these accounts were fixed, meaning that savers could rely on a predictable return despite any volatility in the wider rate climate during their CD term. Depending on the initial deposit, then, savers could earn hundreds or thousands of dollars in interest, simply by opening an account at the right time, with the right lender.
But is now still the right time to do so? Inflation has steadily dropped from the decades-high point it was at in June 2022. Multiple interest rate cuts have since been issued in response, the latest of which is widely expected for when the Federal Reserve meets for the final time in 2024 on December 17 and 18. Against this backdrop, then, savers may be pondering the benefits of opening a CD. While a $5,000 deposit, for example, may have been a clear choice a year or two ago, some may be wondering if a $5,000 CD is still worth opening now. Below, we’ll explain why it may still be.
See how much interest you could be earning with one of today’s top CDs here.
Is a $5,000 CD still worth opening now?
In simple terms: Yes, a $5,000 CD can still be worth opening for many savers right now. But the details matter. For example, a $5,000 deposit into a short-term CD may not be valuable for some savers. These accounts, which mature in under 12 months, have interest rates slightly higher than their long-term counterparts. But long-term CDs, which have terms ranging from 18 months to 10 years, will allow savers to lock in today’s high rates for years to come, making them a smart way to protect your savings against any future rate cuts.
To better understand why a $5,000 long-term CD would be better than a short-term one now, it helps to compare the returns each account can offer savers. It’s possible to find a 6-month CD with a rate of 4.50% now. 2-year CD rates, meanwhile, top out around 4.25%. But the lower rate won’t negate the higher earnings, thanks to the extended earning potential. A $5,000, 6-month CD would make $111.26 upon maturity while the 18-month CD would earn $434.03. That’s almost four times the interest, made with the same effort as it would take to open the shorter term.
The key consideration, then, becomes a personal one. Can you afford to keep your money untouched in a long-term CD? If you can’t and open one anyway you’ll be penalized for withdrawing your money early. That could mean forfeiting all of the interest earned to that point, depending on the individual lender’s fees. The same considerations apply to short-term CDs, too, although those accounts are typically easier for the average saver to see through to maturity. Only you will know which is best for your situation.
Start exploring your short-term and long-term CD options here.
What about high-yield savings accounts?
If you’re concerned about your ability to lock your money away, regardless of the term length, a high-yield savings account could be a valuable alternative to investigate. These accounts operate like traditional savings accounts do, albeit with much higher interest rates. The catch, here, is that rates are variable and likely to fluctuate and potentially decline as additional Fed rate cuts are issued. And the most attractive accounts are usually via online banks, so you may need to move your funds from your regular branch to take advantage of the higher rates offered elsewhere.
Learn more about your high-yield savings account options here.
The bottom line
Interest rates haven’t dropped so low that a $5,000 CD is no longer valuable. Savers will just need to be a bit more strategic in their approach than they have been in recent years. For many, that may mean opening a long-term CD versus a short-term one. Others, however, may be best served by forgoing their CD options for high-yield savings accounts. It’s critical to take action soon, however. Today’s interest rates won’t remain this high forever so it makes sense to start earning more on your money as soon as possible.
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What is birthright citizenship, and can Trump end the constitutional right in the U.S.?
Washington — President-elect Donald Trump says he’ll end birthright citizenship, after years of criticizing the constitutional right.
In an interview on NBC’s “Meet the Press” that aired Sunday, Trump said he’s “absolutely” still planning to end birthright citizenship on Day One of his presidency. “We have to end it,” Trump told host Kristen Welker. In a video post in 2023, Trump had said he’d sign an executive action to do so on the first day in office.
What is birthright citizenship, and is it in the U.S. Constitution?
Birthright citizenship automatically grants citizenship to anyone born on U.S. soil, regardless of the parents’ citizenship status.
The Citizen Clause, under the 14th Amendment to the Constitution, states that “all persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”
Congress passed the 14th Amendment in 1866, during the Reconstruction period following the Civil War. In 1868, the amendment was ratified to extend citizenship to people born on U.S. soil, invalidating the Supreme Court’s Dred Scott decision, which barred slaves and descendants of slaves from becoming citizens.
