For the kitchen-table investor with a little money to spare, now might be an ideal time to consider investing in a certificate of deposit.
CD rates are as high as they’ve been in years. The best one-year CDs offer 5.66% annual interest, according to a January survey by WalletHub, the personal finance site. The best six-month CDs top out at 5.75%.
“No doubt, CDs are getting more attention these days,” said Chris Starr, head of consumer and business deposits at Wells Fargo Bank.
CDs spook some investors. In a 2023 survey by Forbes Advisor, 41% of Americans said they had never opened one. Some respondents said applying for a CD was “too complicated and time-consuming,” and others didn’t want to lose access to their money.
Certificates of deposit may be unfamiliar to many, but bank officials say the application process is not, in fact, particularly complicated or time-consuming.
Learn more: Best current CD rates
“Opening a CD is simple and can be done from your phone or computer in a matter of minutes,” Starr said.
How a certificate of deposit works
When you open a CD, you agree to surrender your money to the bank for a set length of time. In exchange, the bank generally offers you a higher rate of interest than you might get in an ordinary checking or savings account.
The longer the CD’s term, as a rule, the higher the interest rate. Yet, over the past couple of years, the rules have gone out the window. A campaign of aggressive interest-rate hikes by the Federal…
