Your Kid’s Savings Can Benefit from Today’s High Savings and CD Rates
As a parent, you want your child to have the best possible future, and this includes their financial stability. Planning for your child’s future can be daunting, but one of the easiest ways to ensure their financial stability is by saving money. Whether it is for starting their college fund early or planning a family vacation, it is always a good idea to save for the future.
The good news is that saving rates and CD rates are currently high, making it a good time to set aside some extra cash for your child’s savings account. This article will explore the benefits of high-yield savings accounts and certificates of deposit, and recommend some saving options based on your goals for your kids.
High-Yield Savings Rates
The savings rates for high-yield accounts have remained pretty stable this week, with no decreases across the banks that CNET tracks. Some banks have even increased their savings rates, such as Quontic and CIT. Here are some of the highest savings rates currently available:
|My Banking Direct||4.76%|
CD rates have not changed much either, but some have seen small increases after the latest Fed rate hike. Here are some of the CD rate changes that CNET tracked this week:
- Ally’s six-month CD increased from 3.40% to 3.50%.
- Bask Bank increased its one-year CD from 4.70% to 5.00% and its 18-month CD from 4.00% to 4.50%.
- CFG Bank increased its one-year and 18-month CDs from 5.17% to 5.25% each.
- MYSB Direct increased its five-year CD rate from 4.40% to 4.52%.
Here is a comparison of CNET’s average CD rates:
|Term||CNET-tracked APY||FDIC-tracked APY|
The Best Place to Grow Kids’ Savings
Savings accounts and CDs are great options for storing your child’s funds, regardless of whether rates continue to rise or start to trend downward. High-yield savings accounts are an excellent choice for most people since they are low maintenance and funds in the account can be accessed at any time. CDs are a better option for earning a fixed rate on savings you already have put aside.
If your goal is a few years down the road, a CD can serve as a secure place to stash your funds, while earning a predictable return. For long-term saving, consider a diversified approach such as stocks or mutual funds.
One easy way to get started is by thinking about money for kids in three different buckets: saving for today, tomorrow, and the distant future. A high-yield savings account is the best choice for saving for now, while a money market account, CD, or treasury bond is generally the best option for money you’ll need in 3-5 years.
- Parents can open a custodial savings account for their children to begin saving for their future. This can be a simple way to start building a savings account for your child.
- 529 College Saver Plans are another option to consider when saving for your child’s future. These plans offer tax-free growth and withdrawals when used for qualified education expenses.
- Money market accounts, CDs, and treasury bonds may have higher interest rates than high-yield savings accounts, but they often require higher minimum balances or deposits, and have limited withdrawal options.
Your kid’s savings can benefit from today’s high savings and CD rates, giving them a head start towards financial stability. High-yield savings accounts offer excellent interest rates and easy access to your funds, while CDs offer a fixed rate of return for savings you want to grow. Always consider your goals and time horizon for your child’s savings, and speak with a financial advisor if you have any questions.
Planning for your child’s future can seem intimidating, but it is essential to ensure they have a secure financial future. By utilizing high-yield savings accounts and CDs, you can start growing your child’s savings today. Whether you are saving for short-term or long-term goals, finding a savings vehicle that meets your needs is crucial. Remember to consider your child’s goals, time horizon, and risk tolerance when choosing the best savings options for them.