Why does Trump want to end birthright citizenship?
Trump has been talking about ending birthright citizenship since his presidential campaign in 2015. In a policy paper at the time, he called birthright citizenship “the biggest magnet for illegal immigration.” In the 2023 video, Trump blamed birthright citizenship for “birth tourism,” in which he said migrants spend the final weeks of their pregnancies in hotels in order to give birth in the U.S. and then use the child’s citizenship status to bring relatives into the U.S. through “chain migration,” also known as family-based migration.
During his first term, Trump pledged to end birthright citizenship but did not do so. He told “Meet the Press” that he had planned to sign an executive action on birthright citizenship before his focus turned to fighting COVID-19.
Trump called the guarantee of citizenship by birth “ridiculous,” telling Welker that the U.S. is the only country with birthright citizenship. In fact, dozens of other countries have birthright citizenship.
“If somebody sets a foot — just a foot, one foot, you don’t need two — on our land, congratulations, you are now a citizen of the United States of America,” Trump complained. “We’re going to end that because it’s ridiculous.”
Opponents of birthright citizenship say it was never intended to cover undocumented immigrants’ children or so-called “birth tourism.” They contend the amendment was ratified to eliminate barriers to birthright citizenship based on race.
More broadly, the pledge is part of what Trump has billed as a radical shift on immigration that he campaigned on, part of a promise to target both unauthorized and legal immigrants using unprecedented measures likely to test the limits on his authority.
Can Trump end birthright citizenship?
When asked whether he could get around the 14th Amendment through executive action, Trump acknowledged “it would maybe have to go back to the people, but we have to end it,” which seemed to indicate he might try to initiate a constitutional amendment to end the right, if necessary. He clarified that he would pursue an end to birthright citizenship through executive action “if we can.”
Could Trump repeal birthright citizenship through executive action?
“The answer is no,” said Michael LeRoy, professor at the University of Illinois at Urbana-Champaign School of Labor and Employment Relations and College of Law. That’s because the president lacks the authority to unilaterally change the Constitution.
Eliminating birthright citizenship through a constitutional amendment would be nearly impossible as well, because of the widespread approval needed not only from Congress but also from the states.
What’s enshrined in the Constitution can’t be altered by a regular congressional vote, either. Amendments not only have to be approved by a two-thirds vote in both chambers of Congress, but ratified by three-fourths of state legislatures, or three-fourths of conventions called in each state for ratification. It’s an extensive process with a high bar.
The only time in U.S. history a constitutional amendment has been repealed was when the 18th Amendment prohibiting the manufacture, sale and transportation of intoxication liquors, better known as prohibition, was repealed in 1933 through the addition of the 21st Amendment, LeRoy noted.
Republican Sen. Lindsey Graham of South Carolina says he’s working on drafting a constitutional amendment to end the practice.
Do other countries besides the U.S. have birthright citizenship?
The U.S. is far from the only country with birthright citizenship, although birthright citizenship without conditions is more common in North and South America than it is in the rest of the world.
Unlike some countries, the U.S. does not require a parent to be a citizen for a child born on U.S. soil to become a citizen. It’s automatic.
Full list of countries with birthright citizenship
More than 30 countries have birthright citizenship, according to the Central Intelligence Agency’s World Factbook. They include:
- Antigua and Barbuda
- Argentina
- Azerbaijan
- Barbados
- Belize
- Bolivia
- Brazil
- Canada
- Chile
- Costa Rica
- Cuba
- Dominica
- Ecuador
- El Salvador
- The Gambia
- Grenada
- Guatemala
- Guinea-Bissau
- Guyana
- Honduras
- Jamaica
- Lesotho
- Mauritius
- Mexico
- Nepal
- Nicaragua
- Pakistan
- Panama
- Paraguay
- Peru
- Saint Kitts and Nevis
- Saint Lucia
- Saint Vincent and the Grenadines
- Trinidad and Tobago
- Tuvalu
- United States
- Uruguay
- Venezuela