There's a reason CDs have been a pretty popular savings option this year. For much of 2024, it was possible to lock in a 5% CD. And while rates have fallen slightly over the past month following the Federal Reserve's September benchmark interest rate cut, many CDs are still paying close to 5% today. That makes them a good option like they were earlier on in the year.

But if you ask me, I don't think nearly as many people will be lining up to open CDs in 2025. Here's why.

1. CD rates are likely to keep going down

The Federal Reserve isn't done cutting interest rates. Its mid-September rate cut is likely to be the first of many.

But as the Fed continues to cut rates, CDs are going to start paying less. And there may come a point when savers say that they're not willing to commit to a CD if there's minimal upside.

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How low will CD rates go in 2025? That figure is hard to pinpoint, and it depends on how rapidly the Fed seeks to lower interest rates. And that will largely depend on how inflation trends. So all told, there are numerous factors at play.

But it wouldn't be surprising to see CD rates drop to 2.5% to 3% by the end of 2025. Whether it's worth committing to a CD at a rate like that is up to you.

Remember, the S&P 500's average annual return over the past 50 years is 10%, accounting for strong years and weak ones. Even though stock investments carry a lot more risk than CDs, if you have money you're earmarking for a far-off goal, then it could pay to open a brokerage account and use it to invest in stocks rather than open a CD in 2025.

2. Borrowing rates are likely to drop

CD rates and borrowing rates tend to trend in the same direction. Right now, both are up. As the Fed continues cutting rates, both are likely to fall. But that could lead a large number of consumers to spend their money in 2025 rather than save it.

For example, right now, personal loan and auto loan rates are pretty high. But if those rates fall in 2025, more people may be inclined to borrow money to finance purchases like furniture, vacations, electronics, and automobiles. And they may be willing to pull money out of the bank to pay off those debts, or to make down payments where applicable.

Of course, you shouldn't randomly borrow money in 2025 just because rates are lower. But if you've been saving for a specific large purchase -- like a new car to replace your current vehicle that's been giving you trouble -- you should know that you may end up in a better position to move forward on it in the new year. And in that case, it could make sense to use your money to fulfill a need -- like replacing a car -- rather than opening a CD.

Should you lock in a CD now?

All told, I expect CDs to be less popular in 2025 than they are today. But what about today? Should you open a CD while rates are still close to 5%?

The answer depends on your situation. If you're saving for a short-term goal, then I'd recommend that you shop around for the best CD rate and open a CD before rates fall further. But for a long-term goal, I'd recommend creating a stock portfolio.

You also don't want to tie up any money in a CD that you might need for emergency fund purposes. So before you contemplate a CD, make sure you have enough money in savings to cover at least three full months of essential bills.

Remember, too, that even if CDs become less popular in 2025, it doesn't mean you shouldn't buy one. The point, rather, is to be mindful of the reasons why CDs may become less popular, since they have the potential to impact your finances.