Published on June 06, 2023
Searching for cash? Take advantage of higher interest rates through savings strategies
Cash flow can be a challenge for businesses like yours, especially during times of economic uncertainty. Chances are that inflation and high interest rates are having an impact, which may force you to make difficult financial decisions.
Fortunately, the high interest rate environment does provide some opportunities for parking your cash.
One option is through short-term certificates of deposit (CDs). Unlike other deposit accounts or many investments, CDs guarantee a specific yield, so you won’t need to worry about future interest rate fluctuation. Community Choice currently offers a 13-month CD at 4.50% APY*. While you would have to leave that cash in the CD for 13 months, the cash would be available for you next year.
A strategy that uses CDs to support cash flow is called “laddering.” CDs are set up so that interest rates are guaranteed until they mature — just keep in mind that you can receive a penalty for withdrawing early. So, if you put $1,000 in a 12-month CD earning 4% interest, that account will earn $40 in interest and contain $1,040 when it matures.
Laddering divides your deposits into several smaller CDs, so you can access your business funds more frequently, allowing for more liquidity if cash is needed.
By laddering, you stagger the maturity dates of multiple CDs, ensuring consistent returns on a quicker timeline. Consider this example: by putting your money in five CDs of different terms instead of one 5-year CD, you could then withdraw some of your funds multiple times over the course of five years. That can be achieved without penalty instead of waiting the full five years to withdraw your entire deposit.
If you want immediate access to your funds, while still earning interest, other savings options are also available. To learn more, call our Business Services team at 877.243.2528.
*APY = Annual Percentage Yield. $500 minimum – no maximum. Penalty for each withdrawal applies. Special rate subject to change at any time without notice.