Here's why a CD may not be your best savings option when interest rates drop. (via CNBCMakeIt)
The Federal Reserve cut interest rates on Wednesday, the second time this year. But before you rush out to open a CD before rates fall, experts say you may want to consider all your savings options., from 2% to 1.75%. The Fed said in a statement that it would "continue to monitor" the economic outlook and "act as appropriate" to keep the U.S. economy growing.
But just because the Fed cut rates again doesn't mean that using CDs will automatically earn you a higher rate. In fact, Wealthfront CEO Andy Rachleff sees ""It might seem like a great idea to put your emergency fund in an account that earns a higher rate, but if that rate comes with the stipulation that the funds are locked up for a set period of time, that money is not of much value if the emergency for which you saved occurs in the interim," Rachleff says.
But it is true: There are other options available that pay roughly the same interest as a CD and don't require you to lock up your money. "You can get the same return in a high-yield savings account or a money market account without having to lock your cash up for a period of time,"
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