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<p>The Fed just cut rates. Here are 7 smart CD plays to make now</p>
<p>Yahia BarakahOctober 25, 2025 at 4:06 AM</p>
<p>23</p>
<p>The Fed just cut rates: 7 CD moves to make as rates slide (DjelicS via Getty Images)</p>
<p>The Federal Reserve will hold its next policy meeting on October 28 and 29, and markets are nearly certain it will announce another quarter-point cut. There's also a good chance we'll see one more cut in December to wrap up the year with three cuts.</p>
<p>If you're keeping cash in a traditional savings account, you're essentially losing money as inflation eats away at your purchasing power. certificates of deposit (CDs) let you lock in rates that can beat inflation and protect your earnings.</p>
<p>But that advantage is already shrinking. September's data showed that living costs are still climbing, and CD rates that peaked last year are dropping. Once the Fed cuts rates at the end of October, banks will likely slash their CD offerings even further within days or weeks.</p>
<p>You still have a small window to secure today's CD returns, but you need to act quickly before it closes. Here are seven smart ways to secure these rates while maintaining flexibility and access to your money.</p>
<p>1. Lock in today's rates while you still can</p>
<p>Your most obvious move is also the most important: lock in the highest rates you can find while they're still available. Top savings rates have already tumbled since the Fed began cutting rates in 2024, and you aren't likely to find many banks offering rates above 4% APY as cuts continue.</p>
<p>What it means for savers. Once the Fed cuts the benchmark, banks start slashing what they pay savers. CD rates have already dropped from their peak above 5% last year, and today's most competitive CDs could drop their rates within weeks of each rate cut.</p>
<p>Why timing matters. Unlike high-yield savings accounts with variable rates that can change at any time, once you lock in a CD rate, it's yours for the life of your term. Even the smallest rate differences add up to serious money over time — especially on larger deposits.</p>
<p>Digital banks and credit unions continue to offer the highest rates, beating traditional banks by a good margin. Ten minutes shopping around for the best rates and terms can mean hundreds more dollars in your pocket.</p>
<p>🔍 Read more: How the Fed rate affects your savings: What to expect for every type of bank account</p>
<p>2. Avoid puting all your money in one CD</p>
<p>The best way to take advantage of falling rates is by depositing your money across multiple terms with different maturity dates. Called CD laddering, this strategy offers flexibility while locking in some of today's best yields.</p>
<p>How it works. With a CD ladder, you spread your deposit across different terms — say, $5,000 each in 6-month, 9-month, 18-month and 24-month CDs. As each CD matures, you can reinvest your money into a new term at the rates available or cash out your money.</p>
<p>Why it's my favorite CD strategy. I'm not locked into one interest rate for years. If rates rise unexpectedly, I'll have money coming due that I can reinvest at higher rates. If rates fall, I've locked in solid rates on at least part of my savings.</p>
<p>Let's say you have $20,000 to invest and you lock in today's rates, but available rates for new CDs drop by about 1% APY over the next two years. This is what you might earn.</p>
<p>CD ladder strategy</p>
<p>CD term</p>
<p>Amount</p>
<p>Starting APY</p>
<p>Interest earned over 2 years</p>
<p>6-month CD</p>
<p>$5,000</p>
<p>4.25%</p>
<p>$397</p>
<p>9-month CD</p>
<p>$5,000</p>
<p>4.15%</p>
<p>$391</p>
<p>18-month CD</p>
<p>$5,000</p>
<p>4.05%</p>
<p>$390</p>
<p>24-month CD</p>
<p>$5,000</p>
<p>4.00%</p>
<p>$400</p>
<p>Total ladder earnings</p>
<p>$1,578</p>
<p>Single CD strategy</p>
<p>CD term</p>
<p>Amount</p>
<p>Starting APY</p>
<p>Interest earned over 2 years</p>
<p>24-month CD</p>
<p>$20,000</p>
<p>4.00%</p>
<p>$1,600</p>
<p>Total single-CD earnings</p>
<p>$1,600</p>
<p>The one single CD might earn $22 more, but your ladder buys you flexibility, offering four shots to adjust your strategy. If rates suddenly rise, you can lock in those higher rates as each CD matures. If you need money early, you're paying early withdrawal penalties on only part of your savings — and not the whole $20,000.</p>
<p>🔍 Read more: When is it worth it to break a CD?</p>
<p>3. Don't let banks auto-renew you into bad rates</p>
<p>Many CD holders make the rookie mistake of letting CDs automatically roll over into new ones without checking the rates.</p>
<p>The problem. Many banks offer promotional CD rates to hook new customers and then quietly renew them at much lower standard rates. Case in point: I locked in a 5.50% APY CD last year, but when it matures this month, I'll auto-renew at 3.00% APY. I can easily find rates a full percentage point higher if I shop around instead.</p>
<p>What to do instead. Mark your calendar a few days before your CD matures. Most banks give you a grace period of about a week after it matures to make changes without penalty. Use those few days to find a higher rate worth the switch.</p>
