3 smart CD moves to make this June

There are multiple smart moves you can make with CDs this June. 

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June is officially in full swing. With the start of summer just weeks away, the weather outside is becoming more inviting for many. But, June isn’t just a good time to enjoy the outdoors with your children or go on a nice hike through the woods. It’s also a good time to think about your savings and moves you can make to build upon the money you’ve set aside, particularly in today’s unique climate marked by stubborn inflation and elevated interest rates.

This is where certificates of deposit (CDs) can be valuable. Leading products in this category offer impressive returns – many of which are over 5%. But, there’s a tradeoff. In order to tap into the returns a CD has to offer, you’ll need to be willing to lock your money in the account for the account’s entire term. That could be anywhere from a few months to several years, depending on the account you choose. Of course, you can still access your money if you need to, but if you do so early, you may be penalized

Nonetheless, these accounts are valuable tools that, when used properly, can have a meaningful impact on your financial wellbeing. So it’s important to know what smart CD moves to make this June? 

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3 smart CD moves to make this June

There are several moves you can make with a CD to boost the returns on your savings while planning for your financial future. 

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If you don’t already have a CD, you’re missing out on the interest these accounts can provide. And, thanks to the Federal Reserve’s federal funds rate being frozen at a 23-year high, that interest can be impressive. 

But, interest rates typically move in upward and downward cycles. And, if the upward cycle we’ve experienced for the last couple of years is coming to an end, you may not have much longer to lock in today’s high rates with a CD. So, don’t hesitate – start shopping for strong return rates now

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Be prepared to move mid-month

The interest rates on consumer accounts, like CDs, are often dependent on a benchmark rate known as the federal funds rate. That’s the rate the Federal Reserve controls – typically increasing it when inflation is too high and lowering it when inflation is too low. 

That’s an important consideration as we move into June. That’s because the next inflation report is scheduled to be released on the morning of June 12, 2024 and the Federal Reserve will hold its Federal Open Market Committee (FOMC) meeting between June 11 and June 12, 2024. 

It’s important to note that inflation cooled in April – albeit not by much. If the report that’s being released on June 12, 2024 shows cooling of inflation in May, the Fed could cut its federal funds rate. And, if that happens, consumer rates may fall as well – which could mean today’s high CD rates quickly become a thing of the past. 

So, be prepared to move by June 12, 2024 as waiting any longer to open your CD could mean missing out on the opportunity to tap into today’s high rates. 

Use it as a tool to achieve short-term savings goals

Many consider the fact that CDs require you to lock your money up for the account’s term a negative. But, that feature can be a positive too. After all, if you have to pay a penalty to access your money early, you may be less likely to do so, making it more probable that you’ll achieve your savings goals

“CDs, like many things should be part of a sound savings strategy, particularly when you have money earmarked for expenses over a certain time frame,” explains Aaron Cirksena, founder and CEO of the financial planning firm, MDRN Capital. He explains that money you’ll need in the near term and up to three years from now should be invested to earn more money for you. “However you would like to see that money earn more than a traditional savings account so CDs are a great way to increase the yield on that savings while still keeping the funds nice and safe.”

And, that may be particularly important this June. After all, we’re about six months away from the holiday season. So, investing money you have earmarked for the holidays into a six-month CD now could help you earn a meaningful return on that money while ensuring that it’s available when you need it late this year. 

Use a CD to help you achieve your savings goals now

The bottom line

CDs are versatile financial tools that have the potential to expand your earnings on your savings. And, there are a few wise moves you should consider making with CDs this June. In particular, start shopping for one now and be prepared to make a move by the middle of the month. With the upcoming inflation report and Fed meeting, there’s no telling how long today’s high rates will be available. Moreover, consider using a CD to help you achieve your holiday savings goals as well as any other savings goals you may have. Compare today’s leading CDs to earn more on your savings now

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