Banks Offer 4.50% APY CDs as Fed Holds Rates Amid Rate Cut Expectations

Banks offering certificate of deposit (CD) accounts with up to 4.50% annual percentage yield (APY) as of August 7, 2025, are attracting investors seeking stable returns amid a shifting interest rate landscape [1]. The highest rate is currently available through Northern Bank Direct, which offers a 4.50% APY on a six-month CD. This is one of the strongest returns seen in recent years, and investors are encouraged to act quickly, as markets anticipate potential interest rate cuts later in 2025 [1].

The Federal Reserve’s monetary policy remains a key driver of CD rates. In 2024, the Fed cut rates three times, bringing the fed funds rate to a range of 4.25%–4.50% by year-end. This marked a shift from the aggressive rate hikes of 2022 and 2023, when rates were raised 11 times to cool inflation [1]. The most recent Fed meeting in July 2025 left rates unchanged, and the next scheduled meeting is set for September 16–17. The stability of rates so far in 2025 suggests that current high CD yields may remain for the near term, though uncertainty remains [1].

Historically, CD rates have been closely tied to the Fed’s policy decisions. In the early 2020s, CD rates surged to over 5% as the economy adjusted to post-pandemic conditions. However, by 2025, rates have settled into a narrower range of 3%–4% [1]. Despite this decline from previous peaks, the current rates still represent a strong return for savers, particularly given the broader economic context of inflation cooling and economic stimulus measures.

Investors are advised to consider key factors when choosing a CD, including term length, minimum deposit requirements, early withdrawal penalties, and deposit insurance. Longer-term CDs tend to offer higher APYs, but they also require investors to lock in funds for extended periods. A CD ladder strategy, which involves staggering maturities across different terms, can help balance liquidity and return [1].

Online banks and regional institutions tend to offer more competitive CD rates than national banks like Chase, PNC, and U.S. Bank. These larger banks generate revenue through loans and credit cards, reducing their incentive to compete on deposit rates [1]. As a result, investors seeking the best returns may benefit from exploring online or regional banks that specialize in offering high yields on CDs.

The market for CDs remains dynamic, with rates across different terms continuing to reflect the Fed’s broader policy stance. While short-term rates have stabilized, the possibility of future rate cuts means that locking in current high rates could provide a hedge against lower yields in the months ahead. Savers who act now may be able to secure competitive returns for years, depending on the term of the CD they choose [1].

Source:

[1] Fortune – [https://fortune.com/article/cd-rates-8-7-25/](https://fortune.com/article/cd-rates-8-7-25/)