Big banks and the Federal Reserve have faced an uphill battle in recent months amid major bank failures and red-hot inflation. Even so, there are some clear winners. Savers have benefited from record-high APYs on their deposit accounts, with some high-yield savings accounts and certificates of deposit (CDs) offering APYs well above 5%.
One CD that should be on your radar: Goldman Sachs’ 10-month promotional CD.
Goldman Sachs 10-month promo CD
Through Aug. 15, 2023, Goldman is offering a 10-month CD with a fixed 5.05% APY, which is more than three times the national average. The minimum deposit to open an account is $500.
What’s more, Goldman has a 10-day CD rate guarantee. This means that if your account is funded with the $500 minimum deposit within 10 days after opening your CD, Marcus guarantees that you’ll receive the highest published interest rate and APY for the term you selected.
If you opt to open this CD closer to the expiration date for this promo, this rate guarantee will ensure that you receive the highest possible rate. Any interest you earn on your CD balance will automatically be added to the principal balance of your CD account each month. However, you also have the option to withdraw earned interest, penalty-free. You can transfer those funds to a Marcus savings account or to an external bank account.
This CD doesn’t come with any regular fees or penalties, unless you withdraw money before your CD matures. For CDs with terms under one year, you’ll pay a penalty equal to 90 days' interest on the original principal balance at the interest rate in effect for the CD. When your CD matures, you’ll have a 10-day grace period. During that time, you can withdraw your balance without paying a penalty, roll over the money in your CD into a new CD with a new term, or renew your CD and keep the same term.
Choosing the right CD
Generally, the most common CD terms offered by banks and credit unions are one-, three-, and five-year terms. So a 10-month CD is on the shorter end. However, If this is your first CD, a 10-month term could give you a taste of what it means to lock up your money for a set period of time and determine if this kind of savings vehicle and term length is right for you. When choosing a CD, there are a few factors you might want to take into consideration:
- Your savings goal: Knowing what you’re saving for can help you select the appropriate CD term. If you’re saving for a down payment on a home that you plan to purchase in one year, a one-year CD would be the way to go. However, if you’re saving for a longer-term goal like retirement, you could opt for a CD with a longer term between five to 10 years and potentially even roll over that balance at the end of that term depending on your retirement timeline.
- Rates and fees: The APY on your CD balance will tell you how much you can expect to earn in interest over the course of a year. The higher your APY, the more your balance will grow in that time. Take the time to shop around and compare APYs across financial institutions. You may want to start by asking your current bank or credit union about their CD rates. There are institutions that offer a higher, relationship APY for existing customers.
- Liquidity: CDs don’t work the same way that traditional savings accounts do. Even though there are savings accounts that set limits on how many withdrawals you can make within a certain period, you’ll still have some access to the money in your account. If this is an issue for you, a CD may not be the best fit. Putting your money in a CD means that you’re making a commitment to not touching that money at all for the duration of your term. Doing so could mean forfeiting all of the interest you’ve earned. If you still want to take advantage of a high promotional APY, you might want to opt for a CD with a shorter term.
The takeaway
CDs can be a worthwhile investment if you have the funds to deposit upfront and are confident that you won’t need access to your money before your CD matures. Plus, if you’re saving for a specific goal, putting your money in a CD can help keep you accountable and keep your money safe until it's time to fund your goal. Before selecting a CD, pay close attention to the rates, fees, and terms offered to select the best fit for your savings needs.
