The Federal Reserve is set to announce its latest rate decision later today. While many analysts anticipate the central bank maintaining its current stance amidst shifting economic indicators, you can take proactive steps to secure guaranteed returns without waiting for the announcement. Leading certificates of deposit continue to offer competitive rates of up to 4.40% APY, enabling you to safeguard your investments and ensure steady growth regardless of the Fed’s decision. These fixed-rate accounts serve as a valuable buffer against financial uncertainties in the upcoming months. Once you lock in your CD rate, it remains unchanged until maturity, providing predictable returns that can aid in your financial planning, whether for future expenses or bolstering retirement strategies, free from concerns about potential rate fluctuations.
For those seeking accessibility, no-penalty CDs now rival traditional options, allowing for early withdrawals without the usual penalties. This flexibility proves beneficial during times of economic transition when maintaining liquidity is crucial. Alternatively, a CD ladder strategy entails spreading your deposit across multiple CDs with different maturity dates, granting you regular access to portions of your savings while taking advantage of today’s elevated rates for extended periods.
Discover the top CD rates available today before the Fed’s decision, with minimal opening requirements, easy online signup processes, and the same government insurance protection as conventional banks. Here are the best rates for Wednesday, May 7, 2025:
– Bread Financial Savings CDs: 4.40% APY on 6-month terms with a $1,500 minimum
– Valley Bank Online CDs: Up to 4.30% APY on 3-month terms with a $25,000 minimum and 3.90% APY on 12-month terms with a $500 minimum
– Alliant Credit Union CDs: 4.10% APY on 6-month terms with a $1,000 minimum
– Discover Bank CDs: 4.00% APY on 12-month terms with no minimum
– Raisin/American First Credit Union CDs: 4.00% APY on 12-month terms with a $1 minimum
– Barclays Bank Online CDs: 4.00% APY on 12-month terms with no minimums
– CIT Bank No-Penalty CD: 3.50% APY on an 11-month term with a $1,000 minimum
Though online-only banks and digital accounts may be less familiar compared to larger institutions, each is FDIC-insured or partners with an FDIC-insured bank, ensuring deposit accounts are protected up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) – similar to traditional bank protections.
For a more in-depth look, consider exploring smart financial moves to make pre and post Fed rate cuts, as well as how a certificate of deposit functions, offering a secure and lucrative investment opportunity compared to typical savings accounts.
The Federal Deposit Insurance Corporation (FDIC) monitors monthly average interest rates on certificates of deposit and savings accounts. Established by Congress, the FDIC is an independent government agency responsible for upholding stability and public trust in the U.S. financial system, as well as providing insurance on consumer deposit accounts.
The comparison below showcases the national deposit rates on a $10,000 minimum deposit between April and March 2025 for various traditional deposit accounts:
– Savings: 0.41% in April 2025, no change from March 2025
– Interest Checking: 0.07% in April 2025, no change from March 2025
– Money Market: 0.62% in April 2025, down 1 basis point from March 2025
– 1-month CD: 0.24% in April 2025, down 1 basis point from March 2025
– 3-month CD: 1.42% in April 2025, down 1 basis point from March 2025
– 6-month CD: 1.60% in April 2025, down 1 basis point from March 2025
– 12-month CD: 1.77% in April 2025, down 1 basis point from March 2025
– 24-month CD: 1.49% in April 2025, no change from March 2025
– 36-month CD: 1.35% in April 2025, no change from March 2025
– 48-month CD: 1.27% in April 2025, no change from March 2025
– 60-month CD: 1.34% in April 2025, no change from March 2025
Over the past year, there has been minimal movement in average rates for traditional savings accounts, while short- and long-term CDs have shown more significant changes.
The FDIC, an independent government agency, is dedicated to maintaining the stability and trust in the U.S. financial system by insuring consumer deposit accounts.
