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Fed Holds Steady - Decisions about Savings Accounts vs. CDs?


As expected the Federal Reserve left the targeted fed funds rate at 5.25% for the 8th consecutive time (see CNN article). Based on the wordings of its statement, it seems likely that the 5.25% will hold for the rest of the year. Note, there'll be 4 more meetings this year (see FOMC's calendar).

With the Fed likely to keep rates unchanged this year, high yield savings accounts still seem as the better choice over CDs, especially if you're looking for a timeframe under 6 months. In the next six months, you'll likely do better with your money at FNBO Direct's savings account or at Everbank's money market account. Both have 6% promos. Opening either one now will give you about 3 months of 6% APY. After that, the regular rates will likely be at least 5%. That's better than a 5.50% APY 6-month CD that's opened today.

For more info on FNBO Direct and its 6% promo, please see my FNBO Direct account overview. For more info on Everbank and its 6% promo, please see my Everbank post.

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Pete Crane
Pete Crane   |     |   Comment #1
Good call, Banking Guy! (Is your identity revealed anywhere, by the way?) Getting locked into a CD is premature now; it's not even clear which way rates will go let alone when they may move.... Stay liquid!
Pete Crane