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Lackluster Rates - What to Do When your CD Matures

Lackluster Rates - What to Do When your CD Matures

| May 18, 2021

When interest rates are near historic lows, renewing a CD and locking in those low rates is enough to make anyone pause. But… what other options do you have if you want to keep that money hard at work without taking on too much risk? We have some ideas for you that fall into both the guaranteed (as in FDIC-insured or Treasury-backed) and uninsured investment categories.

Insured and guaranteed alternatives

The recent interest rate environment has made it doubtful that insured deposit accounts will allow your funds to keep pace with inflation. The premium CD rates that banks have historically paid in exchange for the security of term deposits has dwindled to the point that these secure alternatives deserve a look:

Money market accounts

Offered by most major financial institutions, money market accounts allow you to withdraw your money at any time while also paying annual percentage yields (APYs) that often compare favorably to a one- or two-year CD. Terms and deposit thresholds vary by institution, so some shopping may be required.

High-yield savings accounts

These FDIC- and NCUA-insured accounts are usually offered online-only, enabling providers to offer higher rates than traditional savings due to the lower cost of doing business without physical branches.


Series I savings bonds1 are issued by the U.S. Treasury and are designed to keep pace with inflation. An I bond earns interest monthly, with interest compounded semi-annually. Interest accrues and is added to the bond until it reaches 30 years, or you cash the bond, whichever comes first. You can redeem the bond after 12 months. I-Bonds can be purchased (without commission) in $25 increments at for up to $10,000 per person. The bonds are then sent electronically into your designated account.

Lower-risk investment alternatives

Note: Nothing in this category is as certain as those listed above, but these historically low-risk investment options are also worthy of consideration if you need this portion of your portfolio to produce returns greater than the options detailed above.


The principal value of Treasury Inflation-Protected Securities can adjust each month based on movements in the Consumer Price Index, helping them keep pace with inflation. While the coupon rate for TIPS is fixed, when the principal value adjusts, investors may reap higher coupon payments.

Short-term bonds funds

Short-term bond mutual funds are another great CD alternative. With low expense fees and no withdrawal penalty, you’ll have access to your money as soon as you need it.

Reliable dividend stocks

Investing in stocks that pay regular dividends - especially growth companies with histories of steadily increasing dividend payments - may also help you outstrip the pace of inflation, although with a higher degree of potential risk than the preceding options.

Viable options to CDs do exist, and many actually place fewer access and renewal requirements on your money. Your investment advisor will be happy to help you sort through the deposit and investment options to arrive at a solution that aligns this portion of your portfolio with your risk tolerance and return needs.

Important disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Certificates of Deposit are FDIC insured and offer a fixed rate of return if held to maturity.  Brokered CDs sold prior to maturity in the secondary market may result in loss of principal due to fluctuations in the interest rate or lack of liquidity.  Brokered CDs are registered with the Depository Trust Corp. (“DTC”).  Brokered CDs with step-down and/or call provisions may be less favorable than traditional CDs without these features.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.

The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time.

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