Investors rush to lock in 4.50% CD rates as Fed cuts loom in 2025

Investors seeking stable returns are increasingly turning to certificates of deposit (CDs), as current rates offer a compelling opportunity to lock in high yields before anticipated Federal Reserve rate cuts later in 2025. The highest available CD rate as of July 24, 2025, stands at 4.50% annual percentage yield (APY), offered by Northern Bank Direct for six- and nine-month terms. This rate, among the most competitive in the U.S., reflects a market still adjusting to the Fed’s monetary policy shifts [1].

The Federal Reserve reduced interest rates three times in 2024, prompting a decline in average CD yields. However, rates have stabilized in 2025 following the central bank’s decision to hold rates steady during its January and June 2025 meetings. Markets anticipate further rate cuts by year-end, creating urgency for investors to secure current high rates before potential downward adjustments [1]. The Fed’s 2024 cuts were aimed at addressing cooling inflation and supporting economic growth, a contrast to the aggressive rate hikes in 2022-2023 that drove CD yields to two-decade highs [1].

While short-term CDs like the 6- and 9-month offerings at 4.50% APY are currently the most lucrative, long-term CDs also remain elevated compared to historical averages. For instance, five-year CD rates in 2019 hovered near 3%, a stark contrast to the 5% peaks seen during the early 2020s pandemic-era inflation period [1]. Smaller regional banks and online institutions typically outperform large national banks in CD rate offerings, as major lenders like Chase and U.S. Bank focus on revenue streams such as loans and credit cards rather than competing on deposit rates [1].

Strategies for maximizing returns include CD laddering—spreading investments across staggered terms to ensure regular access to funds—and opting for online banks, which often provide higher yields due to lower overhead costs. Investors are also advised to prioritize FDIC-insured institutions and carefully review terms such as early withdrawal penalties and minimum deposit requirements [1].

The Fed’s next policy meeting is scheduled for July 29-30, 2025, with no immediate rate changes expected. However, the central bank’s trajectory toward lower rates remains a key factor for CD investors to monitor. With current rates not far from their recent peaks, locking in high APYs now could provide a hedge against potential future declines [1].

Source: [1] [title1Invest in CDs now to get up to 4.50% APY. Here are the best CD rates for July 24, 2025] [url1https://fortune.com/article/cd-rates-7-24-25/]