As August draws to a close with a strong stock market performance, investors looking to secure their funds for the fall can still find attractive yields on Certificates of Deposit (CDs). With the Federal Reserve's September 15-16 meeting on the horizon, market watchers anticipate a potential quarter-percentage-point interest rate hike. This anticipated move, suggested by Fed funds futures trading with a roughly 65% probability, could push the benchmark lending rate to a range of 3.75% to 4%.
Fed Chairman Kevin Warsh's recent remarks at Jackson Hole, Wyoming, underscored concerns about persistent inflation. He noted that despite some improved inflation readings over the summer, underlying trends have not shown significant positive shifts. The July personal consumption expenditures price index, for instance, rose at an annual rate of 3.7%, exceeding the Dow Jones consensus and remaining well above the Federal Reserve's 2% target.
While higher interest rates present challenges for borrowers, they offer a significant advantage to savers seeking better returns on their investments. Certificates of Deposit are currently benefiting from this environment, with several financial institutions actively competing for deposits by offering competitive rates.
Top CD Rates for September
Sallie Mae recently boosted the annual percentage yield (APY) on its one-year CD by five basis points to 4.2%. This increase positions Sallie Mae's offering approximately 25 basis points above the peer median APY of 3.95%, according to analyst Vincent Caintic of BTIG.
Other institutions are also providing compelling rates for their 12-month CDs:
- Popular Direct: Offers an APY of 4.25% on its 12-month CD.
- CIBC: Features a competitive yield of 4.15% on its one-year CD.
For those willing to consider terms beyond 12 months, attractive rates can also be found:
- Synchrony Financial: Offers a 4.3% APY on its 16-month CD.
- Marcus by Goldman Sachs: Provides a similar rate on its 18-month CD.
- Happen Bank: Features an 11-month CD with a 4.2% APY.
Before opening a CD, it's crucial for savers to carefully consider their time horizon and liquidity needs. Withdrawing funds before maturity typically results in a penalty, usually in the form of forfeited interest. Additionally, savers should be mindful of their CD expiration dates to avoid automatic renewals at potentially lower rates.
