Could CD Rates Rise Again in 2024? (2024)

It's a really, really good time to open a certificate of deposit (CD) if you happen to have the money. The Federal Reserve spent much of 2022 and 2023 raising interest rates in an effort to slow the pace of inflation. And the Fed's tactics worked.

These days, living costs are still inflated, but they've been rising at a far more moderate pace than what we saw in 2022. And the Fed is hopeful that it will soon be in a position to cut interest rates, thereby providing relief for borrowers.

But while those interest rate hikes made it more expensive to sign a loan or carry a credit card balance, they worked wonders for savers. Thanks to those hikes, CD rates are sitting at the highest levels we've seen in years, with many CDs paying somewhere in the vicinity of 5%.

Of course, when you open a CD, you run the risk of potentially missing out on a higher rate a few months down the line. So you may be wondering if it pays to open a CD now versus wait a few months and see what happens.

But based on economic conditions, it's unlikely that the Fed will raise interest rates anytime soon. So the likelihood of CD rates rising this year from where they are today is pretty slim, which means that the time to open your next CD is now.

It pays to act sooner rather than later

The Federal Reserve has long targeted 2% inflation as its annual benchmark. The central bank feels that this particular level of inflation is conducive to long-term economic growth and stability.

The Fed is hoping that inflation will inch closer to the 2% mark as 2024 moves along. As of March, annual inflation was being measured at 3.5%, per that month's Consumer Price Index. Once that happens, the Fed may be in a position to start cutting interest rates.

But even if that doesn't happen very soon, it's unlikely that the Fed will want to raise interest rates again. In fact, the Fed opted to leave interest rates unchanged for its past six consecutive meetings. So barring a really jarring change in the inflation rate, interest rates are likely to only go down from where they are today.

That's why waiting on opening a CD doesn't really make sense. Of course, it's one thing to wait because you don't have the money or aren't sure of your financial plans just yet. But don't wait to open a CD because you think rates are going to get better. That's not very likely. And if you wait for that reason, you could end up stuck with a lower rate.

Consider your CD term carefully

Because the Fed is expected to lower interest rates at some point in 2024, banks are being more cautious about longer-term CD rates than shorter-term rates. So while you might find a 12-month CD with a 5% APY, a 60-month CD might only pay 3.8% or 4%.

You may be inclined to go with a 12-month CD in this scenario, since that's a higher rate. But remember, today's CD rates are not the norm. In a year or so from now, you may not be able to find a CD rate that's close to today's rates, based on how inflation shakes out. So don't automatically assume that a longer-term CD is a poor choice because its interest rate isn't as high as a shorter-term CD.

Case in point: Let's say you put $5,000 into a 12-month CD at 5%. That will earn $250 in interest. But what if by the time that CD comes due, 12-month CD rates are down to just 3.5%? Over the next year, you're only earning $175 on a 12-month CD (assuming you only put $5,000 into that CD, as opposed to $5,000 plus the $250 you earned in interest). And then if 12-month CDs pay just 2.5% the following year, your interest earnings there are $125. So that's $550 worth of interest over three years.

Meanwhile, let's say you put $5,000 into a 60-month CD at 4%. There, you'll earn $200 in interest per year over the next three years, bringing your total to $600. Again, this is a simplified example that does not account for earned interest on your interest, but the point is to illustrate that if you can commit to a longer-term CD, it may be a good idea to do so.

All told, CD rates are unlikely to climb from where they are today. So if you have the money on hand to open one, don't wait.

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Could CD Rates Rise Again in 2024? (2024)

FAQs

Could CD Rates Rise Again in 2024? ›

Projections suggest that we may see no rate increases in 2024, and that the Fed might start dropping its rate later this year, according to the CME FedWatch Tool on April 30. If the Fed rate drops, CD rates will likely follow suit, though it's up to each bank and credit union if and when that occurs.

How high will CD rates go in 2024? ›

CD Rates Forecast 2024

The CME FedWatch Tool, which measures market expectations for federal funds rate changes, shows that most experts expect rates to sit between 4.50% and 5.25% by December 2024.

Can you get 6% on a CD? ›

You can find 6% CD rates at a few financial institutions, but chances are those rates are only available on CDs with maturities of 12 months or less. Financial institutions offer high rates to compete for business, but they don't want to pay customers ultra-high rates over many years.

What will interest rates be in 2024? ›

Interest rates have held steady since July 2023.

At its March 2024 gathering the Fed decided to keep the federal funds target rate at 5.25% to 5.5%, where it has remained since July 2023.

