For savers who've enjoyed the highest interest rates in over two decades, the clock is ticking. Certificate of deposit rates that peaked above 5% APY in 2024 have steadily declined following three Federal Reserve rate cuts in 2025. With at least two more cuts expected this year, the window to lock in 4%+ returns is closing fast.

Where CD Rates Stand Today

As of January 5, 2026, the highest nationally available CD rate is 4.18% APY, offered on select terms at online banks and credit unions. That's down significantly from peaks above 5.5% seen in late 2023 and early 2024, but still historically attractive—and still beating inflation.

The best current offers include:

  • Daniels-Sheridan Federal Credit Union: 5.11% APY on a 12-month CD (requires $500 minimum)
  • LendingClub: 4.1% APY on an 8-month CD
  • Sallie Mae Bank: 4.1% APY on an 11-month CD
  • Marcus by Goldman Sachs: 4.0% APY on various terms

Credit unions often offer the highest rates but may require membership. Online banks typically provide the best combination of competitive rates and easy access.

Why Rates Are Falling

The Federal Reserve cut its benchmark rate three times in 2025, bringing the federal funds rate to a range of 3.5% to 3.75%—down 75 basis points from a year ago. Banks have responded by lowering the rates they offer savers.

Philadelphia Fed President Anna Paulson said last week that "modest additional interest-rate cuts could be appropriate later in 2026," though she conditioned that outlook on benign economic data. The CME Group's FedWatch tool currently projects two more cuts this year—one in April and another in September.

Each Fed cut typically triggers another round of CD rate reductions within weeks. Savers who wait risk watching today's 4% offers become tomorrow's 3.5% rates.

The Real Return Calculation

With core inflation running around 2.8% (as measured by the Fed's preferred PCE index), a 4% CD still generates positive real returns of roughly 1.2%. That may seem modest, but it represents risk-free, guaranteed income—something that can't be said for stocks, bonds, or most other investments.

For context, during the decade following the 2008 financial crisis, CD rates rarely exceeded 1% while inflation hovered around 2%. Savers were losing purchasing power. Today's environment, while declining, still favors those who act.

Building a CD Ladder

The most effective strategy for uncertain rate environments is a CD ladder—spreading deposits across multiple maturity dates to balance yield with flexibility.

Here's a sample approach with $50,000:

  • $10,000 in a 3-month CD – Provides liquidity and lets you reinvest if rates rise unexpectedly
  • $10,000 in a 6-month CD – Captures current rates while maintaining some flexibility
  • $15,000 in a 12-month CD – Locks in today's best rates for a full year
  • $15,000 in an 18-month CD – Extends protection against rate declines through mid-2027

As each CD matures, you can reinvest at the longest rung of your ladder, capturing whatever rates are available while maintaining regular access to portions of your savings.

CDs vs. High-Yield Savings

Some savers question whether CDs are worth the commitment when high-yield savings accounts currently pay similar rates—up to 4% APY at some online banks—without locking up funds.

The key difference is rate protection. A CD rate is guaranteed for the full term, regardless of Fed actions. A high-yield savings rate can drop at any time as banks adjust to market conditions. If the Fed cuts rates twice as expected, today's 4% savings account could easily become a 3.5% account by summer.

For funds you won't need in the near term, CDs offer valuable certainty. For your emergency fund or money you might need on short notice, high-yield savings remains the better choice.

The Action Window

Based on current Fed projections, savers likely have until late March or early April before the next rate cut arrives. That gives roughly 10-12 weeks to research options, open accounts, and fund CDs at today's rates.

The process is straightforward at most online banks—typically requiring only an online application, identity verification, and a funding transfer from your existing bank account. Most CDs can be opened and funded within a few business days.

For those who've been waiting for the "perfect" moment to lock in rates, the reality is that moment may have already passed. But 4% APY still represents an excellent risk-free return—one that won't be available indefinitely.