The last time the federal funds rate was at a target range of 4.50%-4.75% in February and March 2023, CD rates were lower than they are now. While that means you can lock in a high rate up to 5.50% today, these rates likely won’t last long as the Federal Reserve continues cutting rates into 2025. Interest rates on CDs and savings accounts typically follow the movement of the fed funds rate and have been falling from their highs of 6.00% thanks to the two rate cuts this year. Thankfully, CDs are safe places to stash your money to avoid the next Fed rate cut.

The Best CD Rates Are at Least 30 Basis Points Higher Now Than in February 2023

After two long years of rate hikes, the Federal Reserve began slashing interest rates by 50 basis points in September and another 25 basis points in November. The federal funds rate, the rate banks use to borrow money from one another and a tool to curb inflation, now sits at 4.50%-4.75%—a target range we haven’t seen since February and March 2023. 

During that time, the Fed was raising rates in an attempt to curb runaway inflation. While this was a challenge for borrowers, it was a boon for savers as interest rates on deposit accounts went up too. At that point, the best CD rates were just a little lower than they are now, falling between 4.70% and 5.50% APY.

The average CD rates in February 2023 (weighted by deposit amount) were between 0.18% and 1.36%, depending on term. That’s because the large, legacy banks didn’t raise their interest rates much after the Fed did, and the massive deposits at these institutions pulled down the average rates across the country.

We see the same trend now, as banks and credit unions are advertising CD rates well into the mid-4.00% range and even as high as 5.00% or 5.50%. But according to FDIC data, average CD rates remain low between 0.23% and 1.84%. 

Where Are CD Rates Headed in 2024 and 2025?

The Fed’s next meeting in December could bring an additional rate cut—and lower CD interest rates with it. Data from CME Group’s FedWatch tool indicates that about 56% of interest rate traders predict another cut of 25 basis points, while 44% think the Fed will keep the rate at the current level. 

Looking forward, economic experts from some of the nation's largest banks said after the Fed’s September rate cut that "the Federal Reserve will continue to reduce interest rates, cutting the target federal funds rate range by an additional 150 basis points between now and the end of 2025."

If that prediction plays out, CD rates are in for a slow decline. Based on the last time the fed funds rate was 150 basis points lower, back in late 2022, CD rates would drop to somewhere between 2.45% and 4.00% in 2025.

CD terms range from a few months to several years, but the interest rate and your cash are locked for the duration of the account’s term. Since rates are expected to drop further, it may be a wise move to secure a favorable CD interest rate before the Fed makes any more cuts.

How We Find the Best CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), the CD's minimum initial deposit must not exceed $25,000, and any specified maximum deposit cannot be under $5,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.