Should you invest in CDs while interest rates fall? Experts weigh in
ABC News
Certificates of deposit, or CDs, promise guaranteed returns but carry downsides, experts told ABC News.
After a high-flying performance last year, the stock market has dropped at the outset of 2024. The turnabout has sent some investors looking for alternatives, including certificates of deposit, or CDs.
A CD is a type of savings account that offers a fixed interest rate over a given period of time. If depositors remove their funds before their agreed-upon end date, however, they incur a penalty.
Investor returns for CDs have soared over the past year in response to a near-historic series of interest rate hikes at the Federal Reserve.
That trend has made this lesser-known financial instrument more attractive than it has been in years, experts told ABC News. Since the Fed expects to cut interest rates this year, they added, interested investors should move quickly before potential gains diminish.
"Now is definitely a good time to look at getting into a CD," Cassandra Happe, an analyst at personal finance firm WalletHub, told ABC News. "Because rates are so high."