Will CD rates go up in 2025? ›

CD rates should remain fairly attractive in 2025

Just as the Fed raised interest rates when inflation soared, the central bank is expected to start cutting interest rates now that inflation has cooled.

Should I lock in a CD now or wait? ›

Unlike traditional or high-yield savings accounts, which have variable APYs, most CDs lock your money into a fixed interest rate the day you open the account. That's why if you suspect that interest rates will soon drop, it can be a good idea to put money in a CD to preserve the high APY you would earn.

What is the best CD rate for $100,000? ›

Compare the Highest Jumbo CD Rates
InstitutionRate (APY)Minimum Deposit
GTE Financial5.38%$100,000
Credit One Bank5.35%$100,000
Third Federal Savings & Loan5.25%$100,000
CD Bank5.25%$100,000
13 more rows

Can you put $100000 in a CD? ›

CDs have a typical minimum balance or opening requirement that's often around $1,000, but it can range from $0 to $10,000. There are jumbo CDs with minimums traditionally around $100,000, though these CDs don't necessarily have the best rates in the industry.

Can you get 5% CD? ›

While they've stabilized in recent months, it's not hard to find CDs offering 5.00% APY if you know where to look. You can still get 5% CD rates at online banks, credit unions and even some traditional banks offering promotional CDs. Account details and annual percentage yields (APYs) are accurate as of April 11, 2024.

Should you do a 5-year CD? ›

A five-year CD allows you to grow your savings at a guaranteed rate, but potential for gains aren't as high as riskier investments. With interest rates at a relative high, now may be a good time to consider putting some of your cash into a five-year CD. Then again, a five-year CD might not be right for every investor.

Will the Fed cut rates in May 2024? ›

The Federal Reserve announced at its May 2024 Federal Open Market Committee (FOMC) meeting that it would maintain the overnight federal funds rate at the current range of 5.25% to 5.5%.

Will interest rates go down in 2024 for cars? ›

Auto loan rates for new and used vehicle purchases fell in the first quarter of 2024 to 6.73% and 11.91%, respectively, down slightly from the 15-year highs we saw at the end of 2023, according to Experian.

What will the mortgage rate be in May 2024? ›

Today's mortgage interest rates
Loan typeToday's mortgage ratesChange
7-6 ARM7.43%0.03
5-6 ARM7.22%0.07
3-6 ARM6.90%0.11
Data current as of: 05/30/2024
5 more rows
3 days ago

What are CD rates expected to do in 2024? ›

CD account interest rates will drop

"CD rates will most likely drop and drop substantially in 2024," says Robert Johnson, professor of finance at Heider College of Business at Creighton University. "The biggest reason is the likelihood of Federal Reserve rate cuts later this year."

Will CD rates ever be high again? ›

CD rates will rise or fall depending on how the Fed interprets its ability to manage interest rates without damaging the economy. With inflation still stubbornly high, expect CD rates to remain elevated this year, potentially dipping later on as the CPI nears the target rate.

What will CD rates be in 2027? ›

The Top CDs for Locking Your Rate Until 2025 to 2027
Best 1-Year CDs - Mature Early 2025APYMinimum
Best 3-Year CDs - Mature 2027RateMinimum
Lafayette Federal Credit Union5.10%$ 500
EFCU Financial5.00%$ 500
DollarSavingsDirect5.00%$ 1,000
20 more rows
Feb 28, 2024

Where can I get 7% interest on my money? ›

7% Interest Savings Accounts: What You Need To Know
  • As of May 2024, no banks are offering 7% interest rates on savings accounts.
  • Two credit unions have high-interest checking accounts: Landmark Credit Union Premium Checking with 7.50% APY and OnPath Credit Union High Yield Checking with 7.00% APY.

What is the interest rate forecast for 2025? ›

U.S. News: Expects the 30-year fixed mortgage rate to be in the high-5% range by the end of 2025. Mortgage Bankers Association (MBA): Predicts a rate of 5.9% in Q1 2025. CBS News: Projects rates could be 6% or below by Q1 2025. Wells Fargo: Forecasts a rate of 5.8% by the end of 2025.

Is it a good time to buy CDs? ›

CD rates are at a 3-year high—but waiting longer to buy could be a gamble. Interest rates on certificates of deposits (CDs) have been increasing substantially since 2022—in lock-step with the Fed's rate hikes. The national deposit rate for 5-year CDs is 1.39%, up from less than 0.50% in June 2022.

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