Should You Lock In a 6-Month CD in May 2025?

Right now, the best 6-month CDs are paying around 4.50% APY. That's a pretty sweet deal if you want to lock in a solid return for the rest of the year.

The thing is, a lot of economists think the Federal Reserve will cut rates once or twice before 2025 wraps up. Nobody knows exactly when or by how much. But if it happens, short-term CD rates will likely slide lower -- and you might kick yourself for not locking something in now.

But CDs aren't always the best fit for everyone. And other options exist that might be a better match for your savings goals.

Here are a few things to consider before locking in your cash.

Who should get a 6-month CD

A 6-month CD could be a total win if you're in one of these camps:

• You have a set amount of cash you won't need for six months. (Think: upcoming tuition payment, a 2026 house down payment, or a big trip at the end of the year.)
• You're worried interest rates might fall soon. Locking in a solid APY now could beat future savings rates if rates get cut.
• You don't want any market risk. CDs are FDIC insured up to $250,000 per depositor, per bank. There's no risk of you losing money.
• You don't mind giving up liquidity. Buying a CD means "locking up" your funds. While you can cash out early, it comes with a penalty.

My in-laws fit this criteria. They just purchased a 6-month CD for a chunk of cash they anticipate needing in early 2026. They're happy earning a guaranteed return in the meantime, without stressing about market swings or rate drops.

Who should not get a 6-month CD

On the flip side, a 6-month CD might not be a fit if:

• You might need the money at any moment. I like to keep my emergency fund in a high-yield savings account. It makes me feel better knowing I can access my cash at the drop of a hat.
• You're OK with a variable return. If interest rates drop, so will your earnings.
• You're waiting for other potential opportunities. Keeping your cash liquid might be smart if you foresee other new investment opportunities popping up soon.

Breaking a CD early often comes with a fee that can erase all of your earnings. So if you can't commit to a 6-month term, it's better to store your cash elsewhere.

Other short-term options

If a CD feels too "locked up" for your style, here are a couple of great short-term cash alternatives.

High-yield savings accounts (HYSAs)

Top online banks are paying around 4.00% APY right now, which isn't that far from current CD rates. You get daily access to your money and FDIC protection.

Money market funds

Some money market mutual funds are yielding over 4.00% right now, with same-day liquidity. While these aren't FDIC insured, they are proven stable short-term investments.

Both of these options let you earn solid returns without tying up your cash for months at a time and could be good alternatives to a short-term CD.