Here's How the Fed's Rate Cut Has Impacted CD Ladders

The Federal Reserve recently cut its benchmark interest rate for the first time since early 2020, and in many cases, banks have lowered their interest rates on high-yield savings accounts, money market accounts, and CDs. However, it's important to note that while CD rates tend to move in the same direction as the Fed's interest rate decisions, they aren't directly linked, and some banks have clearly chosen not to lower their CD rates just yet.

Although the yield you can earn from a CD ladder is generally lower than it was before the Fed started cutting rates, it is still rather high on a historical basis. In this article, we'll compare some of the top CD interest rates on our radar from before the Fed's rate cut with the currently available rates.

If you're looking to start a CD ladder, there's no time like the present, as the Fed is set to cut rates several times in the next few years. Check out the best CD rates right now.

CD ladders: Then and now

Shortly before the Fed announced its interest rate cut, I wrote an article about how much one could make with a hypothetical CD ladder by simply using the CD rates available from some of our favorite online banks at the time.

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 1, 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 1, 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.

Here's how the top CD rates before the rate cut compare to what is currently available:

To be sure, there are plenty of banks you can use to construct a CD ladder, and if you're willing to hunt for the best possible rate, you might be able to do significantly better than the rates in the chart. But the point is that after the Fed cut its benchmark rate, CD interest rates certainly moved downward. However, an overall yield of nearly 4% from a newly-constructed CD ladder is still rather high when compared with recent historical CD yields.

Is it still a good time to start a CD ladder?

The short answer is yes. You can still set yourself up with an excellent income stream with a CD ladder, especially if you have enough money to take advantage of CDs with high minimum deposit requirements.

To be sure, the charts above only show a sampling of CD rates available from some of the most well-known online banks. Some have minimum deposit requirements, and some may have other drawbacks, such as limited ways to deposit and withdraw money, poor customer service ratings, and more. In many cases, the best fit for you might not be the absolute highest-yielding CDs.

However, the bottom line is that a CD ladder is a strategy that is designed to produce a strong level of income in any climate by rolling all your money into longer-maturity CDs over time. And there are some excellent opportunities to do so, while still taking advantage of elevated short-term interest rates.