KATY, TX (Covering Katy News)—In the current economic climate, where interest rates are high, many savers and investors can optimize their earnings by locking in high returns.
With interest rates poised at attractive levels for savers, Brent Sheffield, president and CEO of Advancial Federal Credit Union, emphasizes the advantages of locking in high rates through certificates of deposit, which are known as CDs at banks and Certificates at credit unions. He also recommends reviewing rates on Treasury securities like Treasury Bills and Treasury Inflation-Protected Securities (TIPS).
"Now is a great time to secure a high interest or dividend rate for your savings," Sheffield said. "Given the likelihood of future rate decreases, locking in now mitigates the risk of obtaining lower rates later."
According to Bankrate.com data, as of July 3, 2024, the national average CD rate stands at 1.81% annual percentage yield (APY) for a one-year term, with longer terms such as three and five years yielding slightly lower at 1.43% APY each.
Sheffield suggests exploring options beyond traditional banks, noting that credit unions often offer higher rates.
"Credit unions like Advancial frequently provide better certificate rates," he said, urging consumers to shop around for optimal rates tailored to their financial goals.
Understanding Commitments and Penalties
Yolanda Martinez, Advancial Katy branch manager, suggests that there are alternatives for those who may need more flexibility for their investments.
"Investors should be aware that early withdrawal from CDs typically incurs penalties," she said. "These penalties vary based on the term length, ranging from a few months' interest for shorter terms to more substantial penalties for longer commitments."
Martinez recommends looking at Money Market accounts for investors who are hesitant to lock in funds for extended periods.
"Money Market accounts offer competitive interest rates while allowing for greater liquidity," she said.
Unlike CDs, which require fixed terms, Money Market accounts provide flexibility in accessing funds without penalties.
Choosing the Right Product for Your Financial Goals
When deciding which savings products are your best option, Martinez suggests evaluating personal financial circumstances and lifestyle preferences.
"Term lengths for savings certificates can range from three months to five years," she explains. "Longer terms generally offer higher rates but necessitate longer commitments."
Sheffield and Martinez suggest investors conduct thorough research to align savings strategies with individual financial goals and risk tolerance.
Advancial Federal Credit Union is a Covering Katy's expert contributor, whom we rely on when writing informative articles that provide insight and valuable information for our readers. For more information about being an expert contributor for Covering Katy, contact Dennis Spellman at Dennis@CoveringKaty.com.
With over $2 billion in assets and 85 years of experience, Advancial is a full-service financial institution providing personal, convenient and innovative financial services to individuals and select group partners.
Covering Katy
Advancial Federal Credit Union is located next to Costco at the intersection of the Katy Freeway and Highway 99.