Fixed Rate Savings Accounts: What Are Your Options, and What Kind of CD Strategy Should You Use?

It is quite common for people to look for savings accounts with fixed rates. However, traditional savings accounts usually have variable rates. For true fixed rate savings, you’ll have to consider a CD account or a savings account that accumulates a predetermined interest rate for a set period of time, or the “introductory period”, after which, the rate could go either down or up, depending on how much money you put into the account. There are usually different levels or tiers of savings accounts, and you might be required to continue putting more money into the account if you want to keep a decent APY rate.

Of course, a certificate of deposit account is worth considering as well, just as long as you choose one with a fixed rate from a reliable financial institution. A CD is a type of account that often pays an even higher interest rate than a regular savings account, with the drawback that you will have restricted access to the funds during the pre-defined term, which could be anywhere from 3 months to 5 years. The idea is to allow the money to “mature” and if you take too much money out, or make too many withdrawals before the term period ends, there will be a penalty.

Bank Policies of Fixed Rate Savings Accounts

The type of penalty you’ll receive depends on the bank’s policy, so be sure and read the terms and conditions very carefully when evaluating different online banks. If you’re confident that you won’t need to access any of the money and that you have steady income coming in to pay all the bills, even in there is an emergency situation, then a CD account with fixed rate savings is likely your best option.

Additional benefits of investing in a certificate of deposit is that it is a federally-insured account that typically doesn’t have monthly fees. The only real downside to having a fixed-rate is the possibility that the rate might rise, but then can be taken care of with a strategy called a “CD ladder”, which involves opening several CD accounts with varying term lengths rather than putting all of your money in a single CD account. As the shorter-term accounts mature, the idea is to move the balance into new CDs with higher rates and longer terms.

Now that you have a better understanding of how fixed rate savings work with savings and certificates of deposits, you can find the ideal online bank to join. CIT Bank is definitely one to consider, if the high number of positive reviews are an indicator. The bank is safe to use and new accounts are easy to make. CIT Bank is known for its higher than average APY rates.

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