For further information:
– Explore the best low-risk investments for retirees with steady returns on your savings
– Stay updated on CD rates news, which closely follow the Federal Reserve’s key interest rate
– Understand the impact of the Federal Reserve’s rate changes on deposit accounts and other financial products
As of March 19, 2025, the Federal Reserve chose to keep the federal funds target interest rate steady at a range of 4.25% to 4.50%. This decision follows previous rate adjustments aimed at managing inflation and promoting stable economic conditions. The Fed remains vigilant in assessing economic data and risks to guide future policy decisions.
Upcoming Meeting: May 6–7, 2025
The Federal Reserve is anticipated to maintain the Fed rate between 4.25% and 4.50% following its two-day policy meeting starting today. The CME FedWatch Tool, which gauges market expectations for Fed fund rate adjustments, indicates a likelihood exceeding 95% that rates will remain unchanged.
Economists are closely monitoring inflation and labor data amidst speculation about potential future cuts to the Fed rate. Recent figures show inflation has stabilized, ranging between 2.5% and 4% since May 2023, following a peak of 9.1% in June 2022.
New employment data from the Bureau of Labor Statistics on May 2 revealed an addition of 177,000 jobs in April, surpassing projections but slightly lower than the revised 185,000 jobs in March. Unemployment remained steady at 4.2%.
The consumer price index released on April 10 indicated a decrease in the annual inflation rate to 2.4% in March, below forecasts and down from 2.8% in February. Prices declined by 0.1% for the month due to lower energy costs and reduced travel expenses, marking the first monthly drop since May 2020.
Additionally, the producer price index released on April 11 showed a 0.4% decline in wholesale prices in March, the largest monthly drop since October 2023, with gasoline prices falling by 11.1%. The annual increase in the PPI moderated to 2.7%, signaling a slowdown in inflation. Despite the positive news on inflation, concerns remain about potential price growth resulting from President Trump’s trade policies.
Federal Reserve Chair Jerome Powell, speaking in Chicago on April 16, acknowledged the challenges posed by President Trump’s tariffs on future Fed policy decisions. Powell emphasized the need for clarity before making any adjustments to the policy stance.
The Powell-led rate-setting panel will announce its decision at the conclusion of the meeting on Wednesday, May 7, 2025, at 2 p.m. ET.
For more insights: Learn about the next Federal Reserve meeting and its impact on your finances. Compare different certificate of deposit options when making your selection. Consider factors such as term length, rate of return, minimum deposit, and the type of institution to determine the best fit for your financial goals.
Explore high-yield savings options that offer competitive rates and flexibility. Emergencies can arise, prompting the need to access your funds before the CD reaches maturity. Early withdrawal penalties are calculated in terms of interest months forfeited, such as 90 days’ worth for CDs with durations up to 24 months. Generally, longer terms incur higher penalty charges.
Delve deeper: Is breaking a CD worthwhile? Insights on early withdrawals and reaching a break-even point.
Advantages of a certificate of deposit:
– Secure returns: Lock in a fixed interest rate for the CD term, available for withdrawal after maturity.
– Enhanced rates compared to conventional accounts, especially from digital and online banks.
– Various term lengths, ranging from three months to over five years, to align with your financial objectives.
Disadvantages of a certificate of deposit:
– Early withdrawal penalties: Accessing funds prematurely subjects you to fees equivalent to several months of interest.
– Limited investment returns: While CDs provide steady interest accumulation, higher potential returns can be achieved through stocks, bonds, or mutual funds.
– Inflexibility in adding funds until after maturity, potentially missing out on increased rates.
Further exploration: Weighing high-yield savings accounts against CDs when interest rates are elevated.
Consider alternatives to CDs for low-risk, interest-yielding options with flexibility:
– High-yield savings accounts: Grow savings rapidly with variable rates exceeding 5% APY and no penalties for withdrawals.
– Money market accounts: Similar to savings accounts but with potentially higher interest rates and flexible access to funds.
– Higher-risk investments: Explore stocks, index funds, or mutual funds for increased returns, albeit with greater risks.
Learn more about managing CDs, financial safety, and optimizing your savings. Stay informed about your CD maturity date through notifications from your bank and set personal reminders to ensure timely action. Explore our personal finance resources for valuable insights on saving, earning, and growing wealth.
