CBS News
Should you open a short-term CD now? What experts say
Milos Perkovic/Getty Images
In the post-pandemic era, certificate of deposit (CD) interest rates soared with many offering rates above 5%. These rates, which were the highest in years, were prompted by multiple increases in the benchmark interest rate as part of the Federal Reserve’s inflation-fighting efforts.
Since CDs allow investors to lock in those high rates, investors flocked to them even as savings account rates also increased — despite the fact CDs require you to lock up money and penalize early withdrawals.
Conditions are changing, though. As the Federal Reserve has cut interest rates, CD rates have also started to fall. While it’s still possible to get a CD at a good rate, yields are declining and this trend could accelerate as the Fed has hinted more rate cuts are coming. This has many investors wondering whether it’s still worth investing in a short-term CD right now. Below, we’ll break down what you need to know to help you decide.
See how much more you could be earning on your money with a top CD here.
Should you open a short-term CD now?
Short-term CDs are generally defined as those with a term (or length) of a year or less. While short-term CD rates are down off recent highs and expected to fall further, there are still good opportunities for investors to find products with competitive yields.
“Six-month fixed-rate non-callable CDs are yielding roughly 4.5% right now, which is still relatively high by recent standards,” explains Gary Quinzel, Vice President of Portfolio Consulting at Wealth Enhancement Group. “CDs still make sense as a cash proxy for individuals with short-term liquidity needs.”
One benefit of CDs versus high-yield savings accounts is that your rate is locked in, or guaranteed for the duration of the CD term. If you open a 6-month CD today, you’ll keep that rate until the CD matures. Savings accounts and money market accounts have variable rates, so rates are likely to decline within six months as experts predict an additional rate cut of 25 basis points as early as the Fed’s November meeting.
“We are in an environment where interest rates are likely to decrease twice more by the Fed by the end of 2024,” advises Domenick D’Andrea, AIF, CRC, CPFA, financial advisor and co-founder of DanDarah Wealth Management. “If you’re looking for a place to invest emergency money, then short-term CDs are still a great option. With rates decreasing, they should pay higher rates than money market accounts.”
October could also present one of your last opportunities for the foreseeable future to enjoy today’s ultra-competitive yields on these FDIC-insured, low-risk investments.
“The rate of return on short-term CDs tends to mirror the federal funds rate quite closely,” according to Jonathan Ernest, an economics professor at Case Western Reserve University. “With expectations for the Fed to continue cutting rates at their November meeting and in subsequent meetings stretching into 2025, we can expect that rates of return on certificates of deposit will fall as well.”
Get started with a top-rate CD before that happens now.
If you have money to tie up for longer periods, look elsewhere
While short-term CDs are a good option if you want to maximize yields on money you want to keep relatively accessible, there may be other, better choices for funds you’re looking to invest over a longer time horizon. That’s especially true as buying short-term CDs today could leave you with fewer good options in the coming months when your CD matures.
“Rates are set to go down in six months so any investor will be forced to reinvest the proceeds at what almost certainly will be lower yield,” warned Quinzel. “Instead, investors should look at fixed-income securities with longer maturities to lock in yields before they go down. For example, investors can purchase a 10-year treasury that yields just over 4% and won’t have reinvestment risk until the year 2034.”
Ernest also stresses the importance of considering the opportunity cost of investing in CDs versus other investments offering potentially higher yields over the long term. “Remember, you always want to consider how putting dollars into a CD compares with expected returns and the amount of risk faced from other investment options,” he says.
While CDs are very low risk, returns are limited. An S&P 500 index fund comes with a greater chance of loss but also has a consistent track record of producing 10% average annual returns over the long term. If you have an investing timeline spanning five or more years, you may want to take on the added risk to double your potential ROI compared with short-term CDs.
“Ultimately it is important to look at what is the purpose of the dollars to see if short-term CDs work best for your situation,” D’Andrea says. By evaluating the risks and potential rewards of CDs, treasuries, savings and money market accounts, and equities, you can make the most informed choice about where your money should go.
A federal grand jury unsealed an indictment against two Sudanese brothers Wednesday, charging them with running “Anonymous Sudan,” one of the most prolific cyberattack-for-hire gangs of all time and allegedly behind tens of thousands of attacks.
Federal prosecutors accused Ahmed Salah Yousif Omer, 22, and Alaa Salah Yusuuf Omer, 27, of carrying out 35,000 denial-of-service attacks against hundreds of organizations in just one year, taking down websites and other networks as part of an ideologically motivated extortion scheme affecting thousands of customers.
According to prosecutors, the pair targeted a long list of high-profile victims worldwide and across the U.S., including Microsoft, ChatGPT, PayPal, X, Yahoo, airports, the Pentagon, the Department of Justice, Alabama’s state government, as well as at least one hospital: Cedars-Sinai in the Los Angeles area.
The group held a “Sudanese nationalist ideology,” Martin Estrada, the U.S. attorney for the Central District of California, said in a press conference on Wednesday, charging customers $600 or less to launch major attacks.
