Should You Open a 6-Month CD Now?
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The Federal Reserve just cut the target federal funds rate by 0.25 percentage points. So what does that mean for CD investors?
CD rates haven't fallen yet, but they're likely to drop very soon. And most Fed leaders predict that rates will decline through 2027 and beyond, which means we may not see today's rates again for years.
Should you open a 6-month CD today? Here's what you need to know.
Why a 6-month CD could make sense now
The Fed is expected to cut rates again at its October and December meetings. If that happens, then savings and CD rates could drop quickly.
Opening a 6-month CD today would guarantee you a high APY well into 2026, no matter what the Fed does.
A 6-month CD also gives you more flexibility than a long-term CD. The economic outlook is very uncertain right now, so you may not want to lock your money up for years. Six months from now, you may find that you need that cash, or you might see better investment opportunities than a CD.
Keep an open mind, though. You might be able to get a much higher rate with a slightly shorter or longer term.
Right now, one of the best offers on the market is the LendingClub 8 Mo. CD. If you can commit your money for just two additional months, you'll get a top-tier APY of 4.40%.
That rate could vanish soon, though. If you want to lock in a 4.40% APY until mid-2026, click here to read our full LendingClub CDs review and open an 8 Mo. CD today.
LendingClub CD
On LendingClub's Secure Website.
Should you open a CD at all?
CDs are safe and FDIC-insured (or NCUA-insured, in the case of credit unions). Their interest rates are fixed -- and they're often higher than the rates offered by savings accounts.
But that doesn't mean they're right for everybody.
A CD makes sense if you:
- Have enough money in a savings account to cover an emergency (three to six months' worth of expenses is a good target for most people)
- Don't have high-interest debt (pay that off first)
- Have cash that you will not need until the CD's maturity date
- Are on track to reach your retirement savings goal (for most people, CDs alone will not provide enough growth)
In short, CDs make the most sense for people who are on solid financial footing and want to earn more interest on some of their savings. They're especially great for people who are saving for a near-term goal, like a home down payment.
Should you choose a different term?
If you're positive that you won't need the cash for a long time, then a longer-term CD might be a smart play.
We don't know what the future holds, but if Fed leaders' predictions come true, then some savers will be very glad they locked in today's rates for years.
Right now, Synchrony Bank offers one of the best long-term CDs you can find: a 5 Yr. CD yielding 4.00% APY. To lock in that high rate until 2030, read our full Synchrony Online CD review and open a CD today.
Synchrony Online CD
On Synchrony Bank's Secure Website.
Not ready for such a long-term commitment? CDs come in a wide variety of terms, so you could pick a 1-year, a 2-year, etc. -- or a combination of several terms. Click here to see our list of the best CD rates and find the offer that makes the most sense for you.
Our Research Expert
James McClenathen is a full-time Managing Editor and Personal Finance Writer at Motley Fool Money, overseeing the production and quality of editorial content while also writing about credit cards, investing, and everyday money management. He has worked at The Motley Fool since 2012 and brings extensive experience as an editor, reporter, and finance expert. A graduate of the University of Michigan, James has spent more than a decade of his career helping readers make smarter financial decisions.