Last Chance: Here's How Long You Have Until CD Rates Could Drop

Banks and credit unions have been offering impressive rates on certificates of deposit (CDs) for over a year. If you open one now, it's still possible to get an APY of 5% or more, depending on the CD term you want.

Here's the million-dollar question: How long will these rates last? There has been speculation that they'll decrease this year, so if you want a CD, it makes sense to open yours before that happens. While it's impossible to predict CD rates with 100% accuracy, we can make an educated guess.

Lock in your CD rate by mid-September

To get a CD before rates drop, aim to open yours by the middle of September. Sooner is better, though. The highest CD rates probably aren't going to increase from where they are now, so you don't lose anything by opening one now. But you could miss out if you wait too long.

The basis for this estimate is the Federal Open Market Committee (FOMC), a committee within the Federal Reserve. The FOMC has eight regularly scheduled meetings each year to make economic decisions, including whether to raise or lower interest rates. There are four of these meetings remaining in 2024, on the following dates:

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 10, 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 10, 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.

• July 30-31
• Sept. 17-18
• Nov. 6-7
• Dec. 17-18

In a recent Reuter poll of 100 economists, none of them expected the FOMC to cut rates at the July meeting. But 82 of them expect it to happen in September, and 73 predict there will be two interest rate cuts this year.

Although a cut isn't guaranteed, it's looking more and more likely. When the FOMC cuts interest rates, financial institutions normally reduce the rates they pay on their banking products, including CDs.

Should you open a CD?

Just because rates are expected to drop in September, doesn't necessarily mean you should rush out to open a CD. It depends on whether a CD is a good fit for your current savings goals.

The biggest advantage of CDs is that they allow you to lock in an interest rate for the entire term. If you get a 3-year CD with a 4.25% APY, you're guaranteed that 4.25% for the full three years. The same wouldn't be true if you had your money in a savings account, where the APY can go up and down at any time.

The disadvantage is that you'll pay a stiff penalty for early withdrawals. Penalty amounts are normally three to six months' worth of interest, but it can be even more for long-term CDs. So you should only use a CD for money you're sure you won't need.

Here's a quick summary of when to get a CD and when to use a different type of account:

• If you have savings you won't need for a set period, a CD is a good choice. There are plenty of CD options with terms from three months to five years, so if you can commit your money for that long, you could get a competitive interest rate on it.
• A CD doesn't work well for money you might need at any time. For example, you wouldn't want to use a CD for your emergency fund. High-yield savings accounts are better for this.
• CDs also aren't well-suited for long-term financial goals, such as saving for retirement. For anything more than five or 10 years away, it makes more sense to invest your money, since you can potentially get a much higher return this way.

While CDs aren't always the right type of account, there are plenty of situations where they can be useful. If they're what you're looking for right now, don't wait too long to get yours, as the current rates probably won't last.