Should you put $10,000 in a 3-year CD this July? Here’s what experts think.

Returns on certificates of deposit (CDs) are high at the moment. You can lock in APYs as high as 4.60% with leading financial institutions for three years. And, that’s important given the current economic climate and interest rate environment. 

As inflation cools, economists expect rates to start coming down. And, when they do, earnings on deposit accounts may fall. So, opening a 3-year CD right now could be advantageous. That’s especially true if you have $10,000 in savings you’d like to earn a meaningful return on. But if you put $10,000 in a 3-year CD, you’ll have to leave it there until the account matures. If not, you may pay an early withdrawal penalty, defeating the purpose of opening the CD in the first place. 

So, should you put $10,000 in a 3-year CD right now? We asked some experts their thoughts. 

See how much interest you could earn on a top 3-year CD here. 

Should you put $10,000 in a 3-year CD this July? 

There are multiple reasons to put $10,000 into a 3-year CD. Here’s why the experts we spoke with say you should do so now:

This may be your last chance to lock in such high CD rates for a while

The Federal Reserve’s federal funds rate is a popular benchmark for consumer interest rates. So, if the Fed cuts its federal funds rate, financial institutions may start paying lower APYs on deposit accounts like CDs. And, with inflation cooling, that’s a real possibility in the near term. So, you may be running out of time to lock in today’s high rates. 

“With the Fed’s recent comments, today may be the last chance for quite some time to lock in rates, as they begin to start coming down in the near future,” explains Nick Covyeau, CFP, owner and financial planner at the financial planning firm, Swell Financial. “This is a guarantee that high-yield savings accounts cannot offer as their rates are subject to change.”

Lock in today’s high returns with a 3-year CD before they’re gone. 

CDs are safe

It can be challenging to earn a strong return on your money while maintaining safety. But, CDs are currently the exception to that rule. 

“A CD is a safe and effective way to grow your money,” says Covyeau. 

Return rates on these accounts are currently high – though they may not last – and CDs typically come with FDIC or NCUA insurance on balances up to $250,000. So, as long as you maintain a balance below this insurance cap, your money is safe, even if the financial institution you open your account with isn’t. 

CDs offer a passive savings opportunity

You may have to take an active approach with other savings options. But, CDs give you a way to take a passive approach to earning money on your savings. 

“If you want to ‘set it and forget it,’ this is one of the rare occasions that allow you to,” explains Noah Damsky, principal at the financial planning firm, Marina Wealth Advisors. “Park it, come back in three years, and enjoy the growth.”  

He explains that this is a strong approach for certain savings goals. For example, “if you’re saving for a down payment and your strategy to save up says you’ll be ready in 3-5 years to buy, save it in a 3-year CD,” says Damsky. “This helps you to lock it away at favorable interest rates so it’s on autopilot.”

This may also be a strong option if you’re nearing retirement. 

“Perhaps you’ll retire, start drawing on Social Security or sign up for Medicare in a few years,” says Damsky. “With a CD, you can earn a competitive interest rate while maintaining flexibility for the upcoming milestone.”

Open a CD now to take advantage of passive income generation. 

The bottom line

If you’re looking for a safe way to earn a meaningful return on $10,000, consider depositing it into a 3-year CD. The experts we spoke with say the time to to earn today’s strong returns on these accounts may soon end given the current interest rate environment. And, CDs are safe, passive ways to make your money work for you. Deposit $10,000 into a CD today to earn more on your money.