High Yield Savings Account or CD
28 October 2008When considering whether to place your savings in a CD or in a savings account, there are two primary factors to consider:
1. Will you need access to the funds, and if so, how soon? Early withdrawl from a CD will usually cause a penalty which will erase much or all of any interest earned.
2. Are interest rates trending up or down? The APY on savings accounts are likely to change according to the market. If the Fed is trending to reduce rates, that means your savings account rate could get lower. Check the terms, as some accounts have introductory teaser rates which are locked in. On the other hand, if rates are trending up, locking into a CD now could cause you to wish you had kept your options open.
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