Why You Need to Open a CD Right Now

41% of Americans have never opened a CD. Here's why 2024 is a great time to open a CD, lock in rates and earn interest on your cash.

A close-up of a hand holding three $100 bills
(Image credit: Getty Images)

If you’re thinking about putting your cash in a CD in 2024, now may be the best time. Currently, rates on CDs are high — in most cases offering over 5% on your cash — but they likely won’t go higher than they are now. For this reason, the beginning of this year could be a great time to lock-in CD rates and earn interest on your savings. In fact, many CD accounts have begun to slightly drop rates in recent weeks, so consider taking advantage of the best possible rates while you still can. Overall, many Americans are missing out on savings associated with high yield accounts, specifically CDs.

How to open a CD in 2024

A recent study from Forbes Advisor found that 48% of Americans are saving in a high yield savings account, and only 44% have opened a CD. So why have 41% of Americans never opened a CD account? While this is partially do to a number of individuals not being able to save (only 41% of those who earned less than $30,000 were able to save in the past year), 28% of individuals have reported not opening a CD account "because they think it would be too complicated and time-consuming."

However, opening a CD is fairly straightforward, and can help maximize your savings with little to no effort. In fact, opening a CD can be done in five simple steps:

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  • 1. Choose a CD term 
  • 2. Choose a provider
  • 3. Apply for the CD
  • 4. Choose how to receive your interest 
  • 5. Fund the account

Others reasons individuals listed for not opening a CD included not wanting to temporarily lose access to funds (26%), not wanting to open a CD with an online-only bank (25%) and not seeing the value of having a CD (20%).

CDs hold a fixed amount of money for a fixed period of time, which can be anywhere from three months to three years, and are good options for individuals looking for a fixed, predictable rate of return on their savings. While CD accounts offer higher savings rates than standard savings accounts, there is one drawback. You'll have to wait until your CD's maturity date before you can withdraw funds. Failure to do so will cost you a fee, which can offset any interest you may have earned (unless you have a no-penalty CD account). 

But if you're okay with setting your money aside for a certain period of time, you could easily maximize your savings with the best rates on the market. For those hesitant to lock their cash away, a high yield savings account is a better option. However, because rates on these accounts are variable, you won't be able to lock-in rates. These accounts are also simple to set up, and are a no-brainer for those looking to earn more on their hard-earned cash. By not putting your savings into a high yield savings account or CD, you're leaving money on the table.

Unlike high yield savings accounts, rates on CDs are fixed, meaning your APY won't fluctuate over time. And because savings rates have been leveling off lately, in some cases even dropping, opening a CD account now, rather than later, can help you secure the best rates before they drop further. 

You can compare current CD rates below by using our tool — powered by Bankrate. 

Also check out Kiplinger's savings calculator below to see just how much you could earn with a high APY. 

Savings rates 2024

Savings rates have been on the rise since March 2022, when the Federal Reserve began hiking interest rates in an attempt to combat high inflation. Since then, the Fed has raised rates a total of 11 times, bringing the federal funds rate to a target range of 5.25% to 5.5%. However, at the latest meeting, the Fed decided to pause rates for the third consecutive time. Additionally, the Federal Reserve also sees three interest rate cuts in 2024, and has lowered its median interest rate projection for the end of 2024 to 4.6%.

Since the Fed started holding rates steady, APYs on CDs have begun to level out, and in several cases, decrease. If the Fed decides to cut rates later this year, as expected, savings rates will likely decrease further. For this reason, consider taking advantage of savings rates while they're still high.

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Erin Bendig
Personal Finance Writer

Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.