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Certificates of deposit aren’t an investment that everyone has in their portfolio. In fact, only a small minority of Americans own CDs.

If you’re not one of them, and if you’ve never bought a CD before, they may not even be on your radar. But they should be. Here are three really great reasons why you should consider opening a CD right now — even if you’ve never done so before.

1. CD rates are near record highs

There’s one really obvious reason why it may be a great time to buy CDs. Rates are near record highs.

During the pandemic, CD rates were extremely low as the Federal Reserve slashed interest rates. But even in the years leading up to the COVID-19 pandemic, a good rate on a CD was around 2.00% to 3.00%.

Now, it’s really easy to find CD rates of around 5.00% or higher for short-term CDs and rates close to 4.00% for long-term CDs. A quick look at The Ascent’s guide to the best CD rates shows you can easily earn as much as 5.15% by buying a CD.

That’s a really impressive return, considering there’s minimal risk to certificates of deposit. Your money is FDIC insured, and you can’t lose it unless you break your CD early and face penalties equal to more than the interest paid to date.

You won’t get too many chances to get a return on investment (ROI) in the 4% to 5% range while taking on such little risk. Why pass up the opportunity?

2. CDs can help protect you against inflation

There’s another big benefit to putting money into CDs right now. The yields on offer are typically above the current (high) inflation rate, which was 3.50% in March of 2024.

If you have your money in any account paying less than 3.50%, you are losing buying power every day because prices are going up more than your funds are earning. Moving your money into a CD that’s beating inflation could help you stop the value of your money from eroding.

3. CD rates could drop soon

Finally, it’s a good time to consider opening a CD because you may not have the chance to do so at today’s competitive rates if you don’t act soon.

The fact is, rates above 5.00% are still widely available, but are becoming scarcer. In fact, there’s been around a 20% decrease in the number of CDs offering yields above that threshold in the past four months.

Rates are dropping because the Federal Reserve is widely expected to lower the benchmark interest rate sometime this year. The U.S. central bank doesn’t control CD rates, but when it lowers the overnight rate at which banks pay to borrow from each other, rates in general tend to fall. When the Federal Reserve does cut rates, CDs offering 5.00% will likely be even harder to find — if they don’t disappear entirely.

Don’t miss out on the chance you have now. Your rate will be locked in for your CD term once you buy, so you can keep earning these high yields for as long as five years, depending on which CD you open.

Now, you do need to know that you’ll be locking up your money when you buy a CD. You must leave your funds invested for the duration of the term to avoid penalties. But since even short-term CDs (like those lasting three or six months) are currently offering high yields, that shouldn’t be a big obstacle for most people.

So, if you’ve never before bought a CD, think seriously about doing it now, before rates drop. Review available CD rates, find one with a minimum investment requirement and term that works for you, and open your CD online today.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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