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Which short-term CD length is best?
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Since interest rates shot up in 2022 due to high inflation, savers have been able to take advantage of attractive returns on certificates of deposit (CDs). Today, many CDs still pay high interest rates, but the yield curve is inverted. In other words, with the expectation that rates will fall in the near future, short-term CDs of 12 months or less generally pay higher interest rates than long-term CDs.
However, interest rates aren’t the only determinant of what makes the best CD. For example, you might prefer the certainty that comes with locking in a CD rate, even if the annual percentage yield (APY) is less than some shorter-term CDs. Or, you might prefer certain short-term CD accounts due to a combination of yield and the ability to withdraw your money without penalty sooner. With that in mind, it helps to consider the below examples of when you might choose different short-term CD durations.
Thinking of opening a short-term CD now? See how high of a rate you could secure here.
Which short-term CD length is best?
Here are a few ways to tell which term length could be optimal for you.
When a 12-month CD is best
A 12-month or 1-year CD can provide a good middle ground for savers.
“It is a time frame that gives them a strong competitive rate, and yet not too long of a term for most of their liquidity needs such as saving for the purchase of a car or home renovation,” says John Blizzard, founder, CD Valet.
While some shorter-term CDs might pay slightly higher interest rates than 12-month CDs, keep in mind that APYs are annual measurements. So, a 6-month CD might have a higher APY initially, for instance, but when those six months are up and you go to renew the CD, rates might be lower, meaning the combined interest earned over those 12 months might be less than if you just went with a 12-month CD in the first place.
“For savvy savers that treat CDs more as an investment, a 12-month CD can be a great choice if they think interest rates may fall in the near future, thus locking in a good rate for a longer time period of time,” says Blizzard.
Explore your 1-year CD options online today.
When a 6-month CD is best
While 12-month CDs can be good for those who think interest rates will fall soon, some savers and investors might choose 6-month CDs to try to earn a high interest rate for now and then re-evaluate the situation six months later. Also, 6-month CDs can be useful if you’re trying to save for a specific goal coming up in the near future.
“6-month CDs are good when you know you need money by the end of the year and are forcing yourself to segregate the funds — in other words, you don’t trust yourself to have the money liquid — but you’re not sure if rates are going up or going down,” says Andy Smith, executive director, financial planning, Edelman Financial Engines.
By choosing a 6-month CD, “you’re giving yourself a bit more breathing room on the front-end with a higher rate and giving yourself the potential flexibility to purchase another CD at a higher rate, if need be,” he adds.
When a 3-month CD is best
Choosing an even shorter duration with a 3-month CD could be helpful for those who think interest rates will rise or at least stay flat, so you can get a high interest rate now and then potentially renew the CD for a higher yield at the end of those three months.
“If I had to bet, I think a client would be better off taking the 3-month CD over the 12-month CD if they wanted a higher yield in 12 months, if they keep rolling the 3-month CD each time it comes due instead of buying the 12-month CD. This strategy would work if rates did not come down in the next 12 months,” says Christian Mauser, lead wealth advisor and investment strategist at ATLas Investment Advisors.
And similar to a 6-month CD, you might choose a 3-month CD if you’re saving for a specific purchase in a few months.
Explore multiple short-term CD options here to learn more.
The bottom line
While some savers prefer to choose specific CD terms, like if you’re opening an account to put money away for an upcoming purchase, you don’t necessarily have to choose just one CD.
“Currently if someone is trying to maximize their individual CD rates, I would consider purchasing a ladder of 3-month CDs, 6-month CDs and 12-month+ CDs,” says Mauser. That way, you can diversify, have consistent liquidity, and gain the flexibility to choose where to reinvest at different times as CDs mature.
Some savers also might prefer to forgo CDs and instead focus on high-yield savings accounts, as you can often find a similar interest rate with more liquidity. “With interest rates where they are on high-yield savings accounts, you may not even need to purchase a short-term CD,” says Smith. “Granted, those rates may fluctuate if/when the Fed changes rates.”
