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    Capitalize on Your Savings Potential with CDs and Higher Interest Rates


    CDs (Certificates of Deposit) are a great way to capitalize on your savings potential.[0] With higher interest rates than a traditional savings account, CDs offer a fixed and higher rate of interest than a typical savings account, allowing a higher yield on your money. However, CDs effectively tie your money up for anywhere from a few months to several years and withdrawing cash from one before it matures can result in a cumbersome penalty fee.

    Today, the average APY (Annual Percentage Yield) on a 3-month CD is 4.10%, and 4.25% for a 6-month CD. For CDs with longer terms, the APY rate is even higher with a 5.00% APY for a 6-month CD and 4.86% APY for a 3-year CD.

    When you open a CD, you will decide on a fixed time frame ranging from three months to several years, and your money will be kept for that duration.[0] CDs provide a higher, fixed interest rate than a regular savings account, resulting in a greater return on your investment.

    If you withdraw funds from a CD with a term of 6 months or less, the penalty will be either 1% of the amount withdrawn or the amount of interest that would have been earned had the funds been held until maturity. If the term of a CD is longer than one year, the penalty for withdrawing funds early is the higher of either 50% of the interest that would have been earned if the funds were held to maturity or 3% of the amount withdrawn.

    Almost all of the current jumbo CD offerings necessitate a minimum investment of $100,000.[1] However, you can access CDs paying upwards of 4% with deposits as little as about $500 — and sometimes nothing at all.[1]

    An alternative is to invest in a “bump-up” or “step-up” CD, which adjusts the interest rate at the end of the term to meet current market rates.[2] Kilday states that with step-up CDs, the bank chooses when the rate hike comes into effect, usually as per a pre-set agenda. On the other hand, bump-up CDs (also known as “raise-your-rate CDs”) let you request a rate raise at any time.[2]

    0. “Best CD Accounts of February 2023” GOBankingRates, 7 Feb. 2023,

    1. “‘Best in 15 years.’ This investment is now offering a guaranteed return of up to 4.78%. Should you bite?” MarketWatch, 6 Feb. 2023,

    2. “Could Investing in CDs Be the Best Personal Finance Move Right Now? Experts Weigh In” AOL, 15 Feb. 2023,

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