Will CD Rates Continue to Go Up in 2025?

The Federal Reserve hiked interest rates seven times in 2022 in an attempt to combat inflation, a fight that has proved daunting. Continuing its hawkish stance in 2023, the Fed raised rates at the first two Federal Open Market Committee (FOMC) meetings of the year. However, 2024 brought change as, at last, the Federal Reserve began lowering the federal funds rate. With economic and political uncertainty, 2025 has so far proven to be a time of market volatility, affecting CD rates in turn. It calls into question whether certificates of deposit (CD) rates will rise throughout the year or fall based on current conditions.

To get help with determining where CDs fit into your overall investment plans and what you might expect in terms of returns, consider working with a financial advisor. 

Will CD Rates Rise in 2025?

When the Fed raises interest rates, banks tend to increase CD rates, as well.

To calculate how much interest you could earn with a CD, try using SmartAsset’s CD calculator.

Ever since the pandemic wreaked havoc on the economy, the Federal Reserve has been actively adjusting the federal funds rate accordingly. 2023 and 2024 enjoyed several increases before rate cuts began in September 2024, causing CD rates to drop in response. 

2025 so far has brought overall stability based on the Fed’s decision to hold steady on rates. However, with CD rates often mimicking the movement of the federal funds rate, it is not unreasonable to expect continued decreases if the federal funds rate continues to drop as we move through 2025

CD Rates Will Likely Continue to Drop in 2025

More cuts are expected throughout the rest of 2025 as the Federal Reserve works to receive its goal of a 2% inflation rate. “In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent,” it says in a March 2025 statement.

As of May 2025, the federal funds rate stands at 4.33 percent. National deposit rates for CDs depend on your term.

2025 National CD Deposit Rates

Source: Federal Reserve, as of April 21, 2025

Some of the best CD rates today stand as high as 4.10 percent, a full 2% below the record-high rates of 2024. We find that banks like Marcus by Goldman Sachs, Capital One and Synchrony Bank offer some of the highest rates.

According to Morningstar projections, growth should slow over the next two years with falling rates moving into 2027. Overall, Morningstar predicts future cuts to create a 2.25%-2.50% target rate by mid-2027.

This means now is a good time to open your CDs and ladder your accounts so you can lock in low rates and receive the greatest growth from the most interest possible.

Deciding Which CD Rates and Terms Are Best for You

CD rates typically offer terms ranging from three months to five years. Depending on your savings strategy, a financial advisor can help you so you do not access your money early and fall subject to early withdrawal penalties.

If you feel stuck as to where to put your cash and need to get a clearer picture of your options, speaking with a financial advisor can help you make a sound choice. An advisor can help you identify your savings goals and risk profile. This professional can also help you go over the pros and cons of CD investing so you know if it is the right savings vehicle for your needs.

How to Lock in Competitive CD Rates

If you are looking to get the most from a certificate of deposit (CD), timing and strategy matter. CD rates tend to rise when the Federal Reserve raises interest rates, but they can fall just as quickly when the market shifts. 

That is why it is important to shop around and compare CD rates across different banks, especially online banks and credit unions, which often offer the best deals.

One way to lock in a good rate while keeping some flexibility is to open a short-term CD. These usually have terms of six months to one year and may offer high yields without tying up your money for too long. If rates continue to climb, you can reinvest in a higher-rate CD once the short-term CD matures. This keeps your options open without missing out on current rates.

Another method is to build a CD ladder. This means splitting your savings across several CDs with different maturity dates, such as 6 months, 1 year, 2 years and 3 years. As each CD matures, you can reinvest it at the current rate or use the funds as needed. This strategy helps balance earning potential with ongoing access to your money.

You can also look into no-penalty CDs. These let you withdraw your money early without losing interest. The trade-off is a slightly lower rate, but the added flexibility can be worth it if you are not sure how long you can leave the money untouched. 

Always read the terms carefully and compare the annual percentage yield (APY), minimum deposit and withdrawal requirements before choosing a CD.

Bottom Line

With more interest rate cuts predicted for 2025, it is better to open a CD account now than later when rates fall further. A CD ladder can help you lock in today’s rates while giving you regular access to your cash. However, the market can always change and cause the Fed to alter its course.

Tips for Investing

• Whenever you’re considering specific types of investments then you may want to consider working with a financial advisor. An advisor can help you choose the right investments and make sure you’re on track to meet your financial goals. If you don’t have a financial advisor, finding one doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• If you’re trying to determine what a potential return might look like on a CD or another investment, consider using SmartAsset’s free investment return and growth calculator.

Photo credit: © iStock/Andrii Dodonov, © iStock/designer491, © iStock/Inside Creative House