Prediction: Here's What the Highest CD Rates Will Be in 2025

For most of 2024, certificates of deposit (CDs) had been offering their highest rates in decades. If you shopped around, you could get a CD with a 5.50% APY or higher.

On Sept. 18, the Federal Reserve cut the federal funds rate by half a percentage point. Financial institutions use this to set their savings account and CD rates. After the rate cut, the best CDs are offering about 4.75% to 5.00%. It's still a good return, but not as much as before.

If you want to earn that much, you should probably open a CD soon. In all likelihood, these rates won't last into 2025.

CD rates will probably decrease again this year

The Fed is meeting again on Nov. 6-7, and another rate cut is expected. CME Group's FedWatch tool tracks the probability of this happening, based on interest rate traders. It currently puts the odds of a quarter-percentage rate cut at 86.70%.

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 4, 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 4, 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.

Every three months, the Fed also releases the dot plot -- a chart with each official's interest rate projections. Based on September's dot plot, rates will continue to drop in 2025.

The median projections had interest rates coming down by 1 percentage point in 2024, 1 percentage point in 2025, and half a percentage point in 2026. Since the Fed has already cut rates by half a point this year, that would mean there's still another half point to go.

There will likely be more rate cuts by the end of 2024. Nothing's guaranteed, but it seems likely based on the Fed's projections and the Fedwatch tool. And it wouldn't be a surprise to see them come down more during 2025. Want to lock in a high rate before that happens? Check our list of the best CDs and open one today.

Projected CD rates in 2025 and beyond

CD rates depend on the bank and the length of the CD. Some banks offer high-yield CDs, with rates significantly above the national average. And even though longer CDs have traditionally paid more, that hasn't been the case in recent years. Banks are generally offering their highest rates on short-term CDs lasting one year or less.

The table below has projected high-yield CD rates at the start of 2025 and 2026. These are only predictions based on potential rate cuts by the Fed. Actual CD rates could end up being much different based on what actions the Fed takes at its meetings.

What to do with your savings

Should you rush out to put your savings in a CD? If you're sure you want a CD, then I'd recommend getting one soon. But this type of bank account isn't right for everyone. Here are the signs a CD is a good fit for your needs:

• You have savings you won't need for a set period.
• You're fine with not being able to withdraw your money until the maturity date.
• You have a fully funded emergency savings with three to six months of living expenses.

If you'd rather have more flexibility, I'd recommend a high-yield savings account instead. These don't have early withdrawal penalties like CDs, so you can access your money at any time. This is what I personally use for my own savings, as I'm not a fan of CDs.

To earn the most back on your money, consider the Western Alliance Bank High-Yield Savings Premier account. It has one of the highest rates currently available, it's FDIC-insured, and it has no monthly maintenance fees. Click here to learn more and open your account.

High-yield savings accounts and CDs have their pros and cons. The right choice depends on which one is a better fit for you. Whichever option you choose, pick an account with a competitive APY so you can maximize your interest earnings.