CD rates have declined with Fed rate cuts, but you can still lock in competitive returns

From Yahoo Finance: 2025-06-24 06:00:00

The Federal Reserve has lowered the federal funds rate three times in 2024, causing deposit account rates to decline. Despite this, you can still lock in a competitive return on a CD with rates above 4%. The highest CD rate as of June 24, 2025, is 5.5% APY from Gainbridge® on a 5-year CD.

CD rates have fluctuated over the years, with the early 2000s seeing higher rates, followed by a decline after the 2008 financial crisis. The trend of falling rates continued into the 2010s, with a slight improvement after the Fed started increasing rates between 2015 and 2018.

After the COVID-19 pandemic led to emergency rate cuts, CD rates fell to record lows. However, the situation changed as inflation increased, prompting the Fed to hike rates. In September 2024, the Fed began cutting rates as inflation came under control, leading to a decrease in CD rates.

Traditionally, longer-term CDs offer higher rates, but the highest average CD rate is now for a 12-month term. This change may indicate an uncertain economic environment or expectations of declining future interest rates. When opening a CD, consider factors like your goals, type of financial institution, account terms, and inflation.

When choosing a CD, consider factors like the type of financial institution offering the CD, the account terms, and potential withdrawal penalties. Ensure the institution is FDIC-insured and consider how inflation may impact your returns over the CD’s term.



Read more at Yahoo Finance: Best CD rates today, June 24, 2025 (Lock in up to 5.5% APY)