Focus on CDs for cash reserves, use a CD ladder and compare rates. But don’t lose sight of a CD’s purpose.
Signage for Certificate of Deposit interest rates is displayed outside of a First Republic Bank branch in Santa Monica, California on March 20, 2023. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
But CDs aren’t the most flexible among low-risk savings options. Here are some quick tips for what to do and not do when using CDs for retirement.is a primary goal for short-term savings. Having three to six months’ worth of living expenses, or more, in a regular savings account tends to be a common recommendation.
You can also find competitive yields with brokered CDs, which are issued by banks and available at a brokerage. You need a brokerage account and some understanding of how these CDs work, though. Once a CD ends, there’s a grace period, typically seven to 10 days long, when you can withdraw the full amount without a penalty. Alternatively, you can consider a no-penalty CD, though rates tend to be lower than high-yield CDs at the same bank.For most of the last decade or so, CD rates were at rock-bottom lows and the tax burden for CD interest was minimal. But that’s changed with higher rates in recent years.
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