Experts are predicting a cut in interest rates at the Federal Reserve’s meeting on Tuesday and Wednesday this week. And even more cuts could follow in late 2025 and beyond.
That means certificate of deposit (CD) rates of 4.00% or higher will likely disappear, too.
If you’ve been thinking about opening a CD, now is definitely the time. Here’s what you should know if you’re opening a CD.
What to know when opening a CD
A CD is a type of savings account where you deposit your money for a set period, earning a fixed interest rate in return for the commitment. For example, you might open a 1-year CD that earns 4.00% APY. That means when your CD matures after a full year, you’ll get your money back, plus 4.00% in interest.
Here’s how to pick the right CD for you:
- Find the right term length: Shorter terms (3-12 months) give you quicker access to your cash. Longer terms (a few years) give you a longer guaranteed rate of return.
- Shop for the best rate: Online banks usually offer higher APYs.
- Fund your account: Transfer money from an existing bank account to a CD.
- Wait it out — and don’t touch your money: Most CDs charge a penalty for early withdrawals.
- Plan your next move: Once your CD matures, you can either withdraw your money or roll it over into another CD.
Who should open a CD now?
CDs are a great fit for you if:
- You already have an emergency fund in a savings account
- You want a guaranteed return over a few months or years
- You’re saving for a short- to medium-term goal
- You want to lock in a high interest rate while you still can
With rates expected to fall as soon as this week, now is definitely the time to lock in your CD rate.
Act now before rates drop
Traders expect the Fed to announce an interest rate cut this week, and Fed leadership recently projected that rates would fall through 2027 and beyond. That means today’s high CD rates could soon disappear — for a very long time.
If those predictions turn out to be true, you’ll be glad you locked in a 4.00%-plus APY while you still could.
Ready to open a CD? Check out our full list of the best CDs available now to see some of the highest APYs you can still get.