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Pro: Highest CD rates

3 d ago

Certificates of deposit (CDs) remain a high-yield savings option for investors seeking income as the Federal Reserve is widely expected to raise interest rates again, with banks like Sallie Mae, Popular Direct, and Synchrony Financial boosting annual percentage yields (APYs) above 4% to compete for deposits. August delivered solid stock market gains, but savers can still lock in attractive CD yields ahead of the Fed’s Sept. 15-16 meeting. Fed funds futures indicate a roughly 65% probability of a quarter-point rate hike to a 3.75%-4% range. Fed Chairman Kevin Warsh, speaking in Jackson Hole, Wyoming, warned that stubborn inflation persists: the July personal consumption expenditures price index rose 3.7% annually, above the 2% target. While higher rates burden borrowers, they benefit savers who capture elevated yields on CDs. Several banks aggressively price CDs. Sallie Mae lifted its one-year CD APY by five basis points to 4.2%, 25 basis points above the peer median of 3.95%, per BTIG analyst Vincent Caintic. Popular Direct offers 4.25% on its 12-month CD, while CIBC pays 4.15%. For longer terms, Synchrony Financial provides 4.3% APY on a 16-month CD, and Marcus by Goldman Sachs offers a similar rate on its 18-month instrument. Happen Bank has an 11-month CD at 4.2% APY. Savers should consider their time horizon and liquidity needs before committing. Breaking a CD early incurs a penalty of forfeited interest. Also, be aware of automatic renewal at potentially lower rates when a CD matures. With the Fed poised to raise rates again, locking in current high yields may be a prudent strategy for income-focused investors.