What will happen with CD rates this April? What experts say
If you compare today's rates on a certificate of deposit (CD) to those from a few years ago, they'll seem pretty generous. But compared to a few months ago, CD rates are actually down.
That's because as inflation gets further under control, the Federal Reserve has adjusted its policy, reducing its federal funds rate and, though indirectly, many of the rates offered on consumer borrowing products like CDs.
If the Fed continues on this path, we could see interest rates fall further on CDs. What's the likelihood of that happening, though, this April, and when might consumers see CD rates drop again? We asked some experts to weigh in.
See how high of a CD rate you could lock in before they drop here now.
What will happen to CD rates this April?
According to the experts we spoke to, you can probably expect rates to drop slightly or hold steady in the near term.
There likely won't be a drastic drop in CD rates in the next couple of months, as the Federal Reserve is largely expected to hold steady on its Federal Funds rate at its upcoming meetings.
"The Fed is in wait-and-see mode, watching inflation and job data closely," says Mary Grace Roske, senior vice president at CDValet.com and Seattle Bank. "While they're holding steady for now, if inflation cools further and job growth slows, we could see rate cuts later in the year."
As of April 2, the CME Group's FedWatch tool puts the odds of a rate cut when the Fed meets again in May at just 14.5%. The chance increases substantially by its June meeting. The decision, though, will hinge on many factors, including the impact of tariffs "and whether or not the economy is losing momentum enough that the Fed feels it has to help," says Chris Mediate, president of Mediate Financial, a financial services firm.
As a result, experts think rates will stay around their current range for the near term.
And "If there are changes on the horizon, I don't anticipate any until later in 2025," says Brittany Pedersen, director of deposit and payment operations at Georgia's Own Credit Union.
In the meantime, there could be some small downward adjustments in rates. Case in point: The Fed held steady on its funds rate at both its January and March meetings, but since December, the average rate on a 12-month CD has fallen from 1.83% to 1.78%, according to the Federal Deposit Insurance Corp. This likely means rates could decline slightly in the short term, regardless of Fed decisions.
"Short-term CD rates will probably keep inching down," Roske says. "The best-case scenario is that they hold steady, but momentum is pointing lower."
See how much you could earn with a high-rate CD account online today.
The sooner you act, the better
Most experts agree that CD rates could fall quite a bit by the end of the year, particularly if the Fed follows through on any rate cuts. For this reason, opening a CD soon — when you can lock in today's presumably higher interest rates — is critical if you want to make the most of your cash. "Consumers should open CDs now if they want to maximize the interest they earn," Pedersen says.
And the sooner, the better. "More than likely rates, while lower than they have been in over a year, will still be better than where we were pre-Covid and during Covid," Mediate says. "If the Fed has to take action, most likely that action will mean a rapid decline in the Fed interest rate. This will also bring CD rates down."
You can mix and match if you aren't sure
If you're not 100% confident that CD rates are going to drop later in the year, then you can split up your cash and opt for a mix of CDs instead. One popular option is to use a CD ladder, in which you purchase several CDs with different terms. Then, when the first one comes due, you can either cash it out or roll it into a new CD (hopefully one with higher rates).
If you go this mix-and-match route, expect shorter-term CDs to offer higher rates than long-term ones.
"Look at a shorter-term ladder that is one month to 18 months for the higher rates that are being offered," says Krisstin Petersmsarck, founder, and investment advisor at New Horizon Retirement Solutions. "Then, if you're comfortable having your money tied up in a CD, add longer durations — one year, two years, etc."
And remember: CDs don't have to deliver huge returns to make them worth it.
As Annie Cole, a financial coach at Money Essentials for Women, explains, "With so much uncertainty and day-to-day changes in the stock market, I think the best bet for any consumer is to stick to the basics and not make any dramatic moves. If you want to have quick access to your extra cash, stick with a high-yield savings account. If you can set your money aside in a CD for a short period of time, do so to make the most of the current rates."
