Why Now Might Be Your Last Chance to Lock in 4.00%+ APY With a CD

CD rates have come down in 2025, but they're still near the highest levels we've seen since before the Great Recession. Many still pay APYs north of 4.00%.

These rates may not last much longer, though.

The Federal Reserve has left interest rates unchanged so far this year. Markets are expecting more of the same at the Fed's next meeting, which wraps up on July 30. But inflation is cooling off, and most analysts agree that the Fed is likely to cut rates before the end of 2025.

If that happens, CD rates will almost certainly drop as well. Sometimes banks even lower their rates before an expected interest rate cut.

So if you've been thinking about opening a CD, now might be the time to act.

Why open a CD?

CDs are a safe way to grow your money over a set period of time -- usually anywhere from 3 months to 5 years. They're FDIC insured (up to $250,000 per person, per bank), and their interest rate is fixed, which is appealing when rates are expected to fall.

Here are some good reasons to open a CD today.

You want to lock in a high APY

If interest rates fall, a CD could keep your cash growing while other people's savings begin to stagnate. Many of the best high-yield savings accounts have APYs around 4.00% or higher now, but those rates could drop at any time.

You want safe, predictable returns

There's no risk of losing any deposit of $250,000 or less, and you know exactly how much you'll earn over the CD's term.

You have cash that you don't need to touch for 3 months to 5 years

CDs are perfect for your short- to medium-term savings goals. They're not the best place for money that you may need on short notice, because withdrawing cash early will cost you several months' worth of interest.

CDs are also not best for money you're saving for big, long-term goals like retirement. For that, most people need higher-growth investments like stocks and index funds.

Not sure which term to choose? Here's a smart approach

If you're not ready to lock up all your cash for the next several years, or you're worried about missing out on an interest rate increase, then you might try a CD ladder.

This is where you split your money between several CDs with different terms -- say, 1 year, 2 years, and 3 years. Whenever a CD matures, you can either cash it out, open another 3-year CD to keep your ladder going, or invest in a better opportunity that's come along.

The bottom line

CDs aren't for everyone. But if they make sense for you, then this might be your last shot to lock in a 4.00%-plus APY for months or years.

Ready to lock in a high APY today? Check out our list of the best CDs, with APYs of up to 4.25%.