Here's why now is the perfect time to put your savings in a CD (2024)

The Federal Reserve looks like it's done raising rates. The central bank announced during its last meeting of 2023 that it would hold its benchmark rate steady, even indicating it would reverse course in the near future, hinting at rate cuts in 2024.

"This suggests that interest rates have peaked at their current levels," Ian Eberle, a financial advisor at Fort Pitt Capital Group, tells CNBC Select. "So long as inflation continues to cool, the Fed's next move will likely be to begin lowering rates sometime next year."

What would this mean for you? Well, if the Fed were to lower rates, this could in turn make borrowing money less expensive for everyday consumers, but also lower how much they earn on their savings.

With savings accounts offering record-high returns today over 5%, now's the time to take advantage before those rates go down. And with a CD specifically, savers can lock in today's high rate despite any future cuts from the Fed.

Compare offers to find the best savings account

How CDs work

Unlike traditional orhigh-yield savings accounts, which havevariable 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.

CDs have specified term lengths, ranging from three months to five years. You typically can't access your money (without paying a penalty) until the CD term ends, also known as the maturity date. At maturity, you can get your money back, in addition to the interest you've earned.

Here are the top CDs to put your cash in now

Thetop CDson the market right now offer APYs above 5% for 12-month terms. For context, in 2021, when rates were around their lowest, the national average 12-month CD had an APY of just 0.15%. For a $5,000 deposit, this is the difference between earning $250 in interest over a year versus earning only $7.50 over that same time frame.

"We have not seen CD yields this strong since 2007, and, if the Fed begins cutting rates next year, we will not see a rate environment this attractive for the foreseeable future," Eberle adds.

Looking for a CD with a high yield? Both Bread Savings™ (formerly Comenity Direct) and Marcus by Goldman Sachs® are currently offering 5.25% APY on their 12-month CDs.

Bread Savings™ (formerly Comenity Direct) CDs

Bread Savings™ (formerly Comenity Direct) is a product of Comenity Capital Bank, a Member FDIC.

  • Annual Percentage Yield (APY)

    From 4.15% to 5.35% APY

  • Terms

    From 1 year to 5 years

  • Minimum balance

    $1,500 minimum deposit

  • Monthly fee

    None

  • Early withdrawal penalty fee

    Early withdrawal penalty applies. For terms shorter than 1 year, the penalty is 90 days simple interest. For terms 12 months to 3 years, the penalty is 180 days simple interest. For terms 4 years and up, the penalty is 365 days simple interest.

Terms apply.

Marcus by Goldman Sachs® CDs

  • Annual Percentage Yield (APY)

    From 4.00% to 5.05% APY

  • Terms

    From 6 months to 6 years

  • Minimum deposit

    $500

  • Monthly fee

    None

  • Early withdrawal penalty fee

    If you withdraw the balance entire principal amount from your CD account prior to maturity, you'll be charged anearly withdrawal penaltybased on the term of your CD and the principal (except in the case of a No-Penalty CD). Here's how early withdrawal penalties are calculated:

  • Early Withdrawal Penalty = Interest Rate ÷ 365 (or 366) × Penalty Days × Original Principal Balance

Terms apply.

And, if a year seems like too much time to lock up some savings, Synchrony Bank's 9-month CD currently offers 5.30% APY.

Synchrony Bank CDs

Synchrony Bank is a Member FDIC.

  • Annual Percentage Yield (APY)

    From 0.25% to 5.15% APY

  • Terms

    From 3 months to 60 months

  • Minimum balance

    None

  • Monthly fee

    None

  • Early withdrawal penalty fee

    There may be an early withdrawal penalty if you withdraw funds from the principal prior to the CD maturity date (the last day of the CD term). The penalty is applied to the amount of principal withdrawn (there's no penalty on interest). For the No-Penalty CD, early withdrawals are not permitted within the first 6 days after account funding. Following that, only withdrawal of the entire balance is allowed.

Terms apply.

APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For CD accounts, a penalty may be imposed for early withdrawals. After maturity, if your CD rolls over, you will earn the offered rate of interest for your CD type in effect at that time.

When to opt for a high-yield savings account instead

Though FDIC-insured CDs are one of the safest places to put your money, being unable to touch your funds before the CD term ends might make some people uncomfortable if they're strapped for cash.

In this case, a high-yield savings account could be the better place to put your money. You'll have access to your funds whenever you need them penalty-free (though some banks limit withdrawals or transfers to six each month). High-yield savings accounts are also offering APYs around 5%, some even 6% with restrictions, but these rates are variable and can go up or down at any time. So, if the Fed does end up cutting rates in the new year, your high-yield savings account rate will likely also go down.

Some of the top high-yield savings accounts on the market right now include LendingClub® Bank High-Yield Savings Account and UFB Secure Savings Account. Both of these accounts offer above-average APYs, zero monthly fees and complimentary ATM cards for easy access to your cash.

LendingClub High-Yield Savings

LendingClub Bank, N.A., Member FDIC

  • Annual Percentage Yield (APY)

    5.00%

  • Minimum balance

    No minimum balance requirement after $100.00 to open the account

  • Monthly fee

    None

  • Maximum transactions

    None

  • Excessive transactions fee

    None

  • Overdraft fees

    N/A

  • Offer checking account?

