5 smart CD moves to make this January
Certificate of deposit (CD) interest rates have been dropping in recent months, but many savers are still taking advantage of the current high interest rate environment by opening a CD account. CDs are a popular option because they're a low-risk investment that delivers predictable returns. And CD accounts tend to earn higher rates than traditional or even high-interest savings accounts.
If you're considering opening a certificate of deposit account in 2025, there are some moves you might want to make first. Below, we'll look at five steps you can take to get the most out of today's CD account interest rates.
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5 smart CD moves to make this January, according to experts
Here are five smart - and timely - CD account moves savers should consider this month:
Shop around for the highest rates
If you're considering putting money into a CD, an important first step you can take is shopping around for the best CD terms and rates. National CD rates tend to be low, so comparing your options helps you secure the best CD interest rates.
"Interest rates can vary significantly between banks and credit unions, so it's essential to compare offers to find the most competitive rates," says Jake Falcon, CEO of Falcon Wealth Advisors.
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Ladder your CDs
"With interest rates often fluctuating, consider CD laddering to balance liquidity with future growth," recommends Chikako Tyler, CFO at California Bank and Trust. CD laddering involves opening multiple CD types with different maturity dates.
Once one CD matures, you can access the funds and either withdraw them or re-invest them in another account. "It allows you to take advantage of higher rates for long-term CDs while still having access to funds from short-term CDs as they mature," explains Falcon.
Pay attention to FDIC limits
One of the reasons CDs are so safe is because they are FDIC-insured — the FDIC insures up to $250,000 per depositor, per bank. If you're depositing large amounts of money into a CD, Falcon says it's important to pay attention to FDIC limits. "You don't want to overexpose yourself to any one bank," he warns.
Pay attention to the economic outlook
Continue to pay attention to the economic outlook and continue to monitor CD account rate changes. "While it's impossible to predict the future, staying in the know could help you avoid a mistake," Falcon explains. "If interest rates are expected to rise, you might opt for shorter-term CDs so you can reinvest at higher rates when they mature. Conversely, if rates are expected to fall, locking in a longer-term CD at a higher rate could be beneficial."
Have a plan for CD maturity
You should have a plan for what you'll do with your CDs once they reach maturity. "First, review the terms of your CD and understand the grace period, which is the time frame you have to decide what to do with the matured funds," says Falcon. "During this period, you can withdraw the funds, renew the CD, or transfer the money to another account."
Most CDs will auto-renew once they reach maturity if you don't take action during the grace period, but DeLonde recommends against this. But if you let it automatically renew, it may do so at a new, lower rate.
Learn more about your CD options here now.
The bottom line
"If liquidity or diversification is a priority, you may want to reassess if there is a benefit from reallocating your funds to a high-yield savings account, money market account, or CD investment," says Tyler. "Ultimately, it's about doing what's best for your goals, whether that be long or short term."
