Investors race to lock in record 4.45% CD yields before rates likely fall

On August 29, 2025, investors seeking stable returns on their savings can still find attractive yields in certificates of deposit (CDs), with the highest rate reaching 4.45% annual percentage yield (APY). This top rate is offered by ETRADE on its six-month CD, notable for having no minimum deposit requirement. Other financial institutions, such as Bread Savings and My eBanc, also provide 4.45% APY on six-month and 12-month jumbo CDs, respectively. These rates represent a continuation of the elevated yields seen in early 2025, as the Federal Reserve has paused further interest rate changes for now.

The stabilization of CD rates follows a period of decline in 2024, when the Fed cut rates three times to address easing inflation. The central bank's decision to maintain its benchmark interest rate since January 2025 has contributed to the current rate plateau. However, analysts and forecasters suggest that the Fed may initiate rate cuts later in the year, potentially leading to a decline in CD yields. For example, Christopher Hodge of Natixis CIB Americas predicts a 25 to 50 basis point decline in average 12-month CD rates by year-end if the Fed begins its rate-cutting cycle in September. Matt Gentzkow of Waddell & Associates agrees, noting that CD rates are expected to remain between 4% and 4.5% for the rest of the fall, with gradual downward pressure as monetary policy shifts.

The performance of CD rates is closely linked to the Fed’s monetary policy and the broader economic environment. Inflation, currently running at 2.7% year-over-year, remains above the Fed’s 2% target, but it has cooled from post-pandemic peaks. The Federal Open Market Committee (FOMC) is scheduled to meet on September 16-17, with expectations that the Fed will continue its cautious approach, prioritizing stability over immediate cuts. Should economic conditions deteriorate—such as a rise in unemployment or a sharper-than-expected slowdown—interest rates could fall more rapidly than anticipated.

For savers, the current CD environment offers a valuable window of opportunity to lock in relatively high yields, particularly through online banks and regional institutions. These institutions often provide more competitive rates than large national banks, which focus more on loans and credit cards. Online banks like ETRADE, Bread Savings, and Popular Direct have emerged as strong performers, offering high APYs and flexible deposit requirements. However, savers are encouraged to compare rates across institutions and consider factors such as minimum deposit requirements, early withdrawal penalties, and deposit insurance coverage.

Given the uncertainty around future rate movements, experts recommend strategies such as CD laddering to manage risk and optimize returns. By spreading investments across CDs with varying maturities, investors can maintain liquidity while benefiting from the best available rates. This approach is particularly useful in a declining rate environment, as it allows savers to reinvest maturing CDs at potentially lower rates without locking up all their capital for long periods.

As the Fed’s policy direction remains under close scrutiny, CD investors are advised to monitor market conditions and consult with financial advisors to determine the optimal timing for locking in rates. While the current landscape favors savers, the potential for future rate cuts underscores the importance of strategic planning to preserve and grow capital over time.

Source:

[1] Best CD rates, Aug. 25, 2025 (https://fortune.com/article/cd-rates-8-25-25/)

[2] What's the CD account interest rate forecast for fall 2025? (https://www.cbsnews.com/news/cd-account-interest-rate-forecast-for-fall-2025/)

[3] Best CD Rates for August 28, 2025: Up to 4.60% (https://www.nerdwallet.com/best/banking/cd-rates)

[4] Top CD rates, Aug. 27, 2025 (https://fortune.com/article/cd-rates-8-27-25/)

[5] CD Savings (https://www.morganstanley.com/what-we-do/wealth-management/cd-savings)