Should You Move Cash From Savings to CDs Before Rates Fall?
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National average savings account rates are some of the best we've seen in 15 years. CDs are even better. But the Fed is expected to start cutting rates later this month, and when that happens, those juicy offers will dry up fast.
If you've been putting off moving your money into CDs, now's the time to act. Locking in a CD today could mean hundreds of dollars more in interest compared to waiting even a month or two.
Why CDs stand out right now
Savings accounts are great for flexibility. They let you move money in and out whenever you want. But the downside is that banks can (and will) cut the APY as soon as the Fed does.
CDs, on the other hand, lock in your rate for the full term. So even if savings rates slide below 4.00% by the end of the year, you could still be collecting around 4.50% on your CD. Think of it as a way to future-proof your shorter-term returns.
You can start comparing rates and terms today by visiting our list of the best CDs available now.
The trade-off
CDs aren't for every dollar you have. You'll pay a penalty if you need the cash early, which makes them a bad spot for your emergency fund. But for money you know you won't touch for at least six months, they're tough to beat.
Laddering makes it easier
If you're not sure how long to commit, try a CD ladder. That's where you split your savings across multiple terms -- say 12, 24, and 36 months. You'll get regular access to chunks of your money, while still locking in higher yields on longer terms.
Show me the money
Here's what's at stake:
- $25,000 in a 3-year CD at 4.25% APY = about $3,325 in interest
- $25,000 in a 3-year CD at 3.75% APY = about $2,906 in interest
That's a difference of more than $400 just by opening a CD before rates fall.
Don't miss out
If you're serious about squeezing the most out of your savings, don't wait until after the Fed cuts rates. Shifting some of your cash into CDs today could be the difference between earning coffee money and covering your next vacation.
Check today's best CD rates and lock in while 4%+ yields are still on the table.
Our Research Expert
Jake FitzGerald is a full-time Editorial Strategist and Personal Finance Writer at Motley Fool Money, leading content production and distribution while also writing about credit cards, bank accounts, and other financial products. He has more than a decade of experience editing and shaping financial content to give readers clear, trustworthy money advice. His work focuses on delivering practical insights that empower people to make smarter financial decisions. Off the clock, he’s a fan of college football tailgates and still loyal to his favorite putter -- despite what his short game suggests.