“Anonymous Sudan sought to maximize havoc and destruction against governments and businesses around the world by perpetrating tens of thousands of cyberattacks,” Estrada said. “This group’s attacks were callous and brazen — the defendants went so far as to attack hospitals providing emergency and urgent care to patients,” he added.
The group also targeted governmental and private organizations in the Netherlands, Bahrain, United Arab Emirates, Chad, Israel and the U.K.
According to federal prosecutors, Ahmed Salah allegedly created the DDoS attack infrastructure of Anonymous Sudan and then posted messages on Telegram taking credit for the attacks. Alaa Salah allegedly provided computer code and programming support.
A grand jury indictment charged the pair with one count of conspiracy to damage protected computers. Ahmed Salah was also charged with three counts of damaging protected computers.
If convicted of all charges, Ahmed Salah faces a maximum sentence of life in prison related to the attack on Cedars-Sinai hospital, which endangered patients’ lives, according to the indictment. Alaa Salah would face a maximum sentence of five years, if convicted.
Estrada said that if found guilty, it would mark the first cybercrime conviction tied to physical harm in the U.S.
Anonymous Sudan’s attack on Cedars-Sinai Medical Center in February shuttered emergency services temporarily, causing incoming patients to be redirected to other medical facilities for approximately eight hours.
According to the indictment, Anonymous Sudan operated several Telegram channels, posting “information about their attacks, their DDoS tools and pricing, and their victims,” and boasted as many as 80,000 subscribers at one time. The group’s operations resulted in more than $10 million in damages to victims in the U.S.
Federal prosecutors allege that since early 2023, the brothers have used the group’s Distributed Cloud Attack Tool (DCAT) to conduct devastating and often dayslong DDoS attacks. DDoS attacks — or “distributed denial of service” — barrage websites with traffic, rendering them unusable.
“The FBI’s seizure of this powerful DDoS tool successfully disabled the attack platform that caused widespread damage and disruptions to critical infrastructure and networks around the world,” said Special Agent in Charge Rebecca Day of the FBI Anchorage Field Office, in a statement. “With the FBI’s mix of unique authorities, capabilities, and partnerships, there is no limit to our reach when it comes to combating all forms of cybercrime and defending global cybersecurity.”
According to Estrada, both brothers were arrested abroad in March and have been in custody since then, though the U.S. attorney declined to name the country holding them or comment on potential extradition.
Former One Direction singer Liam Payne died Wednesday after falling into the interior patio of a hotel in Buenos Aires, Argentina, the Argentine Director of Emergency Medical Services, Alberto Crescenti, confirmed to CBS News.
He was 31 years old.
Crescenti said an ambulance arrived seven minutes later. He declined to answer questions about the incident, including whether Payne jumped from the balcony or fell by accident, The Associated Press reported.
Payne, who was from the U.K., had attended a show in Argentina of his former bandmate, Niall Horan, according to media reports. Payne posted a series of social media videos showing him headed to Argentina.
Last year, Payne postponed his South American tour — with shows in Peru, Colombia, Chile, Brazil, Argentina and Mexico — after a serious kidney infection. He told fans he was hospitalized with illness in a video explaining his decision.
Jeff Spicer/Getty Images for Atlantis The Royal
Payne, who struggled with alcohol, announced in 2023 that he was 100 days sober. During a podcast interview in 2021, he detailed how One Direction members became too famous too fast — and said he often turned to drinking to deal with the mounting pressures of being in the globally famous boy band.
Formed in 2010 during “X Factor’s Boot Camp,” One Direction members Harry Styles, Liam Payne, Louis Tomlinson, Niall Horan and Zayn Malik went on to sell 70 million records by 2020, according to the BBC.
In 2016, Payne signed a solo deal with Capitol Records’ U.K. division. He had a son in 2017 with former “X Factor” judge Cheryl Cole.
contributed to this report.
For months, former President Donald Trump and Vice President Kamala Harris have been making promises to the American people about what they’d do to improve the lives of Americans if elected president in the 2024 election. Their promises encompass climate, foreign policy, social issues, health care and, of course, taxes.
Some campaign promises may be fulfilled through the power of the pen with an executive action, while others would require congressional approval.
Here’s what Trump and Harris have been promising Americans during their campaigns.
Trump’s campaign promises:
End the war in Ukraine before Inauguration Day
Trump has more than once promised to end Russia’s war on Ukraine before he’s inaugurated.
“That is a war that’s dying to be settled. I will get it settled before I even become president,” Trump said in the September presidential debate against Harris.
He has also said in a May 2023 CNN town hall that he’d end the conflict “in 24 hours.” Trump has repeatedly been asked how he’d do this but has never outlined a plan.
When asked in late September by CBS News’ Caitlin Huey-Burns what an end to the fighting would look like, he responded, “I don’t want to tell you what that looks like.” And in response to a question from reporters about whether Ukraine should cede land to Russia to end the war, Trump did not answer directly. “Let’s get some peace,” he said.
