3 big money moves to make with Fed rate hikes still paused – Notice Global Online

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There are a few big money moves that could make sense considering that the Fed has kept rates paused for now.

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The May inflation report, released today, offers a glimmer of hope to the millions of Americans who are weary of rising prices. While the drop was slight, the report shows that the inflation rate fell month-over-month, declining from 3.4% in April to 3.3% in May. And, that decrease was enough to prompt the Federal Reserve to keep interest rates unchanged at its June meeting.

The Fed has opted to keep rates frozen at 5.25% to 5.50% for nearly a year now to try and fight back against persistent inflation. Many experts predicted at the start of 2024 that the Fed would start slashing rates mid-year, but inflation improvements have been slower than expected. In turn, the Fed has held on the anticipated rate cuts in exchange for a more aggressive strategy. 

There’s always a chance that rate changes could occur in the future, though. For example, the Fed could opt to hike rates if inflation starts to tick back up again. But if inflation drops substantially over time, the Fed could cut rates in tandem. With the Fed rate hikes remaining paused for now, what big money moves should you make as a result?

Start earning big interest returns on your money today.

3 big money moves to make with Fed rate hikes still paused

Here are a few key money moves you may want to consider making right now:

Open a short-term CD at a high rate 

With the Fed rate still paused at a 23-year high, one move you may want to make is to lock in a high rate on a short-term certificate of deposit (CD). After all, the current rate environment has led short-term rates to be higher than long-term rates in many cases. So, a short-term CD can be a smart way to securely grow your savings in this economy.

For example, many major banks and financial institutions offer short-term CDs with rates that surpass 5.5% currently. That’s a hefty rate in general but is over 10 times higher than the average savings account rate, which is just 0.45% currently. So if you’re looking to maximize your earnings, finding the right short-term CD account makes sense.

And, considering that future rate hikes are still on the table, a short-term CD could make sense in other ways, too. For example, most short-term CDs mature in a matter of months, so if inflation ticks back up over the next few months and the Fed opts to raise rates in response, you’d be able to roll the funds from your matured CD into another CD at a higher rate. 

So between today’s high CD interest rates and the possibility of future rate hikes occurring, opening the right short-term CD account could be a smart move to make while rates remain paused.

Compare the top CD rates and start earning hefty returns now.

Start earning a top rate with a high-yield savings account 

CDs aren’t the only interest-bearing accounts that offer top rates right now. There are also favorable rates being offered on certain types of savings accounts, like high-yield savings accounts

For example, many of today’s top high-yield savings accounts offer rates that rival the annual percentage yields (APYs) being offered on CDs. It’s not uncommon to find high-yield savings accounts with rates over 5% currently, and in some cases, the returns can be even higher. 

With deposit rates this high, putting some of your money into a high-yield savings account now will result in returns that far outpace inflation. And, you’ll also retain access to the funds if you need them, which can be a significant perk compared to CDs, which typically come with early withdrawal penalties that eat into the interest returns. 

Pay down expensive variable-rate debt 

With interest rates staying elevated across the board, any high-rate debt you are carrying is costing you a lot of money in interest. So, it’s a smart time to pay down any outstanding variable-rate debt you’re dealing with to try and get rid of it sooner.

The average credit card rate, for example, is hovering near 22% currently. Rates that high (or higher) make it easy for compounding interest to lead your balances to grow out of control. And, if future rate hikes do occur, that rate could become even more expensive over time.

But trimming these debt loads won’t just save you money on interest. It will also improve your overall financial standing, making it easier and more affordable to borrow money, should you need to, when rates eventually start to fall. So there are numerous benefits to tackling that high-rate debt now that the Fed has paused rate hikes yet again — and there are numerous options for tackling your credit card debt, too.

The bottom line

While it can make sense to tackle your high-rate debt and consider opening a short-term CD and a high-yield savings account right now, it’s also important to understand that each situation is different. In turn, you may want to run the numbers and weigh all of the factors before making any moves. That way, you can pursue the options hat make the most sense for you — ensuring that you’re positioned to meet all of your short- and long-term financial goals. 

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There are a few big money moves that could make sense conside…

There are a few big money moves that could make sense considering that the Fed has kept…

3 big money moves to make with Fed rate hikes still paused – Notice Global Online