Today's CD Rates Are the Best They're Going to Get. But I'm Not Rushing to Open One

A couple of months ago, it wasn't hard to find certificates of deposit (CDs) paying a 5.00% APY. But that changed virtually overnight when the Federal Reserve made an aggressive 0.50% rate cut on Sept. 18. Now, you're lucky if you can find rates over 4.50%, and even those are only available on short-term CDs.

With more rate cuts expected as soon as Nov. 7, today's CD rates are the best we're going to get. Some see this as a sign that they need to lock in these rates while they're still available, but I've got different plans for my money.

APY isn't the only factor to keep in mind

If you hope to guarantee a high interest rate on your bank account funds for the foreseeable future, opening a CD is your best option. Savings accounts don't lock in your interest rate. That's good news when interest rates are rising, but it's bad news when rates are falling like they are now.

You'll probably see your savings account interest rates drop pretty frequently over the next year or so. It's impossible to say where they'll end up, but it's a safe bet that you'll earn a lot less in interest on a high-yield savings account this year than you could have last year.

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.

But savings accounts offer something that CDs don't: easy access to your funds. You're free to withdraw cash whenever you need to, though some banks limit you to six free withdrawals per statement cycle.

Still, that's better than CDs. If you need to access your funds before the CD term is up, you'll have to withdraw all your funds at once, and you'll likely pay a penalty equal to several months of interest payments for taking your money out before the maturity date.

That's why CDs aren't a great fit for your emergency fund or money you plan to spend before the CD term ends. And it's also why I choose to keep my money in a Discover® Online Savings account. Check it out if you want to earn nearly nine times the national average savings account rate.

I don't keep my long-term savings in a CD either. I have brokerage and retirement accounts for that. Though there's a risk associated with investing my money, the potential returns are much greater than the 4.00% I'd be lucky to earn on CDs over the next few years.

Choosing what's right for you

That said, a CD could be the right choice for some people. If you have extra cash outside of your emergency fund and short-term savings that you're not comfortable investing, a CD could be a solid option.

To choose the right one, you must first ask yourself how much you're comfortable locking up in a CD. Some banks require minimum deposits as high as $2,500, though these are rare. Rule out any banks that require more money than you have to put away.

Then, think about how long you're willing to lock your money up. If you only plan to open a single CD, consider going with a long-term option right now. If you opt for a short-term CD, you'll get access to your cash again sooner, but when you go to renew, you'll likely have to settle for a much lower rate. If you're not comfortable with a long-term option, consider a medium-term CD -- between one and three years.

No matter which CD you choose, you need to act quickly if you want to lock in your rate before they fall even further. Compare some of the best CD rates out there today, then choose the one you like and apply for the account online.