With inflation cooling, you may be thinking about opening a long-term certificate of deposit (CD). After all, cooling inflation could be followed by cooling interest rates and returns on CDs. But, if you open a long-term CD now, you can lock in today’s high rates for years – regardless of what happens with interest rates ahead. 

Most finance experts consider a long-term CD to be an account that takes longer than one year to mature. Some popular long-term CDs include those with 18-month, 2-year, 3-year and 5-year terms. 

Of course, each of these CD terms comes with its own pros and cons. So, deciding which one fits your needs in the current financial climate can be challenging. Below, we’ll help you decide which long-term CD is best for you below. 

Compare leading long-term CDs today. 

Which long-term CD is best with inflation cooling? 

There are several factors to think about as you decide which long-term CD is best. Here are a few to consider as you choose: 

The interest rate environment

Interest rates are high at the moment – pushing returns on deposit accounts like CDs up. And, today’s high rates are driven by the fact that the Federal Reserve’s federal funds rate is frozen at a 23-year high. But that high benchmark interest rate isn’t going to last forever. 

Interest rates are cyclical and the cycles they go through are often the result of changes in inflation. And, inflation has been cooling recently. If it continues to do so, it could give the Federal Reserve a reason to start cutting its federal funds rate – a move that may be followed by financial institutions cutting rates on deposit and other financial accounts. 

With the threat of rate cuts looming, it may be better to opt for the longest term that fits with your financial plan. So, if you can comfortably lock your money up for five years, doing so may be your best option. But, if you can only lock your money up for 18 months, an 18-month term may be fitting. 

Lock in a competitive return for the long term while you still can. 

The rate difference between your options

CDs with different terms usually offer different APYs. And currently, those with shorter terms typically offer higher rates than those with longer terms. That rate difference is worth consideration. 

If you’re looking for the highest APY possible, an 18-month term may be the best option for you. Then again, while a 5-year CD may offer a lower yield than its shorter-term counterparts, it may be worth considering if you’d like to lock in today’s high returns for a longer period of time. 

Your financial goals

You should consider your financial goals when determining which long-term CD is best for you. Keep in mind that you’ll need to lock your money in the CD through its entire term. So, it’s important to think about when you might need the money you lock up and plan for that need as you choose your term. 

For example, say you want to put a down payment on a home in three years. In this case, the best long-term CD to consider would be one with a term equal to your goal’s timeframe. When you do, you’ll lock your money up for a few years – helping to ensure that you don’t access your savings early. And, your CD will mature at about the same time that you’re ready to buy your home.

Find a long-term CD that matches your financial goals today. 

The bottom line

No matter which term you choose, locking in today’s high returns with a long-term CD is worth consideration. After all, today’s high rates won’t be available forever. But, as you decide the term you’ll lock in, you should consider today’s interest rate environment and the potential rate cuts that are ahead, the rate difference between your options and your financial goals. Compare today’s leading long-term CDs now.