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Which CD term is best with inflation rising?

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There are a few CD terms that may be worth considering in particular with inflation rising. 

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The economy has shown several signs of strength recently, such as with the unemployment rate remaining under 4%, according to the Bureau of Labor Statistics. However, a hot economy can also coincide with inflation. While inflation is down from its recent peak in 2022, it’s starting to tick back up again, and it’s unclear if and when it will cease to be a significant concern.

Amidst these conditions, savers may be wondering what the best certificates of deposit (CDs) are. There are pros and cons to choosing different CD terms, depending on factors like where inflation might be heading and your own financial needs.

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Which CD term is best with inflation rising?

There are a few CD terms you may want to consider now that inflation is rising. Here’s what to know: 

Is a 3-month CD best with inflation rising? 

A 3-month CD could be best with inflation rising if you want to reassess CD interest rates in a few months. It’s possible that interest rates will rise to combat inflation, thus this very short-term CD could position you to reinvest at a higher rate once the 3-month CD matures.

Short-term CDs such as 3-month CDs or 6-month CDs can provide more flexibility than long-term ones, says Luis Arreola, AVP, cultural development of retail at Neighborhood Credit Union.

“This approach enables consumers to avoid locking their funds into longer-term commitments during a period of uncertainty about the longevity of inflationary trends,” Arreola explains.

Find out the top CD rates you could be earning now.

Is a 6-month CD best with inflation rising?

Similar to 3-month CDs, 6-month CDs have the advantage of giving savers the ability to regain access to their funds not too far into the future, and at that time you might be able to reinvest at a higher rate if inflation rises. The slightly longer horizon, however, provides a little bit more time to earn interest than a 3-month CD does.

“Deciding the best CD term depends on how long you are comfortable putting away your money, and where conventional wisdom thinks rates are heading. With the ups and downs of inflation, I would recommend a 6-month CD to investors who want a safe option while still giving them some flexibility in these uncertain times,” says Lori Gravitt, assistant vice president, branch manager at Addition Financial.

“Longer than that, the Fed’s rate decisions could indirectly affect CD rates up and down, and an investor might lose out on a better rate down the road if they are locked into a long-term CD,” adds Gravitt.

Is a 12-month CD best with inflation rising?

With a 12-month CD, you might not be able to take as much advantage of possible increases in interest rates in the short term, compared to 3- or 6-month CDs. But it can provide a bit more certainty in case rates decline, while still giving you the ability to withdraw your funds in the not-too-distant future.

“Consumers may choose a longer-term CD to lock in a higher dividend rate if they foresee inflation and rates falling in the near future. However, short-term CDs — three to 12 months — may be better for individuals concerned about accessing their funds without risk of an early withdrawal dividend penalty,” says Jaspreet Chawla, senior vice president of savings products at Navy Federal Credit Union.

Is a long-term CD best with inflation rising?

If inflation is rising, then a long-term CD isn’t always the best in terms of maximizing interest rates. However, a long-term CD — past one year — can help you earn interest for longer, and if rates end up decreasing, then a long-term CD can be beneficial.

“If you believe rates are going to rise, then you would more likely favor a short-term CD so that when the rates rise, you can move to a higher-paying CD. On the contrary, if you believe rates are going to go down, then one would favor locking in a ‘higher’ rate now,” says Bob Chitrathorn, founder and vice president of wealth planning at Simplified Wealth Management.

Other options to consider

While there are reasons to consider different CD account terms, these aren’t the only savings vehicles or investments to consider, such as stocks or bonds.

“Locking up money in a long-term CD in this environment may not keep up with inflation compared to other investments,” says Spenser Liszt, owner and financial planner at Motif Planning.

Plus, CDs typically have limited liquidity, especially longer-term CDs that can have stiff penalties for early withdrawals.

“Ultimately the term length decision is reliant on how long an individual does not need the money. Then they can decide what investment vehicle to participate in. For example, high-yield savings accounts are paying similar rates and do not have early withdrawal penalties like CDs,” adds Liszt.



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Tajikistan nationals with alleged ISIS ties removed in immigration proceedings, U.S. officials say

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When federal agents arrested eight Tajikistan nationals with alleged ties to the Islamic State terror group on immigration charges back in June, U.S. officials reasoned that coordinated raids in Los Angeles, New York and Philadelphia would prove the fastest way to disrupt a potential terrorist plot in its earliest stages. Four months later, after being detained in Immigration and Customs Enforcement (ICE) facilities, three of the men have already been returned to Tajikistan and Russia, U.S. officials tell CBS News, following removals by immigration court judges. 

Four more Tajik nationals – also held in ICE detention facilities – are awaiting removal flights to Central Asia, and U.S. officials anticipate they’ll be returned in the coming few weeks. Only one of the arrested men still awaits his legal proceeding, following a medical issue, though U.S. officials speaking on the condition of anonymity to discuss the sensitive proceedings indicated that he remains detained and is likely to face a similar outcome. 

The men face no additional charges – including terrorism-related offenses – with the decision to immediately arrest and remove them through deportation proceedings, rather than orchestrate a hard-fought terrorism trial in Article III courts, born out of a pressing short-term concern about public safety. 

Soon after the eight foreign nationals crossed into the United States, the FBI learned of the potential ties to the Islamic State, CBS News previously reported. The FBI identified early-stage terrorist plotting, triggering their immediate arrests, in part, through a wiretap after the individuals had already been vetted by U.S. Customs and Border Protection, law enforcement sources confirmed to CBS News in June. 

