If you’ve been waiting for the right time to open a certificate of deposit (CD), this is probably it.

CD rates are still hovering at 4.00% APY and above, a huge increase from just a few years ago when rates were stuck near zero. But with the Federal Reserve expected to cut interest rates later this year, CD rates are all but guaranteed to fall as well.

Here’s why now’s the time to lock in a CD and get a higher guaranteed return today.

Rate cuts are expected later this year

The Fed has signaled that it will start cutting interest rates later this year, despite balking at its recent May meeting. When that happens, CD rates will almost definitely follow.

Historically, when the Fed begins a rate-cutting cycle, banks respond by lowering interest rates on savings products like CDs. CD rates tend to move in the same direction as the federal funds rate, which affects how much banks are willing to pay depositors.

That means today’s best CD rates could disappear quickly. And we’ve already seen big banks like Marcus and Bread Savings trim their CD rates in anticipation.

Locking in now could protect your savings

Opening a CD today lets you lock in a high rate for a fixed period of time (generally between three months and five years). If rates fall later this year, you’ll still earn that guaranteed return while others get stuck with lower yields. Meanwhile, savings accounts have variable rates that can change at any time.

CDs also come with federal insurance (up to $250,000 per depositor, per bank), so you don’t have to worry about bank failure. Just be sure you won’t need the money during the term so you can avoid early withdrawal penalties.

How to open a CD

Opening a CD is simple. Here’s how to do it:

  1. Compare rates — Look at top online banks and credit unions, not just traditional banks.
  2. Choose a term — Determine how long you can afford to lock up your money.
  3. Check the fine print — Look for early withdrawal penalties, minimum deposits, and renewal rules.
  4. Fund your CD — Transfer funds from a linked account

Many banks let you open a CD in minutes online, and some offer no-penalty CDs if you want more flexibility.

Lock in your higher rate today

If history is any guide, CD rates won’t stay this high for much longer. With rate cuts expected in the coming months, now’s a smart time to lock in a high, guaranteed return. Just make sure you’re comfortable keeping your money parked until the term ends.

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