Why do short-term CDs have higher rates than long-term ones right now?

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In a historic reversal, short-term CDs often have higher interest rates than long-term ones right now. Here's why.

This year hasn't been a particularly great year for borrowers. Due to nagging inflation and the decades-high interest rates meant to combat it, borrowers are paying significantly more than they would have just a few years ago. That said, 2023 has been an excellent year for savers. After all, higher interest rates for borrowers also mean higher interest rates for savers. And that's exactly what's happened with both high-yield savings and certificates of deposit accounts.

Which CD term is better for you?As is the case with most financial considerations, the answer to which CD length is better for you is a personal one. For many savers, the interest rate is their key consideration, so they'll automatically jump at the higher rate and shorter term. But that may not make sense, particularly if they can earn more interest over time with a long-term CD.

 

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