Don't Miss Out: CD Rates Might Start Falling in September

If you want to lock in some of the highest CD rates we've seen in decades, time is running out. The common consensus among financial analysts is that the Fed will start cutting rates in September. Once it does, APYs on CDs and savings accounts will start to fall.

Unless something drastic happens in the next month, that means the current high-interest period is coming to an end. That's good news for borrowers. But savers will need to make some quick moves if they want to ride the high-interest wave a little longer.

Put simply, if you've been thinking about opening a CD and haven't gotten around to it, now is the time to act.

Don't miss out on high CD rates

CD rates have already started to drop very slightly, but you can still find great CDs with low or no minimum deposit requirements that pay APYs of 4.00% or even 5.00%. Once banks are sure the Fed will cut rates, they will lower their offers accordingly. Moreover, there's a good chance September will be the first of many rate cuts.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of January 9, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of January 9, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

What sets CDs apart from other types of savings accounts is that the APY is fixed for the whole CD term. The trade-off is that your money will be locked up for the whole term, too. Unless you opt for a no-penalty CD or are willing to pay an early withdrawal penalty, you need to be sure you won't need to access your cash.

Here's what you could earn if you lock up $2,000 at some of the top CD terms and rates available today.

Those rates are well ahead of inflation, and the great thing about CDs is that they are safer than other forms of investment. For example, you might be able to earn higher returns from the stock market, but investing in the stock market is riskier, especially over shorter periods.

Don't wait until September

Financial analysts are abuzz with predictions about a potential rate cut in September. Essentially, the Fed uses economic indicators, such as unemployment and inflation, to judge how the economy is going. Those signals suggest it's time for the Fed to ease up on the economic brakes a little.

The next Fed meeting is due to happen on Sept. 17 and 18. Be aware that banks won't necessarily wait for the Fed to make its move. They don't want to be stuck paying high APYs on long CDs once the economic environment has changed. CD APYs have already fallen slightly, so the sooner you make your move, the better.

Is a CD right for you?

With falling rates on the horizon, if you're going to buy a CD, it certainly makes sense to do it quickly. However, CDs won't make sense for everybody. They are a safe way to earn a fixed return over a set period of time.

They aren't a great place for cash you might need to access quickly -- for example, your emergency fund. Keep that in a high-yield savings account, even if it pays less interest. The cost of an early withdrawal penalty will eat into any interest you may have earned on your CD.

CDs are also not ideal for cash you don't plan to touch for decades. If you have money you're saving, say, for retirement, it will often make more sense to invest it in the stock market. It is riskier than a CD, but the potential earnings are considerably higher.

You'll need a long-term perspective for investing because there will be years when markets perform badly. Nonetheless, historically, the S&P 500 has generated an average compound growth rate of around 10%. The S&P 500 is an index that tracks the 500 largest companies in the U.S. so it's a good indicator of how investments might perform.

Bottom line

It feels a little bit like CDs are in some kind of closing-down sale with a big "Everything must go" sign in the window. And just as with going-out-of-business sales, it's important you don't put money in a CD just because we're on the cusp of change.

However, if you have cash you won't touch in the short or medium term, stop what you are doing and shop around to find the best CD APYs. The CD tides are changing and you don't have much time to benefit from today's high rates.