This Could Be Your Last Chance to Lock in 4%-Plus CD Rates
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The Federal Reserve recently projected a drop in interest rates through 2027 and beyond. That means today's high certificate of deposit (CD) rates of 4.00% APY or better will disappear -- and they won't come back anytime soon.
If you've been thinking about opening a CD, now's definitely the time. Here's what you should know before you get started, and how to lock in a high rate before it's too late.
How to open the right CD for you
Put simply, a CD is a type of savings account where you deposit your money for a fixed period and earn a set interest rate in return.
For example, you might open a 2-year CD with a 4.30% annual percentage yield (APY). That means your money earns 4.30% after one year, and then interest is added on top for the second year. By the time your CD matures, you'll have about 8.77% more than you started with -- a little extra thanks to compounding.
Sound good? Here's how to find a CD that's right for you:
- Pick the right term length: Shorter terms (3-12 months) offer quicker access to your money. Longer terms (2-5 years) keep your money earning for longer.
- Find the best rate: Online banks usually offer the highest APYs.
- Fund your account: Move your money from an existing bank account to your new CD.
- Be patient -- don't move your money: Many CDs charge an early-withdrawal penalty for taking out your money prematurely.
- Figure out your next move: Once your CD matures, you can choose to either 1) withdraw your cash or 2) open another CD.
Ready to get started? Check out a few of the top CDs below to lock in a high APY before rates dip.
LendingClub CD
On LendingClub's Secure Website.
Discover® Bank CD
On Discover Bank's Secure Website.
Should you open a CD today?
Short answer: Yes. CDs are the perfect way to lock in a high APY now before it's too late. They're a great way to save if:
- You want a guaranteed return over a few months or years
- You're saving for a short- to medium-term goal
- You already have an emergency fund in place in your savings account
Based on the Fed's projections, rates won't be this high again anytime soon. This could be your last chance to open a CD with 4.00% APY for a long while.
Ready to open a CD? Check out our full list of the best CDs available now to lock in your high APY today.
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.