Several months later, their removals following immigration proceedings mark a departure from the post-9/11 intelligence-sharing architecture of the U.S. government. 

Now facing a more diverse migrant population at the U.S.-Mexico border, a new effort is underway by the Department of Homeland Security, Department of Justice and the Intelligence Community to normalize the direct sharing of classified information – including some marked top-secret – with U.S. immigration judges. 

The more routine intelligence sharing with immigration judges is aimed at allowing U.S. immigration courts to more regularly incorporate derogatory information into their decisions. The endeavor has led to the creation of more safes and sensitive compartmented information facilities – also known as SCIFs – to help facilitate the sharing of classified materials. Once considered a last resort for the department, Secretary Alejandro Mayorkas has sought to use immigration tools, in recent months, to mitigate and disrupt threat activity.

The immigration raids, back in June, underscore the spate of terrorism concerns from the U.S. government this year, as national security agencies point to a system now blinking red in the aftermath of the Oct. 7 attacks by Hamas on Israel, with emerging terrorism hot spots in Central Asia. 

A joint intelligence bulletin released this month, and obtained by CBS News, warns that foreign terrorist organizations have exploited the attack nearly one year ago and its aftermath to try to recruit radicalized followers, creating media that compares the October 7 and 9/11 attacks and encouraging “lone attackers to use simple tactics like firearms, knives, Molotov cocktails, and vehicle ramming against Western targets in retaliation for deaths in Gaza.”

In May, ICE arrested an Uzbek man in Baltimore with alleged ISIS ties after he had been living inside the U.S. for more than two years, NBC News first reported. 

In the past year, Tajik nationals have engaged in foiled terrorism plots in Russia, Iran and Turkey, as well as Europe, with several Tajik men arrested following March’s deadly attack on Crocus City Hall in Moscow that left at least 133 people dead and hundreds more injured. 

The attack has been linked to ISIS-K, or the Islamic State Khorasan Province, an off-shoot of ISIS that emerged in 2015, founded by disillusioned members of Pakistani militant groups, including Taliban fighters. In August 2021, during the U.S. military withdrawal from Afghanistan, ISIS-K launched a suicide attack in Kabul, killing 13 U.S. service members and at least 170 Afghan civilians. 

In a recent change to ICE policy, the agency now recurrently vets foreign nationals arriving from Tajikistan, Uzbekistan and other Central Asian countries, detaining them while they await removal proceedings or immigration hearings.

Only 0.007% of migrant arrivals are flagged by the FBI’s watchlist, and an even smaller number of those asylum seekers are ultimately removed. But with migrants arriving at the Southwest border from conflict zones in the Eastern Hemisphere, posing potential links to extremist or terrorist groups, the White House is now exploring ways to expedite the removal of asylum seekers viewed as a possible threat to the American public. 

“Encounters with migrants from Eastern Hemisphere countries—such as China, India, Russia, and western African countries—in FY 2024 have decreased slightly from about 10 to 9 percent of overall encounters, but remain a higher proportion of encounters than before FY 2023,” according to the Homeland Threat Assessment, a public intelligence document released earlier this month. 

A senior homeland security official told reporters in a briefing Wednesday, that the U.S. is engaged in an “ongoing effort to try to make sure that we can use every bit of available information that the U.S. government has classified and unclassified, and make sure that the best possible picture about a person seeking to enter the United States is available to frontline personnel who are encountering that person.”

Approximately 139 individuals flagged by the FBI’s terror watchlist have been encountered at the U.S.‑Mexico border through July of fiscal year 2024. That number decreased from 216 during the same timeframe in 2023. CBP encountered 283 watchlisted individuals at the U.S.-Canada border through July of fiscal year 2024, down from 375 encountered during the same timeframe in 2023.

“I think one of the features of the surge in migration over recent years is that our border personnel are encountering a much more diverse and global population of individuals trying to enter the United States or seeking to enter the United States,” a senior DHS official said. “So, at some point in the past, it might have been primarily a Western Hemisphere phenomenon. Now, our border personnel encounter individuals from around the world, from all parts of the world, to include conflict zones and other areas where individuals may have links or can support ties to extremist or terrorist organizations that we have long-standing concerns about.”

In April, FBI Director Christopher Wray warned that human smuggling operations at the southern border were trafficking in people with possible connections to terror groups.

“Looking back over my career in law enforcement, I’d be hard-pressed to think of a time when so many different threats to our public safety and national security were so elevated all at once, but that is the case as I sit here today,” Wray, told Congress in June, just days before most of the Tajik men were arrested.

The expedited return of three Tajiks to Central Asia required tremendous diplomatic communication, facilitated by the State Department, U.S. officials said.  

Returns to Central Asia routinely encounter operational and diplomatic hurdles, though regular channels for removal do exist. According to agency data, in 2023, ICE deported only four migrants to Tajikistan.

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Actor Ralph Macchio sits down with Lee Cowan to discuss the sixth and final season of “Cobra Kai.” Then, Tracy Smith visits The Broad museum in Los Angeles to learn about Mickalene Thomas’ exhibition “All About Love.” “Here Comes the Sun” is a closer look at some of the people, places and things we bring you every week on “CBS Sunday Morning.”

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