Money Management

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The yields on certificates of deposit (CDs) have dropped from last year’s highs. In 2024, APYs of 5.00% were easy to come by, while today’s best CD rates are closer to 4.00%.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. And more rate cuts could be coming in 2025.The Federal Reserve kept interest rates the same at its January meeting, and we’re unlikely to see big changes anytime soon. However, the Fed has suggested that rate cuts are possible, and many experts think they’re likely in 2025.If the federal funds rate drops, then CD yields will follow. Should you lock in an APY of 4.00% or more now?Interest rate cuts will probably have little impactLet’s say the federal funds rate drops by a small amount in 2025, and CD rates do the same. (CD rates don’t mirror the federal rate exactly, but they track it pretty closely.)Here’s how much that could change your total earnings on a 1-year CD.Initial InvestmentEarnings at 4.00% APYEarnings at 3.75% APYEarnings at 3.50% APY$5,000$200$187.50$175$10,000$400$375$350$20,000$800$750$700Data source: Author’s calculations.Even if you invest a large amount in CDs, near-term rate cuts will likely have a small effect on your earnings.Are CDs even worth it?CDs offer safe, guaranteed returns. They’re FDIC insured, so your money is safe. That said, there may be better places for your money.High-yield savings accounts have similar rates and more flexibilityToday’s best savings accounts offer roughly the same rates as CDs — around 4.00% or higher in some cases. And unlike CDs, they allow you to deposit and withdraw money at any time.This is why a high-yield savings account is the best place for your emergency fund and any other money you may need on short notice.Want to earn 10 times the national average APY? Check out our list of the best high-yield savings accounts and open a new account today.The stock market offers much higher returnsSince 1957, the U.S. stock market has gained 10% per year on average (as measured by the S&P 500 Index). When it comes to money you want to invest for long-term growth, you may be better off investing in stocks through an IRA or a regular brokerage account.You can even invest in the entire S&P 500 at once with an index fund. Then you’ll have a portfolio of 500 of the biggest companies in the U.S.Just be sure to only invest money that you won’t need for at least three years. That way you have time to ride out any near-term dips in the stock market. That means you’re less likely to be forced to sell stocks at a loss because you need money right away.Don’t make hasty decisions with your moneyCDs are a decent investment, but you shouldn’t rush to buy them just because interest rates may drop this year. Make sure you understand how they work and whether they fit into your financial plan. You may find that you have better options.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

The yields on certificates of deposit (CDs) have dropped from last year’s highs. In 2024, APYs of 5.00% were easy to come by, while today’s best CD rates are closer to 4.00%.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

And more rate cuts could be coming in 2025.

The Federal Reserve kept interest rates the same at its January meeting, and we’re unlikely to see big changes anytime soon. However, the Fed has suggested that rate cuts are possible, and many experts think they’re likely in 2025.

If the federal funds rate drops, then CD yields will follow. Should you lock in an APY of 4.00% or more now?

Interest rate cuts will probably have little impact

Let’s say the federal funds rate drops by a small amount in 2025, and CD rates do the same. (CD rates don’t mirror the federal rate exactly, but they track it pretty closely.)

Here’s how much that could change your total earnings on a 1-year CD.

Even if you invest a large amount in CDs, near-term rate cuts will likely have a small effect on your earnings.

Are CDs even worth it?

CDs offer safe, guaranteed returns. They’re FDIC insured, so your money is safe. That said, there may be better places for your money.

High-yield savings accounts have similar rates and more flexibility

Today’s best savings accounts offer roughly the same rates as CDs — around 4.00% or higher in some cases. And unlike CDs, they allow you to deposit and withdraw money at any time.

This is why a high-yield savings account is the best place for your emergency fund and any other money you may need on short notice.

Want to earn 10 times the national average APY? Check out our list of the best high-yield savings accounts and open a new account today.

The stock market offers much higher returns

Since 1957, the U.S. stock market has gained 10% per year on average (as measured by the S&P 500 Index). When it comes to money you want to invest for long-term growth, you may be better off investing in stocks through an IRA or a regular brokerage account.

You can even invest in the entire S&P 500 at once with an index fund. Then you’ll have a portfolio of 500 of the biggest companies in the U.S.

Just be sure to only invest money that you won’t need for at least three years. That way you have time to ride out any near-term dips in the stock market. That means you’re less likely to be forced to sell stocks at a loss because you need money right away.

Don’t make hasty decisions with your money

CDs are a decent investment, but you shouldn’t rush to buy them just because interest rates may drop this year. Make sure you understand how they work and whether they fit into your financial plan. You may find that you have better options.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

