Louis Barajas compares high-yield savings accounts, which pay around 4% and let you withdraw anytime, with CDs that lock your money for 6 to 14 months but offer similar rates. A 14-month Marcus CD currently pays about 4.5%, while high-yield savings run 3.5% to 4.5% depending on the bank.
Questions this video answers
Mostly around 4% (some ~3.5%), up to 4.5%.
A 14-month CD paying about 4.5% (example attributed to Marcus).
High-yield savings: variable rate, fully liquid; CDs: locked for the term, rate guaranteed for that term.
Bankrate.com and NerdWallet.com
Chapters
I saw some online banks paying up to 4.5% for high yield savings accounts, mostly paying around 4%, some paying around 3.5. So you can find some great, great programs right now that are paying about 4% or a little bit higher. Now how is that different from a CD? Now CDs right now, short term CDs like 6 months, 9 months, even up to 14 months. I've seen some that are paying currently right now also four to four and a half percent. Well, a high yield savings account is not locked in. They, they, they're variable, they fluctuate with the market. So if interest rates start to come down, you're going to see that you're, you're also the interest rate that you're getting on that money will start to come down. It's not guaranteed. Right. But it's great for liquid investing, meaning that when you need the money to pull the money out for something, that you're going to be buying a house in the next six months or next three months, are you already in escrow and you need the money and it's, where are you holding it? Putting a high yield savings account. But I will share with you that right now also with the current craziness of the market, some people who are really concerned and don't want to have their money invested and we're thinking about investing it, but they want to wait a little bit and they have that low risk tolerance where they're not willing to take that risk of maybe the market's going back up and investing in an equity portfolio, in a stock portfolio, you can get a cd. Now the only thing is a CD will lock your money in for that specific time period. Right? That's the difference between a high yield savings account. Completely liquid, put the money in, take it out, you're earning 4%. Six months from now you could be earning 3%, you could be earning 2%. But right now the money's liquid in a CD. You put the money in and you said, I'm not going to touch that money for at least a year or two. You can lock it in right now. This morning I saw actually a 14 month CD that was paying, I think a 4.5% and that's a really great rate for a 14 month CD. I think it was Marcus again. Go to bankrate.com or go to nerdwallet.com and you'll find it there.
And so that is wonderful because if interest rates start coming down, let's say that we do go into recession, the Fed say You know what? We're going to start bringing the rates down so we don't go into a deeper recession.