Overall, choosing the best short-term CD or other types of savings vehicles depends on your goals, risk tolerance and interest rate outlook. Some people might prefer to spread their money out into different types of accounts, while others might try to lock in the highest rate possible via a short-term CD.
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Sen. Thom Tillis says “the scope” of Helene damage in North Carolina “is more like Katrina”
As recovery missions and repairs continue in North Carolina more than a week after Hurricane Helene carved a path of devastation through the western part of the state, the state’s Republican Sen. Thom Tillis called for more resources to bolster the relief effort and likened the damage to Hurricane Katrina’s mark on Louisiana in 2005.
“This is unlike anything that we’ve seen in this state,” Tillis told CBS News’ Margaret Brennan on “Face the Nation with Margaret Brennan” on Sunday morning. “We need increased attention. We need to continue to increase the surge of federal resources.”
Hurricane Helene ripped through the Southeast U.S. after making landfall in Florida on Sept. 26 as a powerful Category 4 storm. Helene brought heavy rain and catastrophic flooding to communities across multiple states, including Georgia, South Carolina, Tennessee and Virginia, with North Carolina bearing the brunt of the destruction. Officials previously said hundreds of roads in western North Carolina were washed out and inaccessible after the storm, hampering rescue operations, and several highways were blocked by mudslides.
Tillis said Sunday that most roads in the region likely remained closed due to flooding and debris. Water, electricity and other essential services still have not been fully restored.
“The scope of this storm is more like Katrina,” he said. “It may look like a flood to the outside observer, but again, this is a landmass roughly the size of the state of Massachusetts, with damage distributed throughout. We have to get maximum resources on the ground immediately to finish rescue operations.”
Hurricane Katrina left more than 1,000 people dead after it slammed into Louisiana’s Gulf Coast in August 2005, flooding neighborhoods and destroying infrastructure in and around New Orleans as well as in parts of the surrounding region. It was the deadliest hurricane to hit the mainland U.S. in the last 50 years, and the costliest storm on record.
The death toll from Hurricane Helene is at least 229, CBS News has confirmed, with at least 116 of those deaths reported in North Carolina alone. Officials have said they expect the death toll to continue to rise as recovery efforts were ongoing, and a spokesperson for the police department in Asheville told CBS News Friday their officers were “actively working 75 cases of missing persons.”
On Saturday, the U.S. Department of Transportation released $100 million in emergency funds for North Carolina to rebuild the roads and bridges damaged by the hurricane.
“We are providing this initial round of funding so there’s no delay getting roads repaired and reopened, and re-establishing critical routes,” U.S. Transportation Secretary Pete Buttigieg said in a statement. “The Biden-Harris administration will be with North Carolina every step of the way, and today’s emergency funding to help get transportation networks back up and running safely will be followed by additional federal resources.”
President Biden previously announced that the federal government would cover “100%” of costs for debris removal and emergency protective measures in North Carolina for six months.
With North Carolina leaders working with a number of relief agencies to deal with the aftermath of the storm, Tillis urged federal officials to ramp up the resources being funneled into the state’s hardest-hit areas. The senator also addressed a surge in conspiracy theories and misinformation about the Biden Administration’s disaster response, which have been fueled by Republican political figures like former President Donald Trump.
Trump falsely claimed that Mr. Biden and Vice President Kamala Harris, his Democratic opponent in the November presidential election, were diverting funds from Federal Emergency Management Agency that would support the relief effort in North Carolina toward initiatives for immigrants. He also said baselessly that the administration and North Carolina Gov. Roy Cooper, a Democrat, were withholding funds because many communities that were hit hardest are predominantly Republican. Elon Musk has shared false claims about FEMA, too.
“Many of these observations are not even from people on the ground,” Tillis said of those claims. “I believe that we have to stay focused on rescue operations, recovery operations, clearing operations, and we don’t need any of these distractions on the ground. It’s at the expense of the hard-working first responders and people that are just trying to recover their lives.”
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