“}]] Read More 

[[{“value”:”Image source: Getty Images
Certificate of deposit (CD) rates have been on a rollercoaster ride in recent years, hitting historic lows during the pandemic and then climbing sharply as the Federal Reserve hiked interest rates to combat inflation. If you’re wondering how high CD rates could go in 2025, you’re not alone. The answer depends on several economic factors, including Fed policy, inflation trends, and the broader financial market.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. A look back: How we got hereCD rates tend to follow the Fed’s moves. When the Fed raises interest rates, banks typically pass those increases along to savers by offering higher returns on CDs, high-yield savings accounts, and money market accounts. In 2022 and 2023, the Fed aggressively raised rates to curb inflation, leading to some of the best CD yields in decades.By early 2024, top CDs were offering APYs of 5.00% to 6.00% — numbers that seemed unthinkable just a few years prior. Currently, the best CDs offer over 4.00% APY. But with inflation cooling and the Fed signaling more potential rate cuts, the big question is: Will these high CD rates come back, or will rates continue to slide?Lock in CD rates now, as experts think they’ll fall in 2025. Check out our list of the best CD accounts now.What could happen to CD rates in 2025?The trajectory of CD rates in 2025 will largely hinge on what the Fed does with interest rates. Here are three possible scenarios:1. The Fed cuts rates, and CD yields dropSome economists predict that the Fed will cut interest rates in 2025 and beyond as inflation eases. If that happens, CD rates will likely decline. The biggest drops would be in long-term CDs, as banks wouldn’t need to offer sky-high rates to attract deposits.2. The Fed holds steady, and CD rates remain where they areIf inflation remains somewhat sticky, the Fed could hold interest rates at current levels longer than expected. In this scenario, CD rates might hover around their current highs, with top banks offering APYs of 4.00% or more for the best deals.3. The unexpected happens, and rates climb higherWhile unlikely, there’s always a chance that inflation picks back up, putting pressure on the Fed to raise rates. If that happens, CD rates could move up a little more, though probably not dramatically.Should you consider a high-yield savings account instead?CDs aren’t the only way to earn a solid return on your cash. The best high-yield savings accounts offer APYs above 4.00% right now without losing access to your money for months or years like a CD.If you were thinking a CD was right for you, check out the best high-yield savings accounts before making up your mind.What should savers do now?If you’re trying to time the market for the best CD rates, here are a few strategies to consider:Lock in high rates now: If you find a CD offering an APY of 4.00% or more, locking in that rate for a year or longer might be a smart move, especially if you think rates will fall.Consider a CD ladder: This strategy involves spreading your money across multiple CDs with different maturity dates. That way, you’re not stuck with a low rate if rates go up, but you still get some security if rates drop.Watch the Fed’s moves: If the Fed signals a series of rate cuts, expect CD rates to follow. Stay informed so you can lock in rates before they drop.Opt for a high-yield savings account: If you want similar rates and no long-term commitment, an HYSA might be the perfect middle ground.CD rates in 2025 will depend heavily on the Fed’s decisions and the broader economy. While a decline in rates is likely, there’s still uncertainty about how quickly and how much they’ll fall. If you’re a saver, now is a great time to take advantage of high yields before they potentially disappear.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

Certificate of deposit (CD) rates have been on a rollercoaster ride in recent years, hitting historic lows during the pandemic and then climbing sharply as the Federal Reserve hiked interest rates to combat inflation. If you’re wondering how high CD rates could go in 2025, you’re not alone. The answer depends on several economic factors, including Fed policy, inflation trends, and the broader financial market.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

A look back: How we got here

CD rates tend to follow the Fed’s moves. When the Fed raises interest rates, banks typically pass those increases along to savers by offering higher returns on CDs, high-yield savings accounts, and money market accounts. In 2022 and 2023, the Fed aggressively raised rates to curb inflation, leading to some of the best CD yields in decades.

By early 2024, top CDs were offering APYs of 5.00% to 6.00% — numbers that seemed unthinkable just a few years prior. Currently, the best CDs offer over 4.00% APY. But with inflation cooling and the Fed signaling more potential rate cuts, the big question is: Will these high CD rates come back, or will rates continue to slide?

Lock in CD rates now, as experts think they’ll fall in 2025. Check out our list of the best CD accounts now.

What could happen to CD rates in 2025?

The trajectory of CD rates in 2025 will largely hinge on what the Fed does with interest rates. Here are three possible scenarios:

1. The Fed cuts rates, and CD yields drop

Some economists predict that the Fed will cut interest rates in 2025 and beyond as inflation eases. If that happens, CD rates will likely decline. The biggest drops would be in long-term CDs, as banks wouldn’t need to offer sky-high rates to attract deposits.

2. The Fed holds steady, and CD rates remain where they are

If inflation remains somewhat sticky, the Fed could hold interest rates at current levels longer than expected. In this scenario, CD rates might hover around their current highs, with top banks offering APYs of 4.00% or more for the best deals.

3. The unexpected happens, and rates climb higher

While unlikely, there’s always a chance that inflation picks back up, putting pressure on the Fed to raise rates. If that happens, CD rates could move up a little more, though probably not dramatically.

Should you consider a high-yield savings account instead?

CDs aren’t the only way to earn a solid return on your cash. The best high-yield savings accounts offer APYs above 4.00% right now without losing access to your money for months or years like a CD.

If you were thinking a CD was right for you, check out the best high-yield savings accounts before making up your mind.

What should savers do now?

If you’re trying to time the market for the best CD rates, here are a few strategies to consider:

• Lock in high rates now: If you find a CD offering an APY of 4.00% or more, locking in that rate for a year or longer might be a smart move, especially if you think rates will fall.
• Consider a CD ladder: This strategy involves spreading your money across multiple CDs with different maturity dates. That way, you’re not stuck with a low rate if rates go up, but you still get some security if rates drop.
• Watch the Fed’s moves: If the Fed signals a series of rate cuts, expect CD rates to follow. Stay informed so you can lock in rates before they drop.
• Opt for a high-yield savings account: If you want similar rates and no long-term commitment, an HYSA might be the perfect middle ground.

CD rates in 2025 will depend heavily on the Fed’s decisions and the broader economy. While a decline in rates is likely, there’s still uncertainty about how quickly and how much they’ll fall. If you’re a saver, now is a great time to take advantage of high yields before they potentially disappear.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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