CD Rate Forecast: Are CD Rates Going Up in 2025?

Interest rates on certificates of deposit play an important role for some savers. CDs’ fixed rates can offer guaranteed returns for several months or years, and locking in a high CD rate can mean earning strong yields even if the economy enters a low-rate environment. Here’s an overview of where CD rates might be headed.

» COMPARE: NerdWallet’s best CD rates

Are CD rates going up?

No, CD rates are falling, albeit slowly, in 2025. Both national average and high-yield CD rates began to noticeably drop around September 2024, which is when the Federal Reserve began lowering its federal funds rate. However, the Fed is expected to slow down rate cuts in 2025, which will keep CD rates more steady.

Here’s a quick comparison: From September to December 2024, the midpoint for one-year CD rates at 21 online banks and credit unions dropped from 4.60% to 4.10% annual percentage yield, according to a NerdWallet analysis. In late January, however, the midpoint for one-year CD rates only dipped to 4.00%. Because rates may continue to fall, now’s the time to take advantage of current high-yield CDs, which still have some of the highest rates in more than a decade.

» Skip down to see more on 2025 CD rate changes

A big reason why rates are at such highs is the frequency with which the Fed increased its federal funds rate in 2022 and 2023. The Fed pushed up the target range of this Fed rate, which is the interest rate banks use to borrow money from each other, as one tool to curb inflation. From March 2022 to July 2023, the Fed raised its rate 11 times. After a year of no rate changes, the Fed finally lowered its rate after the September, November and December 2024 meetings^[0]

Banks generally adjust their rates on new CDs in the same direction as Fed rate changes. Credit unions — the not-for-profit equivalent to banks — similarly raise rates on their CDs, known as share certificates. Learn more about what Fed rate decisions mean for CDs and savings accounts.

» Learn more: What happens when the Fed finally cuts rates?

CD rate trends

• High-yield CDs tend to be at online banks and online credit unions, which have rates that are whole percentages higher than national average CD rates. For example, the national averages are 1.82% for one-year CDs and 1.32% for five-year CDs. Top one-year yields are around 4.20%, and the best five-year CD rates are closer to 3.70%.

• Short-term CD rates remain higher than long-term rates, for national averages and among high-yield CDs, according to a NerdWallet analysis. This phenomenon, known as an inverted yield curve, can reflect that banks expect that future interest rates are headed downward. However, several online banks with consistently top rates slightly adjusted their long-term CDs upwards in January, so this trend may be on its way out.

CD rate forecast: 2025

The Fed kept its benchmark rate the same at a rate range of 4.25% to 4.50% after its first meeting of 2025 on Jan. 28-29. Projections suggest that the Fed will continue to drop its rate for the next few years, and it’s unlikely that we’ll see any rate increases. The next Fed rate cut may occur as early as March 2025, according to CME FedWatch (accessed on Jan. 28, 2025). When the Fed rate drops, CD rates will likely follow suit, though it’s up to each bank and credit union if and when that occurs.

The Fed’s fight against inflation is currently “progressing along a soft-landing path” instead of a recession, and inflation may drop close to the 2% target by the end of 2025, according to a March 2024 forecast from the American Bankers Association’s Economic Advisory Committee. The committee consists of chief economists from some of the largest U.S. banks^[0]

CD rate drops might not be as drastic as they were after March 2020, when the Fed cut its rate to nearly zero. The Fed rate may drop more gradually over the next few years, according to the Fed’s December economic projections^[0]

2025 data highlight: smaller dips for high-yield CDs

CD rates at nearly two dozen online banks and credit unions saw a slowdown in their descent from December to January. Longer-term CDs stayed more steady while short-term CDs only dipped slightly. This slow movement contrasts to the rate drops around September 2024, which was when the Federal Reserve made its first rate cut since 2020. The latest rate dips are mostly around 10 basis points (0.10 percentage point).

Take advantage of today’s CD rates

Lock in CD rates sooner than later. CDs are typically best for specific goals, such as protecting some savings from inflation’s effects or earmarking a fixed sum for a large purchase within five years, such as a car or house.

Remember specialty CDs. If you’re unsure about getting a CD now, know that some types of CDs offer flexibility. Bump-up CDs allow you to increase the rate at least once during a CD term if new CD rates go up. But in a falling-rate environment, it’s more likely for bump-up CD rates to stay the same. No-penalty CDs give you a fixed rate plus the opportunity to jump ship for free.

Consider a CD ladder to hedge your bets. A CD ladder strategy reduces the stress around timing your CDs. Split up an investment equally into several CDs of different term lengths, such as one year, two years and three years. When each CD matures, reinvest in a longer-term CD or, if you need the cash, withdraw. Ideally, though, you can have multiple long-term CDs that mature at staggered intervals. You mix short-term CD access with long-term rates.

Compare other short-term ways to save and invest. For more everyday savings with the same low risks as CDs, consider a high-yield savings account or money market account, which have top rates above 4% APY. Or, if you’re looking to invest, consider more ways to invest your savings.