In its last meeting of the year, the Federal Reserve voted to drop interest rates to the 3.50% to 3.75% range. That's welcome news for those hoping to refinance a mortgage, but disappointing for consumers looking to save.
As we head into the new year, there are still some CDs offering yields above 4%. That's higher than CD rates have been in the last decade and higher than inflation, which currently sits at 3.0% as of September. However, some economists expect the Fed to continue cutting rates next year.
Your best bet is to lock in current higher rates for as long as you can with a 5-year CD. Right now, the best 5-year CD rates are above 4%. While shorter-term CDs are a little higher, the benefit of securing higher yields for the next five years is worth taking the slightly lower rate.
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If rates do keep dropping through the rest of this year, you might not find offers this good again when your short-term CD matures in a few months or a year from now.
So, if you can afford to lock up your cash for a few years, a 5-year CD is one of the best places to store your cash.
5-year CDs we recommend after the Fed meeting
With 5-year CD rates still above 4%, this is a great time to lock in inflation-beating yields for the long term.
Since rates are fixed for the entire term, these longer term CDs allow you to secure today's above-average rates before the decreases expected later this year.
Here are some of the top 5-year CD accounts you can open today:
Account | APY | Min. Deposit |
|---|---|---|
4.00% | $500 | |
4.00% | $500 | |
3.90% | $500 | |
3.80% | $500 | |
3.80% | $5,000 |
Short-term CDs are still a good choice if you need flexibility
Locking up your cash for five years isn't a realistic option for everyone. If you know you'll need to tap into those savings sooner, there are plenty of attractive shorter-term CDs to choose from.
The best 1-year CD rates are hovering around 4%. You can also find 3-month or 6-month CDs offering similar yields. So if you need a little more flexibility with your funds, it's worth considering a shorter-term CD.
Use the tool below to compare the best CD rates by term and APY, powered by Bankrate:
When to consider a high-yield savings account
Even with the pause on rate cuts over, now is still a good time to open a high-yield savings account. You won't be able to lock in rates for a fixed term like you can with a CD, but there's also no penalty for dipping into those savings as needed.
With some of the best high-yield savings accounts offering rates as high as 4.35% APY, this is the best place to stash your emergency fund, vacation savings, or other cash that you need regular access to.
Use the Bankrate tool below to find the best fit for your savings:
How to make the most of today's CD rates
After the Federal Reserve's rate cut, locking in a 5-year CD remains one of the best ways to maximize your savings. With yields still above 4%, these accounts continue to beat inflation and can protect your money from further rate declines expected later this year.
If you need more flexibility, shorter-term CDs or high-yield savings accounts are still strong choices for keeping your cash accessible while earning a competitive return.
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