While inflation and higher interest rates hurt borrowers in the past few years, they’ve been a major support for savers. With the Federal Reserve raising its federal funds rate multiple times, the returns on savings vehicles like high-yield savings and certificates of deposit (CD) accounts surged, rising exponentially from where they were in 2020 and 2021. This allowed savers to earn hundreds and possibly thousands of dollars, simply by transferring a portion of their money into one of these accounts instead of a traditional account.

But the economic climate has shifted in some unpredictable ways this year. While inflation is down dramatically from the 9% range it was registered at in June 2022, it rose in both October and November and is closing in at 3% – a full percentage point above the Federal Reserve’s desired 2% goal. Interest rates, meanwhile, were reduced in both September and November with a third and final cut of 2024 expected for when the Federal Reserve meets again later this month.

These developments haven’t dramatically reduced the benefits of CDs, though, and savers can still find CDs with rates close to 5% now. To do so, however, will require a bit more work and strategy than what savers may have been accustomed to recently. And these moves should be made in a timely, if nuanced, manner. Below, we’ll detail four CD moves to make before January 1, 2025.

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4 CD moves to make before 2025

Looking to open a CD soon? Make these four moves before the new year to improve your chances of success:

Monitor the rate climate

A new inflation reading for November was released this week. The next Federal Reserve meeting is set for December 17 and December 18. Both can affect what offers lenders offer prospective CD account holders, so start by monitoring the current rate climate for opportunities to act. Remember that lenders don’t need to wait for a formal rate reduction or hike to start pricing in this predicted action in advance. So, if a cut looks likely, it may be better to lock in as high a rate as you can now.

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Start shopping for lenders

Different banks will offer different rates and terms, some significantly better than others. But you won’t know which is optimal until you start shopping around for lenders. This may mean going beyond your current bank with physical branches and opting for an online one instead. The latter types tend to have less maintenance expenses and, thus, the ability to pass on those savings to customers in the form of higher interest rates.

Open a long-term account

Short-term CD accounts have slightly higher interest rates than most long-term options now. But that rate will expire as soon as three months from now while long-term CDs can lock in today’s elevated rate for 18 months to 10 years. So crunch the numbers and, if you can afford to part with the funds for an extended period, opt for a long-term account. This will ensure predictable earnings for the full CD term, regardless of what happens in the broader rate climate during that time.

Only deposit what you can afford to keep in the account

All of these strategic moves won’t matter if your opening CD account deposit is too difficult for you to keep locked away. If you have to regain access to your funds prematurely — whether that be at the beginning of your term or near the end of it — you’ll likely get hit with an early withdrawal penalty. That fee could see you having to forfeit all of the interest earned to date. So don’t let today’s high rates tempt you into depositing more money than you can easily afford to part with.

The bottom line

Despite some volatility in the rate climate in recent months, CDs are still a smart bet for many savers. But with a new year just weeks away and additional volatility likely, it makes sense to open one of these accounts in the final weeks of the year. By taking these four steps, you can do so in a comprehensive and financially secure way, setting your money up for success in 2025 and beyond. 

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