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Published: Dec 07, 2023 6 min read

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Certificates of deposit, or CDs, might not be the most exciting way to invest your money — but they can certainly be one of the most fool-proof. That's especially true right now because interest rates are the highest they’ve been in 22 years.

The Federal Reserve's inflation-busting rate hikes pushed annual percentage yields (APYs) on some CDs upwards of 5% in 2023. But with the central bank poised to pull back and cut interest rates, time may be running out for investors to take advantage of those exceptional APYs.

With CDs, you can lock in a fixed interest rate over a certain length of time, usually from three months to 5 years. Rates vary by institution and term length, but prior to the period of soaring inflation that began in mid-2021, you would be lucky to find a CD with an APY as high as 3%.

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Once your CD matures, you receive your initial deposit as well as the interest you earned. Let’s say you put $10,000 into a one-year CD with an APY of 5%: After 12 months, you’d walk away with $10,500.