Is Putting Your Emergency Fund in a CD a Good Choice?
Why You Shouldn't Put Your Emergency Fund in a CD
Considering the high interest rates on CDs, it may be tempting to invest your emergency fund. However, locking up your money in a CD could lead to penalties and loss of gains.
CD Terms and Risks
CD terms can range from three months to five years, with penalties for early withdrawal. Since emergency funds are for unexpected expenses, a CD may not be the best place to store them.
The Best Place for Your Emergency Money
Instead of CDs, keeping your emergency savings in an accessible savings account is crucial. Look for high-interest savings accounts that offer around 5% returns without risking early withdrawal penalties.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.