Is it too late to open a CD? Here are three reasons why it may not be

After years of abnormally low interest rates thanks to the pandemic, the rate climate changed in 2022. With inflation at its worst point in decades interest rate hikes became routine, hitting a 23-year high last summer. The benchmark interest rate range between 5.25% and 5.50% hasn't changed since then and most don't expect it to be adjusted when the Federal Reserve meets again on March 19.

While higher rates have been problematic for borrowers they've been a boost for savers, resulting in surging returns on high-yield savings and certificates of deposit (CD) accounts. The latter account type has rates as high as 7% right now for select savers. But with interest rate cuts expected for later this year, many may be wondering if it's too late to open a CD. Below, we'll break down three reasons why it may not be.

See how much more you could be earning with a top CD account here now.

Is it too late to open a CD?

While you may have missed out on substantial returns over the last 12 to 18 months, it's not too late to open a CD now. Here's why:

Rates are still high

Rates on CDs are still very high, with many over 5.50% right now. Others are closer to 6%, depending on the term you choose and if you use an online bank. That's a significant amount of money to be made simply by moving some of your funds into one of today's top CD accounts. A CD with an interest rate of 5% could result in hundreds of dollars earned over just one year. 

And that's just for a short-term CD with a 5% rate. You may be able to find longer terms with better returns simply by shopping online, so don't delay.

Get started with a top CD account here now.

Rates aren't expected to drop dramatically

While many experts aren't expecting the Fed to reduce interest rates in March, a rate cut (possibly multiple ones) is being predicted for 2024, possibly as soon as May or June. And while the Fed won't directly dictate what lenders offer CD account holders, the returns savers can get will drop when the benchmark rate does. 

That all being said, rates aren't expected to drop dramatically. Instead, they'll fall in small increments (think a quarter of a percentage point). And it will take many months, if not years, for that to happen. Plus, if you lock in a long-term CD rate now you'll be set to earn that rate even if the larger rate climate drops before your CD matures.

You may be losing money

Take a look at the interest rate you're currently earning with a regular savings account. According to the FDIC, the average return for these types of accounts is just 0.46%, which isn't even keeping pace with inflation. 

When compared to CDs, then, it becomes clear that you're losing money. Though it may not be feasible — or even recommended — to move all of your money into a locked CD, it does make sense to stem some of the interest losses incurred with a regular savings account with a top CD instead.

Learn more about your CD options here now.

The bottom line

While savers may have missed out on big CD returns over the last 12 months, they can make up for it with a top CD now. Rates are still elevated and they're not expected to drop dramatically even when the Fed does make its first rate cut. And compared to the minimal earnings the average savings account comes with, it becomes even clearer that the window of opportunity to earn high CD rates hasn't closed quite yet.