Lock in 4.45% APY now—before Fed cuts steal your gains

Certificate of deposit (CD) rates in the U.S. have stabilized in 2025, offering investors opportunities to secure high yields before potential future rate cuts by the Federal Reserve. As of August 25, 2025, the highest annual percentage yield (APY) available stands at 4.45%, with ETRADE, Bread Savings, and My eBanc among the leading providers. ETRADE distinguishes itself by offering a six-month CD with no minimum deposit requirement, making it particularly accessible for a broader range of savers [1]. Bread Savings and My eBanc also offer the same 4.45% APY, with the latter requiring a larger minimum deposit for its 12-month jumbo CD [2].

The Federal Reserve’s monetary policy remains a key driver of CD rate trends. In 2024, the Fed cut rates three times, bringing the federal funds rate to a range of 4.25%-4.50% by December. These cuts were aimed at supporting the U.S. economy amid cooling inflation after a post-pandemic spike. Prior to that, the Fed had aggressively raised rates in 2022 and 2023 in response to high inflation, which drove CD rates to historic levels [1]. In early 2025, the Fed paused rate adjustments during its January and July meetings, allowing CD rates to remain steady [1]. The next scheduled FOMC meeting is set for September 16-17, with markets anticipating potential further rate cuts [2]. This uncertainty makes the current environment an optimal time for investors to lock in high rates before they may decline.

Short-term and long-term CD rates are both elevated compared to historical norms, though not as high as the peak levels seen during the aggressive rate-hiking phase of 2022-2023. For instance, a $10,000 deposit in a one-year CD with a 4.55% APY would generate $455 in interest. Longer-term deposits yield even more substantial returns, as seen in a $10,000 investment in a three-year CD with a 4.40% APY, which would earn $1,378 in interest [3]. These figures highlight the potential for savers to benefit from higher returns, especially as current rates remain above the 4% threshold.

Financial institutions vary in their CD offerings, with smaller regional banks and online institutions generally providing more competitive rates than major national banks. Large banks like Chase, PNC, and U.S. Bank typically focus on attracting customers through loans and credit cards rather than CDs, resulting in lower interest rates for certificate accounts [1]. Savers are advised to compare rates across institutions and consider factors such as term length, minimum deposit requirements, and early withdrawal penalties when selecting a CD. Online banks, in particular, often offer higher APYs due to lower overhead costs, making them a popular choice for those seeking maximum returns [1].

Investors are also encouraged to employ strategies such as CD laddering, which involves spreading funds across multiple CDs with staggered maturity dates. This approach allows for greater flexibility and ensures that a portion of the investment remains accessible each year while benefiting from long-term higher yields. For example, investing $3,000 in three CDs with terms of one, two, and three years ensures annual maturity dates. As each CD matures, the funds can be reinvested into a new three-year CD, maintaining consistent access to capital and interest earnings [1].

The range of CD types available to investors further enhances the flexibility of CD investing. Options such as jumbo CDs, which require larger minimum deposits, bump-up CDs that allow for rate increases during the term, and no-penalty CDs that avoid early withdrawal fees cater to diverse financial goals and risk tolerances [3]. Understanding these nuances is essential for investors seeking to optimize their returns while managing liquidity and risk.

Source:

[1] Top CD rates, Aug. 21, 2025 (https://fortune.com/article/cd-rates-8-21-25/)

[2] CD rates today, Aug. 22, 2025 (https://fortune.com/article/cd-rates-8-22-25/)

[3] Best CD Rates for August 2025: Up to 4.60% (https://www.investopedia.com/best-cd-rates-4770214)