$100,000 short-term CD vs. $100,000 long-term CD: Which will earn more interest now?

Interest earnings on a $100,000 CD account will stack up fairly quickly in today's elevated interest rate environment. /iStockphoto In a traditional economic landscape, interest rates on long-term certificate of deposit (CD) accounts were typically much higher than those available with short-term CDs — and the logic was easy to understand. Since savers were being asked to keep their funds frozen with a bank for an extended period of time, they would be rewarded with a higher interest rate than those who elected to keep their funds in an account for just a few months. But the economic climate many savers find themselves in this spring is far from traditional. Inflation rose again in April and is now nearing 4%, a report from the Bureau of Labor Statistics revealed this week. With an inflation rate nearly two percentage points above the Federal Reserve's target 2% goal, the chances of an interest rate cut when the central bank meets again in June are now incredibly low. That will keep interest rates elevated and costs high for borrowers, many of whom are already contending with the daily impacts of rising inflation. In this climate, savers may see competitive rates on short-term CD accounts, naturally making them an attractive option for those looking to deposit a large, six-figure sum such as $100,000. …