What's the CD interest rate forecast for spring 2025?
If you've been looking for a safe, simple way to earn hefty returns on your savings, you may have considered opening a certificate of deposit (CD) in recent months. After all, while CD rates aren't as high as they were one year ago, the rates on these deposit accounts are still some of the highest available right now, making this a smart way to maximize your interest earnings.
That could change, though. After all, while CD rates are influenced by a variety of factors, the Fed rate is key among them. And, with the Federal Open Market Committee (FOMC) meeting in March to adjust the Fed rate, there's a chance that changes could be coming for CD rates this spring.
So, if you're planning to open a CD soon, you'll want to keep a close eye on where CD rate trends head. What exactly is expected to occur with CD rates this spring, though?
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What's the CD interest rate forecast for spring 2025?
After three consecutive rate cuts in 2024, the Fed held rates steady at its last meeting this January — and it's expected to do the same in March. There is a 95% chance that the Federal Reserve will maintain interest rates this March, according to FedWatch, a tool that uses the Fed Funds futures market to track the probability of Fed rate changes.
"This [probability] seems reasonable based on some recent inflationary data that were not terribly friendly, combined with a confusing tariff policy by the new administration," says Davide Accomazzo, a finance instructor at Pepperdine University's Graziadio Business School.
The Federal Reserve is keen to hold interest rates steady until inflation is under control. Chairman Jerome Powell stated in January that the Federal Reserve needs to see real progress toward its 2% inflation target before considering more rate adjustments.
And, while inflation was trending downward last year, it picked up in January and is currently at 3%.
"The recent downtrend in price inflation hit a speed bump in the last few months," explains Stephen Taddie, director of wealth management firm Focus Partners. "With uncertainty surrounding the near-term path for prices, I think the Federal Reserve will wait until May to consider taking any action."
So what does this information mean in terms of where CD rates head this spring?
"Given short-term rates will likely stall, the most probable effect on CD rates this spring is they won't move much," says Robert Frick, corporate economist at Navy Federal Credit Union.
It is possible for other factors to influence CD rates, however. For example, increased competition can cause some financial institutions to temporarily raise CD rates to attract new customers.
A need for liquid funds can factor in and "drive individual banks to use teaser rates to attract more depositor capital," Taddie says. This means you may find the occasional promotional CD offering an inflated rate.
Overall, though, experts agree it's unlikely that CD rates will go up —or change much at all — in the next few months. In fact, CD rates may start to go down later in the year if the Fed eventually proceeds with rate cuts.
"CD rates march to the beat of the short-term interest rates drum," explains Taddie, who says short-term interest rates should continue to go down later in the year as long as inflation returns to its previous downward path. "Every tick lower in the Fed rate should pull the shorter-term CD rates lower as well."
Dr. Brandon Renfro, a CFP with a doctorate in finance, agrees.
"I expect CD rates to remain flat in the coming months, with a potential to fall this year if the Fed cuts [rates] again," Renfro says. "Other factors can influence rates, but they don't have as much influence as the Fed rate."
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Is this a good time to open a CD?
CD rates might not be as high as they were last year, but that shouldn't stop you from locking in a favorable rate while you still can. Accomazzo says that while CD interest rates will likely remain stable in the coming months, he's doubtful they'll remain this high through next year.
Both Frick and Renfro advise against waiting for a clear direction in interest rates before opening a CD.
"If you have long-term savings I don't think it's smart to wait for rates to rise again," Renfro says. "Buying a CD now, with a term that matches the timeline of when you'll need the money, will allow you to lock in a rate and remove some of the uncertainty."
For example, if you open a one-year CD today with a rate of 4.52% and deposit $10,000 into the account, you could earn $452 in interest by next year. If you leave that money in a traditional savings account with minimal interest, though, you'll earn much less.
If you know you won't need to access your savings for a few years, opting for a longer CD term with a good CD rate could help you earn more. Just make sure you won't need to access the funds before your CD matures. With today's CD rates still relatively high, the early withdrawal penalty for accessing money before your CD term ends can sting.
If you need a little extra flexibility, Taddie recommends looking into brokered CDs, which can be sold at any time on the secondary market. That said, you have to find a buyer, and interest rate trends can impact the market value of a brokered CD. If interest rates go down, you can usually sell your CD at a profit, but if rates go up, you may have to sell your CD at a loss.
The bottom line
CD rates could shift this spring, but it appears unlikely that they'll increase at this point. However, you can still get a good CD rate by choosing a CD term and then shopping around for the best rates for your desired timeline. Don't discount online banks, either, which often have some of the highest CD rates available. As long as you open a CD from a bank that's FDIC insured, or a credit union that's NCUA insured, your money is safe. It can also help to check CD rates regularly. As interest rates evolve this spring and beyond, staying informed can keep you from leaving money on the table.
