From Time:

Payouts from certificates of deposit are anticipated to decrease later this year in light of expected interest rate cuts from the Federal Reserve. Banks such as Ally, Barclays, Discover, Marcus, Sallie Mae, and Synchrony have already begun reducing their 12-month CD rates, with some dropping from 5.5% to 5.25%.

Ally’s CFO Russ Hutchinson announced that the bank has already cut CD rates twice in January and predicts more cuts by 2024. This downturn for CD rates is tied closely to trends with the Federal Fund Rate and is expected to continue as the year progresses, signaling a less welcoming environment for savers than in the past.

Investors, advisors, and economists all agree that CD rates are likely to drop as rate cuts by the Federal Reserve become imminent in 2024. Therefore, while their attractive APYs are a major draw for savers, CDs are not without their limitations in terms of accessibility and interest penalties associated with early withdrawal.

Though locking in higher CD rates is now advisable, CDs may not be the best place to keep emergency savings funds, which should remain easily accessible. Financial advisor Lawrence Sprung suggests a strategy called CD laddering to maintain higher rates while still having liquidity for the future.



Read more: CD Rates Are Falling. Is Now a Good Time to Buy CDs?