Interest Rates Are Dropping: Here’s What Clark Says To Do With Idle Cash – Technologist

With the Federal Reserve’s latest move to lower interest rates by half a percentage point, CD rates are not as attractive as they have been in the past. However, money expert Clark Howard says they are still worth your while.

In this article, we’ll cover why Clark says CDs are still a great buy right now as well as where you can purchase them and some tools to help you.

Clark: CDs Still Have Attractive Rates for Savers

“I’m being asked by so many people what you should do with your idle cash now that interest rates are starting to drop,” Clark says on his podcast. “And overall, [the Fed’s interest rate cut] is a great thing for the economy. It’s great for borrowers, seeing the interest rates they pay going down, but for us as savers, what you earn on savings becomes very important. And those rates are declining.” But, he explains there are still solid rates to be found.

For example, Ally Bank, which makes our list of the best online banks, has CD rates of 3.60% for three years and five years at the time of this writing. For six months, you can get 4.60%.

What You Need To Do:

“For money you’re not going to need for a while, lock in CDs while there are still CDs out there paying great rates,” Clark says. “And there are lots of services you can do that will show you the best CD rates for various terms around the country.”

Where To Open a CD

Clark recommends opening a CD at one of the following:

Discount Brokers

Clark says for general savings, you should take a look at the discount brokers, because they generally offer a higher rate on savings than you’re going to find at banks, online banks or credit unions.

Check out Clark’s favorite discount brokerages.

Online Banks

Clark says not only do many online banks have competitive CD rates, but a lot of them also have zero fees and low balance and deposit requirements, which make them excellent banking options overall.

Read our comprehensive guide on the best online banks.

Credit Unions

Credit unions are also great for CDs as well, Clark says. Many of these financial institutions may have a similar savings product called a “share certificate” that works like a CD.

Follow up with your local credit union to find out the specifics on its rates and whether they are in line with — or can beat — those of the discount brokers and online banks.

“If you go with a bank, credit union or online bank, your money’s insured by the FDIC up to a quarter-million dollars,” Clark says. “And even though the interest rate can change each day, the banks paying the highest rates, even when the rates drop, are still paying much higher than other places.”

Want to go in-depth? Our guide on the best places to open a CD will show you how to go about the process.

CD Tools

Make sure you check out our CD Interest Rate Calculator to see how much your idle cash could earn at today’s rates.

For a deeper dive on strategy, take a look at our CD Ladder Calculator.

Final Thoughts

Clark says do your research before you open a CD at a financial institution because savings rates can be a very fluid thing.

“The rates vary so much from one bank or credit union to another or an online bank, and even within online banks, there can be big differences between who’s paying the highest and who’s paying the lowest,” he adds.

Want more money-saving tips? Read 10 ways Clark Howard saves money.

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