As interest rates have steadily climbed this year, so too have CD payouts — with plenty paying upwards of 5% . Some investors have valid concerns: What happens if the Fed raises interest rates more? Won’t I be stuck with a lower-paying CD?
Currently, bump-up CDs are paying somewhere in the neighborhood of 4%, with Marcus by Goldman Sachs offering 4.50% and Andrews Federal Credit Union offering 4.30%, for example. Earning more on a CD might sound like a no-brainer, but there are some significant downsides to consider. Indeed, the initial rate of a bump-up CD is typically significantly lower than the rate of a standard CD, with the same term, says Ken Tumin, founder of DirectDeposits.com.
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