The federal funds rate was cut by half a percentage point in September, its first reduction in more than four years. While encouraging economic growth has slightly dimmed the likelihood of additional big reductions, many experts predict at least two additional 25 basis point cuts when the Federal Reserve meets again in November and December. While this will be welcomed by borrowers currently coping with high rates on a variety of products, it won’t be as beneficial for savers who have had an opportunity to earn big returns on select savings accounts.

For those who have opened certificates of deposit (CDs) in recent years, as well as those considering opening one now, it makes sense to open accounts with the highest rates for the longest terms in this current climate. By doing so, savers will earn a high, fixed return for a year or more, even if rates fall during that time. But what CD accounts, specifically, should savers open before the next rate cut? Below, we’ll detail three to consider now.

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3 CD accounts to open before the next rate cut

While every saver’s financial situation differs, there’s a compelling case to be made for opening one or more of the following CD accounts now, before the next rate reduction:

1-year CD

Interest rates on short-term CDs of 12 months or less have historically been lower than their long-term counterparts. But that hasn’t been the case with the rate volatility of recent years as rates on these accounts are generally higher than long-term CDs. And one lone rate reduction hasn’t caused the rates on these accounts to drop in a significant way, either. 

Right now you could lock in a rate of 4.75% on a 1-year CD. With a $5,000 deposit, that equates to around $240 in earned interest – and you’ll earn it no matter how many times the Fed cuts rates between now and the October 2025 maturity date.

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18-month CD

An 18-month CD only comes with a slightly lower interest rate than a 1-year CD does (4.40% versus the 1-year CD’s 4.75%), but you’ll still earn a substantial return (around $335 using that $5,000 deposit example). And you’ll extend your protection and rate-earning potential another six months, into 2026. 

By then, the hope is that the rate climate will have leveled off and you’ll be able to make a better-informed decision for your money. In the interim, an 18-month CD could provide a good balance of a high rate and extended protection. 

5-year CD

A 5-year CD isn’t for everyone as it is one of the longer terms currently available. However, if you’re not sure when the rate climate will ultimately shake out but want to protect your money until you’re comfortable that it has, a 5-year CD could be beneficial for you. You can secure a rate of 4.35% now, which is equivalent to an almost $1,200 return using that same $5,000 deposit example. And the more your deposit, the more you’ll earn. 

Just be cautious with what you ultimately do decide to put into this account, should you decide to. Lenders will charge an early withdrawal penalty to regain access to your funds and, with long-term CDs, this becomes a more realistic situation than it would be with CDs that mature earlier. 

Try the CD laddering strategy

Not sure which CD account type is best for you now? Then consider opening multiple ones with varying lengths. This is called the CD laddering strategy. By taking this approach, you’ll keep your funds relatively accessible while still taking advantage of today’s available high rates. When one account matures, you can reinvest the money into a different account with a different rate and term and so on. This may require a more hands-on approach and greater use of online banks to secure the highest rates and terms, but it could result in significant earnings over time.

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