6-Month vs. 5-Year CDs: What's the Best Investment in October 2025?
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A few weeks ago, the Federal Reserve cut interest rates for the first time this year, while also forecasting a drop in rates through 2027 and beyond.
That means now's the perfect time to lock your money in a certificate of deposit (CD). The question is, how long should your CD be?
Here's what to know about opening a shorter CD of, say, 6 months versus a longer 5-year CD.
What to know before you open a CD
A CD is a savings product where you deposit your money for a set period, then earn a guaranteed APY in return. Because interest rates are on the decline, now's the time to lock in a high CD rate that might not be available again for a long while.
For you, that might mean opening a CD that stretches on for years. The downside, though, is that with a CD, you're locking up your money. Putting money in a 5-year CD means you won't have access to that money for half a decade, unless you pay an early withdrawal fee.
Here's what to do before you open a CD:
- Find the right term length: Longer-term CDs won't be right for everyone. Shorter-term CDs (3-12 months) give you quicker access to your cash, which means more flexibility.
- Shop around before you open: Online banks usually offer the highest APYs.
- Be disciplined: Don't take out your money if you don't have to. Most CDs charge a penalty for early withdrawals.
Ready to get started? Check out our full list of the best CDs to lock in your rate today.
Should you open a 6-month CD or a 5-year CD?
The main advantage of shorter-term CDs like 6-month CDs is flexibility. Your money's locked up for a shorter time, so you'll have access to it sooner.
With interest rates on the decline, shorter-term CDs are a good option if you want to earn a decent return before pivoting and moving your money elsewhere.
A 6-month CD could be smart if you:
- Want to lock in a strong short-term APY before rates fall
- Think you'll need the cash within the next year
On the other hand, CDs that last multiple years can be solid long-term earners. At their best, they protect you from falling rates -- so even if the Fed keeps cutting rates as expected, your return stays solid.
A 5-year CD might be a good fit if you:
- Have money you won't need until 2030 or beyond
- Want a guaranteed return that beats inflation
- Think rates will continue to fall for the next few years
Want to start saving? Check out our full list of the best CDs available now to get started.
Our Research Expert
Ryan Wilcox is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, auto insurance, and other personal finance topics. Ryan has been writing about credit cards and savings since 2022. Before joining Motley Fool Money, he was a full-time writer at The Points Guy, where he focused on maximizing credit card rewards and travel strategies. He holds a bachelor’s degree in English and American History from the University of North Carolina at Chapel Hill, where he also spent four years reporting for The Daily Tar Heel. With a background in both journalism and consumer finance, he brings a clear and thoughtful voice to money topics. Outside of work, Ryan is likely reading, writing, or updating his Letterboxd account.