The Single Best CD Strategy for Making Money With CDs in August

Certificates of deposit (CDs) lock your money up for a specified term in exchange for a fixed interest rate. They can be an excellent way to boost your savings, especially with many of the best CD rates still clocking in at around 5.00%.

What's more, if banks and credit unions cut CD rates later this year, as many experts expect, locking into a CD now could mean enjoying high interest at a later date when CD rates are much lower.

While plenty of banks are still offering great rates on CDs, putting some forethought into your CD strategy could help you maximize returns. With that in mind, one of the best CD strategies for the remainder of summer is fairly clear -- building a CD ladder.

Why CD ladders are the best strategy for August

A CD ladder is a strategy in which you spread out the maturity dates on different CDs to both take advantage of different annual percentage yields (APYs) and gradually unlock access to portions of your savings.

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 December 28, 2024. 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 December 28, 2024. 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 4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 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.	4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 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.

For instance, if you had $15,000 to invest in today's best CDs, you could divide your money like this:

• $3,000 in a 3-month CD
• $3,000 in a 6-month CD
• $3,000 in an 12-month CD
• $3,000 in a 18-year CD
• $3,000 in a 2-year CD

With laddered CDs, you're never more than six months away from accessing another portion of your savings.

Since most CDs have early withdrawal penalties, splitting your money among multiple termed CDs like this could prevent you from having to liquidate a single CD account if you ran into an emergency and needed cash fast.

It could also help you take full advantage of today's best CD rates. Short-term CDs (CDs with terms of 12 months or less) have higher interest rates right now, while long-term CDs (CDs with terms greater than 12 months) can lock in decent rates for longer periods.

This is important in August, because, by the looks of it, CD rates may not stay this high for long. Savings rates hinge on the Federal Reserve, which has previously been aggressively in favor of hiking its federal funds rate to extinguish inflation. Now that inflation is starting to cool off, it's becoming increasingly more likely that we'll see at least one rate cut before the end of 2024 -- with several more coming in 2025.

Locking into long-term CDs, then, would be a prudent strategy for extending high CD rates into the future. Short-term CDs would also freeze rates, but would free up your money at regular intervals, thereby giving you access to cash.

Consider a brokerage account to save for retirement

CDs aren't the only good investment in August. In fact, if you have a long time horizon, they might not even be the best investment for you.

If you're saving for a long-term goal -- like retirement -- you might be better off opening a brokerage account and investing in securities with potentially greater returns, like stocks or ETFs. CDs may have fixed interest rates, but over long periods, the stock market can yield greater returns.

You could also combine stocks and CDs to get the best of both. You'd get guaranteed returns on your CD accounts, plus a chance to grow your money at a faster pace. In this case, leave some extra money in a high-yield savings account, as you don't want to be stuck choosing between selling your investments or breaking CD contracts if you end up needing cash.