When your CD reaches maturity, banks profit by lending out money at higher interest rates than what they pay on customer deposits. This difference in rates, known as a spread, is essential for banks to generate income. Unlike regular savings accounts that allow flexibility in moving funds without penalties, a CD requires you to lock in your deposit for a specific time period. Upon maturity, you receive your initial amount plus accumulated interest. This lock-in feature, along with potential penalties for early withdrawal, enables banks to plan how to maximize returns on your deposit. They are willing to offer slightly higher interest rates in exchange for this reliability.
Is your money safe with online-only banks like Lending Club or SoFi? Yes, online-only banks and digital accounts are just as secure as traditional banks. They are either FDIC-insured chartered banks or partner with established banks to offer protected deposit accounts up to $250,000. Even in the event of a fintech failure, your money is safeguarded by the FDIC. Look for terms like “member FDIC,” “FDIC insured,” or “NCUA insured” to ensure the safety of your funds. Explore the differences between online and traditional banks regarding rates, fees, and money management.
What is compound interest? Compound interest means earning interest not only on your initial deposit but also on the interest accumulated over time. This method accelerates your savings by allowing each dollar to grow faster toward your financial objectives. The Annual Percentage Yield (APY) represents the total interest earned on your deposit in one year, including compound interest, expressed as a percentage. Discover how compound interest can turn time into money in our guide.
What is a jumbo CD? A jumbo CD is a certificate of deposit requiring a minimum deposit of $100,000 to open the account. Similar to regular CDs, jumbo CDs offer a fixed interest rate and term. While in the past jumbo CDs provided a secure investment with higher rates than traditional CDs, the current elevated interest rates set by the Fed may not always guarantee higher returns. Get informed about jumbo CDs and the importance of comparing options before committing your funds.
What is a no-penalty CD? Also known as a liquid CD, a no-penalty CD resembles a traditional CD but allows you to withdraw funds before maturity without penalties. However, this flexibility may come with lower interest rates compared to regular CDs. Given the current high rates, a high-yield savings account could potentially offer better returns than a no-penalty CD with similar withdrawal flexibility. Learn about the considerations when opting for a no-penalty CD.
What is a CD ladder? A CD ladder is a strategic savings approach that involves dividing your funds among multiple CDs to benefit from higher rates without locking your entire investment into a long-term CD. This method grants you access to a portion of your investment at regular intervals. Find out how to create a CD ladder that capitalizes on today’s top rates while enjoying consistent returns.
Act fast before today’s top rates disappear. What exactly is a brokered CD? It’s a type of certificate of deposit that you purchase through a brokerage firm rather than directly from a bank or credit union. Similar to regular CDs, you select a term length that corresponds with a fixed interest rate. However, unlike traditional CDs, brokered CDs can be acquired through your investment account either brand new or “pre-owned” from other investors. Get more insights on brokered CDs and important factors to consider before making an investment decision.
Distinguishing between saving and investing comes down to the accessibility of your funds and the level of risk involved. Saving involves keeping your money in secure accounts with minimal risk to your initial investment. On the other hand, investing entails purchasing assets such as stocks, bonds, or mutual funds that have the potential to generate higher returns. Delve deeper into the topic of saving versus investing to determine the most suitable strategy for growing your savings.
Please note that the annual percentage yields mentioned were accurate as of Wednesday, May 7, 2025, at 7 a.m. ET. Keep in mind that APYs and promotional rates for certain products may vary by region and are subject to change.
References:
– National Rates and Rate Caps, FDIC. Retrieved on April 22, 2025.
– Consumer Price Index Summary, U.S. Bureau of Labor and Statistics. Retrieved on April 11, 2025.
– Producer Price Index News Release Summary, U.S. Bureau of Labor and Statistics. Retrieved on April 14, 2025.
– Employment Situation Summary, U.S. Bureau of Labor and Statistics. Retrieved on May 5, 2025.
– CME FedWatch Tool, CME Group. Retrieved on May 7, 2025.
