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There's a lot to consider for both borrowers and savers after an is issued, as it was earlier in September by the Federal Reserve. For borrowers, a reduction, even in a minimal amount, opens new windows of opportunity to borrow at a lower cost or to refinance existing debt at a lower rate. And that's what many have already started to do, as demonstrated by a recent .
For savers, however, there's an understandable cause for concern. Lower rates, after all, will reduce their interest-earning opportunities. And those have already been declining over the past year, as the Fed has now issued four rate cuts dating back to early September 2024. So these savers have fewer ways to grow their money in high-interest earning accounts like .
But that doesn't mean these accounts are ineffective, either. While not quite as attractive as they were a year or 18 months ago, there are still compelling reasons why some savers may want to consider a CD account now. However, timing is not on the side of savers, so if you still want to lock in an attractive – and the interest that comes with it – you'll want to be proactive. To that point, there are multiple reasons why savers may want to open a CD this October, especially in the first half of the month. Below, we'll detail three big ones worth considering right now.
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Does a CD still fit into your savings strategy? Here are three reasons why an account can still be worth opening in the early part of this October:
You can still now, equivalent to $4.50 earned for every $100 deposited. And that rate will be , even in the face of looming rate cuts, meaning that the interest will be reliable and predictable. The sooner you open an account, however, the quicker you can start the process of having . This is determined by the principal, the initial deposit plus any interest you've earned on the account over time.
But you'll need time, as interest will compound monthly or quarterly, depending on the lender being used. The sooner you start that process, then, the more interest will compound, generating you larger returns than if you had waited to take action.
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85.5%. That's the chance the Fed will issue another rate cut at the conclusion of its next meeting on October 29, according to the tool. With the likelihood of a rate cut that is prevalent now and the chances of it increasing as the month goes on, there's no valid reason to delay a CD account opening.
Instead, consider shopping around for rates and banks now, before that rate prediction becomes a reality. And, specifically, look to and lending institutions, which tend to offer better rates and terms to savers than their counterparts with physical branch locations.
With expectations high that the Fed will reduce rates at the end of October, many banks may not wait for that to become a reality and instead start reducing the rates they offer lenders in advance. This has already happened in the mortgage rate climate, for example, as last week, right before the Fed actually cut rates. And it's been known to happen in the savings space, too.
So don't think you have until the very end of October to lock in a high rate, as adjustments may soon start, perhaps even sooner than expected. In other words, if you can afford to open a CD now, waiting is unlikely to present any additional advantages.
Not every saver will want to pursue a CD account now, especially considering that rates here are less beneficial than they were in recent years. But returns here are far from the near-zero that they were at the start of the decade, either. So there's still likely a role for a strategic CD account in your budget now. But the time to take advantage is dwindling. With the chance to start building compound interest immediately and the likelihood of rate cuts at the end of October (and perhaps before then), savers still considering this attractive account type may want to get started in the early half of the month. Just be sure to do so with an initial deposit and that fits your needs and budget to avoid having to deal with an in the future.
