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How to earn big CD returns as interest rates are cut
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The moment borrowers had been waiting for finally came last month when the Federal Reserve reduced its federal funds rate for the first time in four years. With inflation cooling significantly from recent years, the Fed felt secure in cutting rates — and they could cut them again in November and December, too. While this is great news for borrowers contending with higher rates on everything from mortgages to credit cards, it’s a detriment for savers who have been earning big returns.
With a certificate of deposit (CD) account, savers have been able to earn a rate of 4% to 5% or higher. And while an interest rate cut will inevitably reduce what savers can earn with CDs, the rate climate hasn’t adjusted so dramatically to diminish the value of today’s top CDs yet. It just may take a little more work to earn a big return than it would’ve at an earlier point in 2024, for example. Below, we’ll break down three ways savers can earn big CD returns now, even as interest rates are cut.
See how much more you could be earning on your money with a top CD here now.
How to earn big CD returns as interest rates are cut
While the September rate cut hasn’t significantly changed what you can potentially earn with a CD, it’s a good idea to take action now, before that does happen. Specifically, right now savers should:
Shop around
The highest CD interest rates are generally found with online banks versus those with physical locations. And that’s not any different now, even though additional interest rate cuts are looming. So start shopping around online to see what you can lock in. Because online banks don’t have the expenses that banks with physical locations do, you’ll generally be able to find a higher rate by looking for an online lender. Even a slight difference in rates could add up to big savings over the full CD term.
Get started with a CD here now.
Open a long-term CD
A long-term CD doesn’t come with as high an interest rate as a short-term CD does right now — a direct opposite of historic norms. But the difference is negligible and you can still secure a rate of 4% or higher with a long-term CD. And by opening one now, you’ll be able to earn big returns for an extended period of 18 months or longer, even as the wider rate climate cools. That fixed rate is a major advantage, especially compared to the volatility that traditional savings accounts and high-yield savings accounts come with thanks to their variable rate structure.
Consider a larger deposit
The more you deposit into a CD, the more you stand to earn. A $5,000 deposit into a 5-year CD with a 4.35% rate will result in an almost $1,200 profit. If you double your deposit, you’ll double your profit. But even a short-term CD with a substantial, five-figure deposit could result in hundreds of dollars earned over a brief period. Just remember to limit your deposit to an amount you’re comfortable leaving in the account untouched for the full term or you could risk having to pay a hefty early withdrawal penalty to regain access to your funds.
The bottom line
While interest rates have been reduced, they haven’t been cut so dramatically that they diminish the benefit of a CD account. But that doesn’t mean savers should wait much longer to act, either. Instead, start shopping around now to find a CD offering the highest rate. Consider a long-term CD to maintain those high returns even as rates fall and look to deposit a larger amount to capitalize on the opportunity while it still exists. By taking these steps now, you can earn big returns immediately and, potentially, for multiple years to come.
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The northern lights made an incredible display over much of the United States on Thursday — and might make a return appearance Friday night.
The aurora borealis was visible as far south as Florida on Thursday. Photos show the sky lit up in red and purple, even in some brightly-lit areas like New York City and Chicago.
The strong geomagnetic storm that created such a show has subsided, according the National Oceanic and Atmospheric Administration, but some parts of the U.S. may again see the northern lights tonight. Here’s what to know.
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Where will the northern lights be visible tonight?
The northern lights will be visible for parts of the northern U.S., according to the NOAA Space Weather Prediction Center’s aurora forecast. The aurora will be visible over much of Canada and Alaska, but the northern lights can also be seen from as far as 620 miles away if the conditions are right, NOAA says.
Parts of Idaho, South Dakota, Minnesota and Wisconsin may be able to see the lights Friday night. On the East Coast, the aurora might be visible in northern New York and parts of Vermont and New Hampshire. Areas of Maine may also see the northern lights.
The lights will appear to the north when it’s dark outside. If you can’t see them with the naked eye, they may be visible through a phone camera or other device.
NOAA Space Weather Prediction Center
What time will the northern lights be most visible?
The northern lights are most visible just after sunset or just before sunrise, NOAA said. The aurora is not visible during the day. Dark, cloudless skies with little artificial light provide the best viewing experience.
Ross Harried/NurPhoto via Getty Images
Why have the northern lights been so visible lately?
Over the last several months the sun has been incredibly active, unleashing a series of coronal mass ejections from its surface, CBS Boston reported. That’s resulted in multiple visible aurora shows.
The geomagnetic storm responsible for Thursday’s stunning skies is now subsiding, CBS Boston reported. That means there will be less chance of seeing the aurora on Friday, but there may be more opportunities in the future.
Shawn Dahl, a forecast coordinator with the Space Weather Prediction Center, told CBS Boston that the northern lights have been so intense lately because of where the sun is in its 11-year solar cycle. Dahl said that “we are in the midst of solar maximum.”
Heather Kepple
“What that means is the sun is now this twisted-up mass of strong magnetic fields, and some of these are so localized and intense they reveal themselves as these sunspot groups,” Dahl said. “That’s the source of a bunch of the space weather storms that we’re looking for and predict.”
What causes the northern lights?
The northern lights are caused by interactions between the sun’s solar winds and the Earth’s protective magnetic field, according to NOAA. Those two phenomenons result in geomagnetic storms and increased geomagnetic activity.
The higher the geomagnetic activity is, the better your odds are of seeing the aurora. Increased geomagnetic activity means the aurora will become brighter, more active and visible farther from the poles of the planet, NOAA said.
Even moderate solar wind creates the aurora, NOAA said, so there is usually a weak aurora visible from somewhere on Earth. The best places to see these weaker auroras is close to the planet’s poles, like in Greenland or southern Argentina. If you see the aurora near the North Pole, it’s nicknamed the northern lights. The same phenomenon near the South Pole is called the southern lights.