~Thu~ Jan 31st 2008
Money Hack: Use CDs to Beat Falling Interest Rates
Posted by J.D. Roth under Investing , Money Hacks[42] comments
When the Federal Reserve cuts short-term interest rates, as it did yesterday, you feel the pinch in your savings account. My ING Direct account, for example, has dropped from 4.50% when I opened it to 3.65% today. It may drop again.
Brian from The Job Bored dropped a line with a money hack for those who like to chase the highest interest rates. “Why not buy protection?”, he wonders. Here’s how:
Since ING makes it free and easy to open a certificate of deposit [CD], every time I see another interest rate drop coming, I just throw more money into a 6-12 month CD, which locks in the higher rate.
I’ve been doing this since before Thanksgiving, and actually just did it again yesterday. I was watching CNBC and they were all saying a rate cut was certain. I now have about 40% of my savings in CDs, earning an average of 4.90%.
This may not seem [...]


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