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prices Certificate of deposit (CDs) Savings accounts still reap multiple benefits Federal Reserve rate hike. Some banks push rates beyond 5.00% APY, giving you a higher return on your hard-earned money.
Higher interest rates are a win-win for all savers because high-yield CDs and savings accounts are good low-risk options backed by FDIC or NCUA insurance. But with short-term CDs topping 5.00% APY and savings accounts closing in, the best place for your savings boils down to your goals.
Either way, with these rates so high, if you haven’t been earning interest on your savings, now is the time to start. And with experts predicting that the Fed will not raise interest rates at its next meeting this month, this could be as good as savings rates and CD rates. Prices could slowly start to fall in the coming months – so there may not be much time left to take advantage of the price hike.
For now, here are some of the best savings and CD rates this week, and banks are offering over 5.00% APY this week.
Many short-term certificates of deposit reach 5.00% APY and beyond
Many Certificates of Deposit rates have remained the same this week across the banks we track at CNET – with many short-term certificates remaining around 5.00%. However, some banks are currently offering rates above 5.00%, such as Bank Bask’s six-month certificate of interest at 5.10% APY. MYSB Direct was one of the few companies to increase its rates last week, with six-month and one-year CD prices rising to 5.10% and 5.20%, respectively. However, Barclays cut the prices of its one- and two-year certificates – 4.80% and 4.40%, respectively.
Savings accounts remained the same, but some were over 5.00% APY
Most of the banks we track kept their high-yield savings rates the same this week. However, My Banking Direct stands out for paying its savings account up to 5.00% APY. The increase helped boost the high-yield average savings rate of the banks we track at CNET from 4.45% to 4.51% APY.
Banks offering 5.00% APY or more on high-yield savings accounts and CDs
Whether you are looking for a new savings account or a CD to deposit your money towards a future savings goal, here are some banks that are offering the best return on your savings right now.
Here are some high-yield savings accounts that offer APYs of 5.00% or close to it:
My Banking Direct: 5.00% Newtek Bank: 5.00% UFB Direct: 4.81%
Note: To earn this higher APY, you may have to meet certain deposit requirements or you may only earn higher APY on a portion of your balance. In addition, the highest APYs are usually only offered at online banks, which means you’ll need to be comfortable with managing your account and other banking services online.
Read more: Earn 5% APY (or close to it) with these high-yield savings accounts
Right now, long-term CD rates aren’t nearly as high as short-term CD rates – which are over 5.00% APY for many banks. More certificates of deposit have pushed rates above 5.00% this week, including MYSB Direct and Quontic Bank — but only for six-month and one-year CDs. Most banks reserve their highest rates for CD terms of two years or less. Here’s the rundown:
BankTerm and APYAlliant 1 year (5.00%), 18 months (5.15%) Barclays 6 months (5.10%), 1 year (5.00%) Basque Bank 6 months (5.10%), 1 year (5.00%) Baking Savings 1 year ( 5.20%), 2 years (5.00%) CFG Bank 1 year (5.28%), 18 months (5.25%) CIT Bank 6 months (5.00%) Forbright 1 year (5.20%) MYSB Direct 6 months (5.10%), 1 year (5.20%) Rising Bank 6 months (5.00%), 1 year (5.15%) Quontic 6 months (5.05%), 1 year (5.15%) Synchro 6 months (5.00%), 1 year (5.15%) TIAA Bank 9 Months (5.00%) prices as of June 5, 2023.
How to decide if high yield savings or CDs are right for you
With short-term CDs over 5.00% and variable savings rates steadily increasing, choosing between the two savings vehicles may not be easy. It all boils down to when you will need the money and your goal for the funds.
“What are you trying to achieve with the money in question?” Raven Walters, certified financial planner Transverse Wealth Solutions. “If the answer is for emergencies, a highly liquid and fully accessible savings account would be the most appropriate option.” Apart from your emergency fundAny excess cash you plan to use in a few years could go toward a CD that matures just before the expected date you’ll need the money.
When it comes to short-term CDs, you’ll need to do some math to determine if a high-yield savings account or CD is best. However, since high-yield savings accounts have a variable APY, you can lock in a short-term CD to guarantee a guaranteed rate if rates drop over the next few months. But remember, if you need to withdraw money before the CD is due, you’ll pay an early withdrawal penalty — which can wipe out your interest earnings.
bottom line
While choosing between a short-term CD and a high-yield savings account may not be simple, it’s best to think about your goals rather than chasing returns. While CDs can provide a guaranteed return on your money, high-yield savings accounts give you flexibility without paying a penalty if you need money on short notice. And if you’re thinking of putting money into a long-term CD, like three or five years, now’s the time to start comparing prices because experts say prices won’t improve much in the coming months.
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