<p>💡Pro tip: Some banks match competitor rates to keep your business — but only if you ask. It's worth calling your bank within your grace period to negotiate.</p>
<p>🔍 Read more: What to do when your CD matures and how to take advantage of your grace period</p>
<p>4. Don't get stuck in a long-term CD</p>
<p>With the Fed signaling more cuts ahead, the old rule of going for longer terms to get better rates just might backfire.</p>
<p>Why shorter terms make sense. Lock your money into a five-year CD today, and you could miss out on better deals if the economy changes and rates shoot back up a year or two down the road. With everything from tariff hikes to rising prices in the balance, nobody knows exactly where we'll be — so why put all yours eggs in one basket?</p>
<p>My comfortable spot. I prefer CDs between 6 months and two years because they offer decent protection from rate drops but I'm not locked in if something better comes along. If you're feeling more confident about where rates are headed or have different money goals, go with what makes sense for your situation.</p>
<p>💡 Pro tip: If you're lucky enough to have $100,000 or more to invest, consider a jumbo CD. These high-deposit options typically pay slightly higher rates for large deposits. Even a small rate boost can translate into meaningful earnings when you're dealing with six-figure CDs.</p>
<p>🔍 Read more: We asked 7 experts: 'What's happening with the economy?' Here's what they said</p>
<p>5. Consider CD alternatives</p>
<p>CDs aren't your only option for earning decent returns on your savings. Here are three other ways to put your money to work:</p>
<p>Brokered CDs. Brokerages like Fidelity and Charles Schwab offer CDs that come with brokered rates that can be higher than what you'd find at a bank. Plus, you can shop multiple banks in one spot and get the same FDIC protection as a traditional CD.</p>
<p>Treasury bills. These are short-term loans you make to the U.S. government, typically four weeks to a year. They're as safe as it gets because they're backed by Uncle Sam. Buy them from the official TreasuryDirect website or through your brokerage. Even better, you won't owe state or local taxes on the interest you earn.</p>
<p>Bond funds. Investing in these funds is like buying shares of a big basket that holds hundreds of different bonds from governments and companies. You can reach into that basket anytime the market is open to buy and sell your shares — no waiting for maturity. The trade-off is value that bounces up and down daily, so you could be down money in the short term, though they generally pay a steady income.</p>
<p>6. Match your terms to your needs</p>
<p>Before locking up your cash into several CDs, make sure you have enough money accessible elsewhere.</p>
<p>Build your emergency fund first. Keep three to six months of expenses in an easily accessible high-yield savings account to cover unexpected costs like medical bills, car repairs or job loss without needing to dip into long-term investments or take on high-interest debt.</p>
<p>Know your timeline. Think about when you'll actually need your cash before locking it up. Planning to buy a car in two years? A 24-month CD could make sense. Needing the money next year for a down payment? Stick with something shorter so you're not stuck paying penalties.</p>
<p>CDs charge early withdrawal penalties if you need your money before maturity — typically three to 12 months' worth of interest. Calculate the fee you might pay and compare it to the cost of other options available first.</p>
<p>🔍 Read more: How much should you keep in a certificate of deposit?</p>
<p>7. Act quickly — but wisely</p>
<p>The window for capturing competitive CD rates is closing fast. If you're thinking about locking in a CD, turn that thinking into doing with a few key tips.</p>
<p>Don't chase the highest rate. If you're wringing your hands over whether to lock in 4.00% or 4.10%, take a breath: That 0.10% difference adds up to only $10 per year on a $10,000 deposit. Focus instead on reputable banks that won't rankle you with bad customer service and inconvenient terms.</p>
<p>Consider your tax situation. CD interest is taxable as ordinary income, which can take a big bite out your earnings if you're in a higher tax bracket. Say you earn $400 in CD interest and you're in the 32% tax bracket — in this case, you'll owe $128 in federal taxes, keeping just $272. Municipal bonds might be a smarter play since they're tax-free at the federal level.</p>
<p>More stories you might like -</p>
<p>I'm a personal finance expert: Here's why you need to invest in a CD today</p>
<p>What is a money market account?</p>
<p>Can you lose money in a high-yield savings account?</p>
<p>Online banks vs. traditional banks: What's best for your money?</p>
<p>Top banking mistakes that could be costing you money</p>
<p>📩 Have thoughts or comments about this story — or ideas on topics you'd like us to cover? Reach out to our team at [email protected].</p>
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