How much should you deposit in a CD this April? Experts weigh in

Interest rates have fluctuated over the last year, but many deposit accounts continue to offer solid returns. Certificates of deposit (CDs) are particularly attractive. Banks are advertising 1-year CDs yielding up to 4.25% and 5-year terms settling between 3.5% and 4%. While they've declined from recent peaks, today's CD rates still provide a secure harbor for savers seeking guaranteed growth amid market uncertainty.

With economic indicators sending mixed signals this April, deciding how much to commit to a CD requires careful consideration. Lock away too much money, and you might miss better opportunities or face penalties for early withdrawal. Invest too little, and you may miss out on rates outperforming high-yield savings accounts.

We asked three finance professionals about optimal CD investments this month. Below, we'll break down what they had to say (and what they recommend savers do now).

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How much should you deposit in a CD this April? 

There's no one-size-fits-all answer to how much you should invest in a CD this April. However, "any excess cash [you don't need] for one year or more for spending, major purchases or investing and savings could do well in a CD right now," suggests Henry Yoshida, a certified financial planner and CEO of Rocket Dollar.

Below, experts explore the factors that should shape your decision, effective laddering strategies, and whether to prioritize short-term or long-term CDs.

Key factors determining your ideal CD investment amount

Industry professionals say these key factors should guide your CD deposit amount:

• Liquidity needs: "Only commit funds you won't need during the CD's term," advises Christopher Stroup, a certified financial planner and founder of Silicon Beach Financial, a wealth management company. "Early withdrawals come with penalties, which can reduce the attractiveness of a CD compared to a high-yield savings account."
• Emergency savings: Bree Shellito, director of financial well-being at Ent Credit Union, recommends ensuring at least two months' worth of living expenses are accessible before locking money into a CD.
• Outstanding debt: "[Pay] off high-interest debt [such as] credit cards or personal loans before committing funds to CDs," says Shellito. This approach makes sense when debt costs more than CD returns.
• Interest rate outlook: "If rates drop, longer-term CDs can lock in better yields for the foreseeable future," says Stroup.
• Risk tolerance: CDs are low-risk. But "tying up funds may mean missed opportunities in other areas of the market," warns Shellito.
• Financial goals: "Align CD terms with your savings goals," recommends Shellito. In other words, use a shorter-term CD if you have short-term goals. Long-term goals pair well with longer-term CDs.

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CD laddering strategies to maximize returns in today's market

"[CD] laddering helps manage interest rate risk and maintains ongoing access to maturing funds," explains Shellito. She and Stroup recommend these approaches for effective laddering:

• Start with the right amount: "We typically recommend that you start with at least $5,000 to $10,000 to build a basic 1-year to 3-year ladder," says Stroup. Shellito notes that even $1,000 to $10,000 spread across three to five CDs can work well.
• Stagger maturity dates: Stroup suggests dividing your funds across 6-month, 12-month, 18-month and 24-month CDs. This captures higher rates and provides rolling access to funds when needed.
• Mix CD types: "Blend traditional CDs with no-penalty CDs to keep your options open in an uncertain rate environment," Stroup encourages.
• Consider a barbell strategy: Shellito suggests putting 50% to 75% in short-term CDs (three months to a year), and the rest in longer-term CDs (two to five years). This can help you hedge against rate swings.
• Reinvest strategically: "Roll over matured CDs into the longest rung to keep the ladder growing as the rate environment shifts," advises Stroup.

Short-term vs. long-term CDs: Where to place your dollars now

Yoshida believes in capitalizing on today's rates with longer-term CDs. "The interest rate environment is high in relative terms, so it could prove savvy to lock in long-term CDs right now," he says. However, Shellito recommends a more cautious approach. A 70/30 split between short-term and long-term CDs "balances liquidity and return, while positioning you to benefit if rates rise or fall," she highlights.

The bottom line

CDs offer a valuable balance of security and growth potential in today's shifting interest rate environment. "For more risk-conservative or retirement-focused folks, I suggest 10% to 30% of the portfolio in CDs," Shellito advises. Generally, CDs work best as a complement to higher-risk investments rather than dominating a growth strategy.

Before opening a CD account, shop around at several institutions to find a good rate. Watch for promotional rates that drop after maturity. Finally, consult a financial advisor to ensure your CD investments align with your broader goals and timeline.