Will the Best CD Rates Reach 6% Again? (2024)

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What You Can Earn with Today's Best CDs

Thanks to the Federal Reserve's aggressive rate-hike campaign, certificate of deposit (CD) rates have enjoyed a remarkable heyday over the past year. Last fall, the top CD rate touched an eye-popping peak of 6.50% for a few days. And at other times—including most of June and all of July—you could earn 6.00% with the top nationwide offer.

Unfortunately, those days are almost certainly over, with the last 6.00% CD offer expiring on July 31. But that doesn't mean CDs aren't still a good idea. With rates above 5% that you can lock in as long as three years—or rates in the 4% range that are guaranteed to 2028 or 2029—opening one of today's top-paying CDs is a smart financial move.

But the sooner you can commit to one of today's top certificates, the better—as we'll describe below how the guaranteed rates are likely to get worse, not better, if you wait.

Why CD Rates Have Already Begun Dropping

Last month, the Federal Reserve announced its eighth consecutive rate hold after its historic 2022–2023 rate-hike campaign pushed the federal funds rate to its highest level since 2001. The central bank's massive increases to that benchmark rate—which influences what banks and credit unions are willing to pay on CDs—were aimed at tamping down decades-high inflation.

But as inflation cooled, the Fed was able to take its foot off the rates pedal, coasting at an elevated fed funds rate for the past year. Now, inflation has come down even further, leaving the Fed to decide when—and how quickly—to apply the brakes.

The Fed's next rate-setting meeting will conclude with a rate announcement on Sept. 18. It's overwhelmingly expected that the central bank will implement a rate cut. However, the magnitude of the reduction is up for debate. According to the CME Group's FedWatch Tool, fed funds futures traders are currently split on their predictions of the rate cut size; roughly 55% think it will be 0.50 percentage points. The rest predict a rate cut of 0.25 points.

Since confidence in this Fed rate cut is exceptionally high, some banks and credit unions have already begun lowering rates. That's because CDs offer you not just a rate today, but a guaranteed future rate. With Fed rate cuts almost certainly on the near-term horizon, institutions don't want to get locked into paying CD rates they'll regret months or years down the road. That gives them little reason to wait until an official Fed announcement comes through.

Expect CD Rates to Continue Falling

Unfortunately for CD shoppers, the rate declines we've already seen are most likely just the beginning. In fact, this could be the start of a CD rate slide that continues for the next two to three years. With the federal funds rate at such a high level and inflation now much closer to the Fed's 2% target, the Fed has a lot of room to lower rates to a more normalized level.

In fact, after the Fed met on June 12, it released its quarterly “dot plot” projections for where the federal funds rate would be at the end of 2024, 2025, and 2026. You can see below that, as of the June meeting, Fed committee members predicted the benchmark rate would be lowered by more than 2 percentage points over the next two and a half years.

We won't see an updated dot plot from the Fed until Sept. 18. But in financial markets, about 70% of investors currently predict the fed funds rate will be at least 0.75 percentage points lower than today by the end of the Fed's Nov. 7 meeting. And by the Dec. 18 meeting, more than 80% of traders are betting the benchmark rate will have been lowered by at least a full percentage point.

That means there will be little relief for CD shoppers. The top nationwide rates are expected to keep edging lower and lower, as long as more Fed rate cuts appear to be coming.

The Best Advice for CD Shoppers? Act Now!

If you can allocate a portion of your savings to leave alone for a bit, there is no better time than the present to sock some of your cash away in a CD. Not only are future CD rates almost certainly moving much lower, but high-yield savings account rates will also decline. That means the only way to earn one of today's great rates next year or in 2025—or even longer—is to lock it in with a CD now—before it's too late.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account's minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that's below $5,000.

Banks must be available in at least 40 states to qualify as nationally available. 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.