Carry out the largest mass deportation in U.S. history
Trump frequently vows to carry out the “largest deportation” effort in U.S. history. In September, he said he’d begin by targeting migrants in Aurora, Colorado, and Springfield, Ohio. A Trump spokesperson told the Associated Press that Trump “would marshal every federal and state power necessary to institute the largest deportation operation of illegal criminals, drug dealers, and human traffickers.”
Cut federal funding to schools that teach “critical race theory” and “transgender” matters
Trump says he’d cut federal funding for schools that teach “critical race theory” and “transgender” matters, which he calls “transgender insanity.” He has suggested launching civil rights investigations into schools that support transgender rights. Shortly after becoming president in 2017, Trump withdrew Obama-era protections that permitted transgender students to use public school restrooms according to how they identified.
Local taxes provide the vast majority of funding for school districts, not federal tax dollars. The Department of Education estimates that tax dollars account for about 8% of funding for U.S. public schools.
Roll back Biden’s electric vehicle mandate
Trump often says he’d repeal President Biden’s electric vehicle mandate. Mr. Biden has not issued an EV mandate, though he is urging Americans to adopt EVs and is offering incentives to move the country to the point where 50% of new vehicles sold are zero-emission, a goal he hopes to reach by 2030. Rolling back an EPA rule entails logistical hurdles, but it is something a president can accomplish without Congress.
End taxes on tips
A few months ago, Trump began saying he’d end federal taxes on tips, and soon afterward, Harris followed suit. Doing so would require Congress to pass legislation so that tipped workers would no longer be subject to federal taxes on those tips. Trump has not said how he’d pay for this plan.
The Committee for a Responsible Federal Budget has estimated the cost of this promise to be as high as $250 billion.
No taxes on Social Security income
Trump has also pledged to stop taxing Social Security benefits for seniors. About 40% of Social Security recipients pay federal income taxes on those benefits, according to the Social Security Administration. Federal taxes on Social Security income don’t kick in until an individual’s combined income reaches $25,000. An individual filer with a total income between $25,000 and $34,000 may have to pay income tax on up to 50% of those benefits, and above $34,000, up to 85% of Social Security benefits may be taxable, according to the SSA.
This, too, would require legislation. Trump has not said how he’d pay for this plan.
“Replace” Obamacare
In his debate against Harris, Trump pledged to replace the Affordable Care Act, something he was unable to do in the four years he was president. In 2016, he also campaigned in 2016 on repealing the health care law.
“Obamacare was lousy health care,” Trump said during the debate. “Always was. It’s not very good today. And what I said, that if we come up with something, and we are working on things, we’re going to do it and we’re going to replace it.”
Pressed during the debate on what his replacement plan would be, Trump replied that he had “concepts of a plan.”
Congress would have to pass a repeal, and Republicans’ best chance to do so failed with the late Sen. John McCain’s thumbs-down vote in 2017. Trump and Republicans tried to dismantle Obamacare through the courts, too, but the Supreme Court rejected the challenge.
Expand the child tax credit
The Trump campaign has proposed expanding the child tax credit to up to $5,000 a year per child. Congress which holds the power of the purse, would have to sign off on this expansion. The CTC is currently $2,000 per child, with only $1,600 of that being refundable. Refundable tax credits can be received as a refund even if the filer owes no tax to the federal government.That means filers who owe the federal government little or nothing in federal income taxes are eligible for a tax credit of $1,600 per child.
Harris’ campaign promises:
Take on pharmaceutical companies
Harris has pledged to continue President Biden’s campaign to take on pharmaceutical companies, particularly by addressing high drug prices. Americans pay more for prescription drugs than do citizens of other countries. The Inflation Reduction Act, passed in 2022, gave Medicare the authority to negotiate lower prices with drug companies. The Biden administration has lowered the cost of a number of popular prescription drugs covered by Medicare, and Harris has pledged to continue that effort.
Ban price gouging on groceries
It’s not completely clear how Harris would accomplish this, but she’s said she wants to eliminate price gouging on groceries. Grocery prices have jumped 25% since 2020, and the price tag of many individual items has increased much more than 25%. Price gouging is when businesses charge excessively high prices on items that become scarce, such as during a hurricane. But experts have told CBS News there are a number of factors behind the higher prices at the supermarket.
However, economists agree with Harris that adding more competition to the grocery and food industries could help tackle rising food prices by adding to the supply of products on the market. That in turn would give consumers more choice while curtailing companies’ ability to set unreasonably high prices. Economist Mark Zandi suggested the Justice Department should keep a close eye on any proposed mergers or acquisitions of food companies.
Expand the child tax credit
Harris says she’d expand the child tax credit to up to $6,000 for newborn children, $1,000 more than Trump VP candidate Sen. JD Vance proposed, although his expanded tax credit would not be restricted to those with newborn children. Any expansion of the tax credit would require congressional approval. It’s not clear how Harris would pay for the proposal.
Nominate a Republican to her Cabinet
Harris says she’ll appoint a Republican to her Cabinet, which would set her apart from President Biden, who has no Republicans in his Cabinet.
“It would be to the benefit of the American public to have a member of my Cabinet who is a Republican,” Harris told CNN in August.