Should I Lock My Money Into a CD Right Now?

Speaker A00:00:37

Your bank keeps advertising certificates of deposits with attractive interest rates. They promise you a guaranteed return if you simply leave your money alone. And it sounds like an easy win.Yet is locking up your money really the smartest move right now? Let's find out together. Because, yes, I get it.Those guaranteed returns sound appealing, but the right choice is about your plan, not just about the rate. So stay with me today. Let's make sure today's decision still serves you tomorrow. Hello and welcome to Financially Confident Christian.I'm Ralph Estep Jr. And I just want to thank you from the beginning for joining me here today. And today's question comes from a listener that wants to know, should I open up a cd? And. And are today's rates worth locking in?But more importantly, what if I need the money unexpectedly? And listen, I get it. Everyone's seeing these exciting and higher interest rates. But most people are like me. You wonder, what's the catch?So before you lock away savings, make sure it's the right tool. Now, if you've got a question for this show, this show's all about questions. You can send it to us by going to Financially Confident Christian.We'll put a link in the show notes. But again, that's financiallyconfidentchristian.com/question Well, let's get right to today's listener question. Listener writes this. Hi, Ralph.I've been seeing advertisements everywhere for certificates of deposit paying much better interest rate than my regular savings account. Now, I've got about $15,000 sitting in savings that I don't need immediately. And part of me thinks I should lock it in before rates change.My concern is if something unexpected happens, I won't be able to get my money without paying a penalty. I don't want to miss a good opportunity, Ralph, but I also don't want to make a decision that I'll regret later.How do I know if a CD is the right choice? Thank you. Well, thank you for sending in that question. That's a great question. And that's a question we get on the show all the time.The truth is this. A CD can be an excellent tool, just not the right tool for every dollar that you own. So today I want to help you build a simple framework.Well, let's start off with the basics. Let's talk about what is a cd, because you might be listening or watching right now. You're like, ralph, I have no idea what a CD is.A CD is actually pretty simple. It's a savings product that has a fixed term. Basically, what you're doing is you're agreeing to leave your money untouched. And.And the bank in their part guarantees you a fixed interest rate for the term of that cd. Now, oftentimes, the longer the term, the higher the interest rate because there's more risk.And they're designed for money that you don't need right away because like I said, you're locking it up for a certain period of time. A CD by its very nature rewards patience, not access. So let's get right to the bones of today's question.First thing I'm going to tell you is don't lock up your emergency fund. This is one that I see a lot of people make a mistake with your emergency fund.Those monies that you've got to set aside for emergencies only need to stay accessible. They can't wait for maturity dates because you never know when that motor is going to blow in your car.You're going to have that unexpected repair around the house, the kids need medicine, something like that. You want to be able to keep that emergency fund liquid.One of the things I've talked about on the show before, I love high yield savings accounts for those type of situations because those you can get to right away. I would encourage you to reserve those CDs for longer term savings.Like I said, money meant for emergencies should never require permission for it to reach. And that's why we really got to spend a couple minutes here and talk about matching the tool to the goal.Because all of these things we're talking about are tools in your arsenal. Things like a CD are great if you're planning for next year's vacation.Maybe you're planning for a home down payment or property taxes even in six months away. Those are all very appropriate uses for a cd. But like I've said on the show before, every dollar should have an assignment.So the best financial tool is the one that matches your purpose. Now, you mentioned in your question I may end up having to pay a penalty. Let's dig right into that.I want you to understand the penalties most CDs, because you're locking in that money. The bank and you are making an agreement that you're not going to touch this money for a certain amount of time.Most CDs charge an early withdrawal penalty. So you've got to know the terms before you open one. Read the fine print. Yes, you got to really understand what you're getting into.And don't make an assumption that every bank is the same, because not every bank handles these the same. Being wise means understanding the commitment before making It. So never chase a rate without understanding the rules.And that goes for CDs, that goes for money market accounts, those high interest savings accounts as well. Always understand the 5 fine print. And in the end, build a balanced savings strategy. Not every one of your dollars belongs in one place.As I've said a couple times today, keep your emergency money accessible. Lock away that money.If you've got a clear timeline, diversify your savings strategy and and try to make it simple, because simplicity creates confidence. If you really want to get to financial peace, it comes from putting each dollar exactly where it belongs.Now, one of the things that undertones I heard in your question today is sort of this feeling of a lack of faith. And I just want to dispel that rumor right now. Planning ahead is not lack of faith.In fact, scripture says all throughout it examples of wise preparation. Just think about Joseph. Joseph stored grain during years of abundance because God had shown him the difficult years are coming.That preparation on the hand of Joseph didn't replace trust in God. It was part of faithful stewardship. Because we have to remember something. Faith doesn't promise us tomorrow is always going to look like today.It doesn't promise us that there won't be unexpected expenses. And it doesn't promise that every financial opportunity is meant for you. But here's what faith does promise us.God gives wisdom generously to those who ask. You just have to ask for it. And seeking his guidance lets us decide with confidence instead of fear.And that preparation we're talking about today that honors God, that wisdom considers the future. But that stewardship that we try to live in as faithful Christians requires planning. And yes, trust and planning can work together.And that peace you're seeking comes from bringing those two things in alignment. So trust God completely and then steward wisely what he's already placed in your hands. As I said earlier, every financial tool has a purpose.Your job is to simply choose the right one. And that wisdom that you're seeking is going to grow one decision at a time. So here's your big win for today.Today's win is to list every savings goal that you currently have. Just list them out one by one and identify which money must stay available for the short term.But you can also identify the money that won't be needed for several months or longer. And then match each of those goals with the right accounts. Kind of like when you were a kid playing the match game.And then review that timeline before making any changes. Because in the end, when every dollar has a purpose, every financial decision becomes a little bit easier.Well, let's get right to our Bible verse today comes from the book of Proverbs, chapter 24, verse 27. It says do your planning and prepare your fields before building your house.And I just love this one because God values our preparation and that wise planet thinking through this process creates stability and that preparation reduces unnecessary stress and stewardship begins before action. How about we pray together right now? Father God, thank you for giving us opportunities to prepare wisely for the future.Lord, help us make decisions that reflect wisdom instead of impulse. It's so easy to live impulsive, Lord, and I just want you to teach us to plan carefully without letting fear run control of us.Give each of us discernment to know when to save, when to invest, and yes, when to wait. May every decision honor you Lord, and strengthen our future that you've called us to build. And we ask this in Jesus name. Amen, friend.As I said at the beginning, a CD isn't automatically good and it's not automatically bad. It's one tool among many in the arsenal of finance. So keep those emergency savings available.Match your savings to your goal and understand that commitment before you're locking in your money. So here's today's takeaways. Know how CDs work. Protect that emergency fund. Match your savings tool to your timeline.Read those terms carefully and practice wise, intentional stewardship. Now, maybe right now you're going through a tough financial season and you could really use some assistance. I would love to hear from you.You can reach me by going to financiallyconfidentchristian.com/voicemail we'll put a link in the show notes and listen. It's super simple. You click on that link, you'll go right to website and you push record and I'll hear your voice and I'll talk about it on the show.Again, that's financiallyconfidentchristian.com/voicemail thank you so much for joining me today. I want to encourage you as I always encourage you, stay financially savvy. May God bless you and you have a great day. We.