    Yes

  • Offer ATM card?

    Yes

Terms apply.

UFB Secure Savings

UFB Secure Savings is offered by Axos Bank ® , a Member FDIC.

  • Annual Percentage Yield (APY)

    Up to 5.25%APY on any savings balance; add a UFB Freedom Checking and meet checking account qualifications to get an additional up to0.20%APY on savings

  • Minimum balance

    $0, no minimum deposit or balance needed for savings

  • Fees

    No monthly maintenance or service fees

  • Overdraft fee

    Overdraft fees may be charged, according to the terms; overdraft protection available

  • ATM access

    Free ATM card with unlimited withdrawals

  • Maximum transactions

    6 per month; terms apply

  • Terms apply.

Read our UFB Secure Savings review.

Bottom line

While we don't yet officially know when, and by how much, interest rates could drop in 2024, it's safe to say we've reached peak savings rates today and now is the time to lock one in with a CD.

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AtCNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every savings article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products.While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

Here's why now is the perfect time to put your savings in a CD (2024)

FAQs

Here's why now is the perfect time to put your savings in a CD? ›

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.

Is it worth putting money in a CD right now? ›

If you don't need access to your money right away, a CD might be a good savings tool for you in 2024 while average interest rates remain high. CD interest rates are high in 2024 — higher nationally, on average, than they've been in more than a decade, according to Forbes Advisor.

Should I lock in a CD now or wait? ›

Waiting to open a CD could mean missing out on some stellar rates. Now, you can lock in high rates on both short-term and long-term CDs and, you can score some serious interest just by opting to deposit a larger lump sum into your CD.

What is the biggest negative of putting your money in a CD? ›

Banks and credit unions often charge an early withdrawal penalty for taking funds from a CD ahead of its maturity date. This penalty can be a flat fee or a percentage of the interest earned. In some cases, it could even be all the interest earned, negating your efforts to use a CD for savings.

How high will CD rates go in 2024? ›

Key takeaways. The national average rate for one-year CD rates will be at 1.15 percent APY by the end of 2024, McBride forecasts, while predicting top-yielding one-year CDs to pay a significantly higher rate of 4.25 percent APY at that time.

Why is CD not a good financial investment? ›

CD rates tend to lag behind rising inflation and drop more quickly than inflation on the way down. Because of that likelihood, investing in CDs carries the danger that your money will lose its purchasing power over time as your interest gains are overtaken by inflation.

Why shouldn't you invest all of your savings in a CD? ›

CD drawbacks

There are a few key points to keep in mind before opening one. Lower returns: If you're looking for a way to build wealth, CDs may offer only limited benefits. You could get better returns for your money by putting it into the market and buying stocks, mutual funds, or other investments instead.

Is there a risk of losing money in a CD? ›

Standard CDs are insured by the Federal Deposit Insurance Corp. (FDIC) for up to $250,000, so they cannot lose money. However, some CDs that are not FDIC-insured may carry greater risk, and there may be risks that come from rising inflation or interest rates.

How much will a $500 CD make in 5 years? ›

This CD will earn $108.33 on $500 over five years, which means your deposit will grow by 21.7%.

What is a downside of opening a CD? ›

Disadvantages of investing in CDs

As noted previously, since CDs have a set interest rate and maturity date, you typically can't withdraw the money from the CD without paying a penalty. The penalty ranges from a minimum of multiple months' worth of interest to more, depending on the bank and term of the CD.

How much does a $10,000 CD make in a year? ›

Earnings on a $10,000 CD Opened at Today's Top Rates
Top Nationwide Rate (APY)Balance at Maturity
6 months5.76%$ 10,288
1 year6.18%$ 10,618
18 months5.80%$ 10,887
2 year5.60%$ 11,151
3 more rows
Nov 9, 2023

Do banks charge a fee for CDs? ›

CDs are safe, low-risk accounts offering competitive interest rates that remain fixed for the CD's term. Many banks and credit unions charge fees for opening and maintaining CD accounts, which can cut into your earnings. These include early withdrawal fees, monthly maintenance fees and broker fees.

Is it better to have one CD or multiple? ›

Use Multiple CDs to Manage Interest Rates

Multiple CDs can help you capitalize on interest rate changes if you believe CD rates will change over time. You might put some cash into a higher-rate 6-month CD and the remainder into a 24-month bump-up CD that allows you to take advantage of CD rate increases over time.

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

Compare the Best Jumbo CD Rates
InstitutionRate (APY)Minimum Deposit
Quorum Federal Credit Union5.35%$100,000
Credit One Bank5.35%$100,000
Third Federal Savings & Loan5.25%$100,000
CD Bank5.25%$100,000
15 more rows

Where can I get 7% interest? ›

7% Interest Savings Accounts: What You Need To Know. Why Trust Us? As of April 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 a Jumbo CD? ›

A jumbo CD is a certificate of deposit that traditionally requires a minimum deposit of $100,000. Some banks and credit unions offer jumbo CDs with lower minimums, such as $25,000. If that sum is far higher than the right amount for you to put into CDs, you can skip these CDs.

Is a 12 month CD worth it? ›

A one-year CD typically offers a higher interest rate than shorter-term CDs, such as three-month CDs and six-month CDs. Offers higher interest rates than traditional savings accounts.

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