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10 November, 19:24

What does "higher interest rates are a trade-off for lower liquidity" mean?

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  1. 10 November, 19:38
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    Higher interest rates are a trade-off for lower liquidity meaning, if you choose an account with a higher interest rate to earn more money, you have a smaller chance for liquidity.

    A checking and savings account typically have a lower interest rate but you have a larger chance for liquidity (spendability). With something like a certificate of deposit, you have a higher interest rate but less options with regards to spending.
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