Why you should open a CD before the Fed meeting in November

When it comes to the right financial product or service, timing is everything. And for most of the last two years, it’s been the right time to open one Certificate of deposit (CD) Account. Whether you have decided on a short-term CD or a Long-term CD and decided to make a deposit $500 or $5,000They were able to generate a return that was exponentially higher than just a few years ago inflation and higher interest rates.

But the timing of opening a CD account is changing again — and savers would be wise to take action smart moves now, while they still can.

For those who don’t already have a CD account, as well as those who still want to take advantage of today’s high interest rates, it makes sense to open a CD account now, in the weeks before the Federal Reserve’s scheduled November meeting. Below we explain why.

See how much more you could make with a top CD here.

Why you should open a CD before the Fed meeting in November

Not sure if now is the right time to open a CD? Then consider these three factors:

Interest rates are still high

Despite the US Federal Reserve interest rate cut in September of half a percentage point, Interest Rates on CDs are currently still high, with many lenders offering interest rates in the 4% to 5% range. In other words, the interest rate climate has only recently begun to cool, and not so dramatically that CD interest rates have become unworthy.

However, today’s interest rates are unlikely to remain at these high levels for much longer, and many may look back to October 2024 as the last time they could have secured a high interest rate in this economic cycle. So don’t wait for that to happen.

Start here now with a high-priced CD.

Interest rates could fall in anticipation of a cut

A formal rate cut ensures that lenders reduce the interest rates on their products, both for savers and borrowers. However, this reduction does not have to be official in order for lenders to pre-empt any reductions. Interest rates could fall in anticipation of a cut, as they did in September Mortgage interest ratesbefore the Fed took formal action. The same dynamic could also unfold with CDs in the last weeks of October. So start shopping around for interest rates and lenders now before this theoretical scenario becomes a reality.

Several interest rate cuts now seem likely

It has been difficult to predict rate cuts this year as many assumed at the start of 2024 that they would be implemented in the spring or perhaps June. But when the first formal cut was finally enacted on September 18 – the first in four years – the economy had a chance to respond. And while the cuts in November and December are now likely to be only 25 basis points, that will represent a full point cut from the September 1 federal funds rate. This will reduce what you can earn on a CD if you wait to trade beyond November. So if you know how much you can comfortably deposit without taking any risk Prepayment penaltyIt makes sense to act now, as high-priced CDs are still easy to find.

The end result

While you could have opened a high-earning CD for most of 2022 and 2023, the window of opportunity hasn’t completely closed yet. If savers act now, they can still lock in an interest rate between 4% and 5% — and they can do both before the Fed cuts rates again in November And before lenders start pricing this reduction into their offers. Just shop around to find a lender that offers the best interest rates and terms and consider using one Online bankas they can generally (but not always) offer a more attractive return than banks with physical branches.