Olde Hornet
Well-Known Member
Many people make the mistake of moving their cash into liquid accounts, such as high-yield money-market and savings accounts, particularly as the threat of a recession looms, Geller said.
The yield on those accounts isn’t guaranteed like it is with a CD. He estimates that Americans lost billions of dollars in interest by giving into this money anxiety during the last recession.
“Resist the temptation to think that if you put it in a money-market account that it’s more accessible to you in a time of need,” Geller said. “Even if you have to pay a small penalty at some point to break the CD, it’s worth it.”
Geller’s simple rule of thumb for approaching CDs today: Find the highest rate for the longest term.
Don’t just leave your money in a bank account and forget about it
A recent survey from Bankrate found that nearly 70% of Americans had savings accounts that paid less than 2% interest. At a time when interest rates are falling, that can be an especially costly mistake.
“Do not let your money sit fallow in a bank paying an uncompetitive return,” said Greg McBride, chief financial analyst at Bankrate. He added, “Be prepared to move their money to a bank paying a better return.”