I've Got $50,000 Burning A Hole in My Pocket. Where Do I Park It Before the Fed Cuts Rates So I Don't Lose Ground?

Question: I have $50,000 saved. Where should I park it before a rate cut happens?

Answer: You'll want to find a savings solution that's resistant to rate cuts. That way, you maximize your savings while rates are still higher. However, you might not have much time to act.

The Federal Reserve cut rates at each of its last three meetings. And while it's likely the Fed won't cut rates at the upcoming January meeting, they might reduce them again later in 2026 if the data show numbers in line with their goals — and after Chair Jerome Powell's term ends in May, as the president has explicitly said he wants to appoint someone who will cut rates.

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A way to maximize returns and shield against future rate cuts

One route to turn to now that'll protect your money from rate cuts in the near future is CDs.

A certificate of deposit (CD) features a fixed interest rate. Once you lock in your CD rate, it remains in effect for the entire term. The Fed could cut rates multiple times during your term, and it wouldn't impact your savings at all.

Using this tool, powered by Bankrate, can help find options that work best for your needs:

But if you are sitting on a wad of cash, a balanced savings approach can maximize yields now while granting flexibility for future investments.

A strategy that keeps you ahead of the game, with flexibility

female counting one hundred dollar bills

One strategy is to open multiple CDs at various terms. Doing so now ensures you lock in higher CD rates to maximize returns. But it also achieves another positive: You'll gain quick access to some of your money.

Here's how it works:

Put $25,000 in a one-year CD. A top-performing account is Limelight Bank. You'll earn 4.00% with a minimum deposit of $25,000. In that year alone, you'll earn $1,000 effortlessly.
Deposit $20,000 into a five-year CD. Our top pick is SchoolsFirst Credit Union, with a rate of 4.00%. Over five years, that'll earn you $4,333.06.
Lastly, place your remaining $5,000 into a no-penalty CD. Farmers Insurance Federal Credit Union offers a rate of 4.00% for a nine-month term. This will net you $149.26 in interest earned for a mere six months.

Overall, this approach helps you earn $5,482.32 for a few minutes of work setting up the accounts. Best of all, you'll only tie up half of your money for the next five years. The rest you'll have back within the year, and you can reconsider investment or savings options, depending on how the market does.

What I would caution with this approach

CDs are generally not a flexible savings tool. Term-based CDs require you to keep your money until maturity, or face substantial withdrawal fees. For shorter-term CDs of a year or less, this could mean losing a few months of interest.

For long-term CDs of five years, this could mean penalties equivalent to up to one year's interest. Only consider this option if you're comfortable locking away $25,000 for five years.

Ultimately, the Fed is unlikely to cut rates when it meets this week. In fact, they might not lower rates again until fall. However, you can adopt strategies that help maximize returns now, while rates are high. This approach keeps you aligned with your goals, regardless of the Fed's actions in the future.

Sean is a veteran personal finance writer, with over 10 years of experience. He's written finance guides on insurance, savings, travel and more for CNET, Bankrate and GOBankingRates.