The Federal Reserve meets on January 29 and they'll decide whether to keep rates steady or cut them. Either decision could impact your savings account. Both high-yield savings accounts and CD accounts are currently offering rates well above 4% but rates might not remain this high for very long. While cuts to the federal funds rate won’t impact CDs directly, banks will usually follow suit and change rates accordingly.
Some cuts are expected throughout 2025 as the Fed incrementally drops rates from their 23-year high. So if you’re looking to take advantage of rates while they’re still this high, you’ll want to act soon.
Since high-yield savings accounts have variable rates, meaning they fluctuate with the market, you won’t be able to lock in a steady rate with one of those accounts. On the other hand, CDs offer a fixed APY, letting you secure high rates until the CD matures. Opening a longer-term CD can be an easy way to maximize the amount of interest earned on your savings, but you’ll need to be careful when choosing a term length.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Best CDs to check out before the Fed meets
While the Fed likely won't increase rates at its next meeting, there might be further rate cuts down the road. Locking in a high rate now could be a smart move. But you’ll need to be prepared to lock your cash away for the full term, or you could offset any earned interest by paying an early withdrawal fee.
If you already have an emergency fund and can commit to setting aside extra cash for a year or more, consider the following CDs, which can help you earn a fixed, predictable rate of return on your savings:
Prime Alliance Bank
Maturity: 1 year
APY: 4.45%
Minimum opening deposit: $500
One of the highest earning 1-year CD accounts is offered by Prime Alliance Bank. The CD has an impressive APY of 4.45% and a reasonable minimum opening deposit of just $500.
If you were to put $5,000 in the CD initially, once it matured you’d earn $222.50 in interest, leaving you with $5,222.50 after one year — a fairly reasonable time frame to lock up your cash.
Transportation Federal Credit Union
Maturity: 5 years
APY: 4.40%
Minimum opening deposit: $1,000
The longer you keep your money in a CD, the more interest you’ll earn. If you’re OK with the longer time commitment, consider opting for a 5-year CD.
The highest-yielding 5-year CD we’ve found is offered by Transportation Federal Credit Union and earns a 4.40% APY. If you put $5,000 in the account, after five years you’d have $6,201.15 , earning $1,201.15 in interest.
All in One Credit Union
Maturity: 3 years
APY: 4.07%
Minimum opening deposit: $1,000
If five years is a bit too long, consider a 3-year CD. Maybe you have a specific savings goal in mind — you might be planning on purchasing a new vehicle or paying for your grandkid’s wedding in three years — and are looking for a risk-free way to grow your savings.
The highest-yielding 3-year CD we’ve found, also offered by All in One Credit Union, has an APY of 4.07% and a minimum opening deposit of $1,000. If you put $5,000 in the account, after three years you’d have $5,635.68, earning $635.68 in interest.
You can also use our tool below, powered by Bankrate, to compare CD rates today:
Bottom line
Opening a CD account can be an easy way to earn a guaranteed return on your savings. With the Fed meeting this week, many anticipate rates will remain steady, but more rate cuts could be coming later this year. This could lead to lower yields on savings tools like CDs, so it’s wise to consider locking in current rates now before a potential drop.
But before you open a CD, you’ll need to choose a term length that makes sense for you. If you're unsure, compare 1-year vs 5-year CD accounts for more information.
Related Content
-
Your Medicare Costs Are Set to Soar: What to Expect Over the Next DecadeMedicare beneficiaries will face higher premiums, deductibles and surcharges starting in 2026 and continuing over the next decade. Here's what you need to know.
-
How Different Generations Invest and What They Can Teach YouBoomers, Gen Xers, millennials and Gen Zers are taking varying approaches to investing. Here's what they're doing and key lessons you can learn from them.
-
How to Navigate Your Finances After Losing Your Spouse: Thoughts From a Financial PlannerIt's important you get involved in financial planning now so you're prepared and confident to make decisions when you potentially become your own financial manager.
-
The Five Best Cruise Lines for RetireesRetirement is an ideal time for cruising. Check out the five best cruise lines for comfort, ease, and unforgettable experiences.
-
My First $1 Million: Oil and Gas Retiree, 67, Round Rock, TexasEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Why Jerry Quits Ben & Jerry's: 5 Signs It May Be Time for You to Do the SameAfter 47 years with Ben & Jerry's, co-founder Jerry Greenfield has stepped down. His decision highlights an important truth: sometimes it's not about waiting for retirement — it's about recognizing the signs that it's time to quit.
-
Amex Platinum Just Got More Expensive: $895 Fee and $3,500 in Perks ExplainedAmerican Express raises the Platinum Card’s annual fee to $895 and expands its perks. We break down the changes so you don’t have to.
-
Falling Interest Rates: What They Mean for Homeowners, Savers and InvestorsAs interest rates fall, homeowners may celebrate while savers feel the pinch. Here’s what the change could mean for your money.
-
Refinance Applications Surge as Mortgage Rates TumbleThe window to refinance is reopening as mortgage rates hit their lowest level in nearly a year. Here’s what the market shift means for homeowners.
-
Average Spending by Age for Those 55 and Up: Are You Thrifty?Everybody has their own number for how much they’ll spend in retirement. See if your's is in line with the averages.
