Did you know that it's still possible to get an interest rate of 4.5%? This isn't an option that only exists for people with a huge down payment, perfect credit, or tons of money. This is actually available to a lot of purchasers, and many don't know about it.
For example, the average savings account rate is just 0.42%, while the best savings interest rates are generally around 4.0% to 4.5% APY.
4.5% is very likely a good rate for the next 12 months.
A 'good' mortgage interest rate is typically between 4-4.5%. However, whether mortgage lenders are offering rates between this range depends on the current market.
Here's an example: According to a compound interest calculator, if you have a $1,000 balance in an account that earns 4.50%, you would earn just under $47 in interest after a year. That same $1,000 in a basic savings account that earns only 0.5%, for example, would earn only about $5 in that same time frame.
To determine what a "good" rate is, simply compare what CDs are currently offering to what you can get with a regular savings account. Savings account interest rates currently hover around 0.43%, while interest rates on CDs are around 4.5% to 5% or higher, depending on the lender and other factors.
A high Annual Percentage Yield (APY) means your money grows faster. With a 5% APY, your savings will increase more quickly compared to lower-rate accounts. For example, if you deposit $10,000, you could earn about $500 in interest over a year. This is much better than accounts with 0.5% or 1% APY.
72 months equals 6 years. To figure this out, we recognize the well-known relationship between months and years. That is, there are 12 months in 1 year.
Cash App savings account details
Account holders earn a minimum of 1.50% APY on balances, or 4.50% APY if they have the Cash App card and receive at least $300 per month in direct deposits.
As of July 2024, these are typical ranges for good CD rates in six categories, according to Corgiat: 6-month CD: 5.05% - 5.2% 12-month CD: 4.75% - 5.1% 24-month CD: 4.4% - 4.6%
There are two high-yield checking accounts with interest of at least 7%, though: BCU PowerPlus Checking and Landmark Credit Union Premium Checking Account. Both come with major downsides, though. Are 7% interest savings accounts safe?
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The National Association of Home Builders expects the 30-year mortgage rate to decrease to around 6.5% by the end of 2024 and fall below 6% by the end of 2025, according to the group's latest outlook.
To afford a $400,000 house, you typically need an annual income between $100,000 to $125,000, which translates to a gross monthly income of approximately $8,333 to $10,417. However, this is a general range, and your specific circumstances will determine the exact income required.
The average interest rate on a traditional savings account is only 0.42%, according to the FDIC. However, the best savings rates can be found on high-yield accounts, which often pay around 4.5% to 5% APY or even more.
Varo Bank has a tiered savings rate that benefits lower balances. You'll earn 5.00% APY on balances up to $5,000 and 3.00% APY on balances above that.
The average two-year fixed mortgage rate for someone with a 40% deposit is around 4.8%, with some experts speculating rates could drop to around 4% by the end of 2023.
Example: A six year fixed-rate loan for a $25,000 new car, with 20% down, requires a $20,000 loan. Based on a simple interest rate of 3.4% and a loan fee of $200, this loan would have 72 monthly payments of $310.54 each and an annual percentage rate (APR) of 3.74%.
Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go.
Individuals with an 800 credit score can secure an average interest rate of 5.25% for new cars and 7.13% for used cars. A high credit score allows borrowers to access favorable interest rates and loan terms, which can lower overall borrowing costs.
For example, a $10,000 deposit in a five-year CD with 3.50% APY would earn around $1,877 in interest. The same CD with a 1.50% APY would earn around $773 in interest, and the same CD with a 0.01% APY would earn only $5 in interest.
See our criteria for evaluating banks and credit unions. Savings accounts that earn more than 4% annual percentage yield are high-yield, meaning they help your money grow faster than an average savings account.
While longer-term CDs may tie up your funds for years, a 6-month CD allows you to access your money relatively quickly. If you suddenly need your $5,000 for an emergency or a more lucrative investment opportunity arises, you won't have to wait years to access your funds without incurring hefty penalties.