CD Rates Forecast 2026: Will Rates Go Up or Down?
CD rates have retreated from their 2023-2024 peaks but remain historically attractive. The best 12-month CD still pays 4.23% APY. Here is where rates stand today, what the Fed signals for the rest of 2026, and whether you should lock in now or wait.
Last updated: April 4, 2026
Quick Answer: Are CD Rates Going Down?
Yes, the trend is downward. The Federal Reserve held its benchmark rate at 4.25%-4.50% through early 2026 after cutting a full percentage point in late 2024. Markets expect two to three additional quarter-point cuts before year-end, which would push the fed funds rate to the 3.50%-4.00% range. Each Fed cut typically pulls top CD rates down by a similar amount within weeks.
What this means for you: Today's CD rates are likely higher than what you will find later in 2026. If you have cash you can lock away, securing a 4.23% 12-month or 4.20% 24-month CD now protects your yield against falling rates. A CD ladder strategy is an effective way to balance rate-locking with ongoing liquidity.
Current Best CD Rates at a Glance
Federal Reserve Outlook for 2026
The Federal Reserve is the single biggest driver of CD rates. Here is the current policy position and what it means for savers:
The Fed cut rates three times in late 2024 (September, November, December), lowering the benchmark by a full percentage point from its 2023-2024 peak of 5.25%-5.50%. Since then, the Fed has held steady as it monitors inflation and labor market data.
Fed funds futures imply the benchmark rate will end 2026 in the 3.50%-4.00% range. The Fed's own "dot plot" projections have pointed to a gradual easing path. However, sticky inflation or a resilient labor market could slow the pace of cuts.
Each quarter-point Fed cut typically pulls top CD rates down by 0.15%-0.25% within a few weeks. If the Fed cuts twice more in 2026, today's best 4.23% 12-month CD could drop to the mid-3% range by year-end. Longer-term CDs may hold up better because banks have already priced in expected cuts.
Historical CD Rate Context
Understanding where CD rates have been helps frame where they are going.
| Period | Fed Funds Rate | Top 1-Year CD | Context |
|---|---|---|---|
| 2020-2021 | 0.00%-0.25% | ~0.50%-0.75% | COVID zero-rate era |
| 2022 | 0.25% to 4.50% | ~3.00%-4.50% | Aggressive Fed hiking cycle |
| 2023-2024 (Peak) | 5.25%-5.50% | 5.25%-5.65% | Highest in 20+ years |
| Late 2024 | 4.25%-4.50% | 4.25%-4.75% | Fed begins cutting |
| Now (2026) | 4.25%-4.50% | 4.23% | Fed on hold, cuts expected |
Even with expected declines, today's CD rates remain far above the near-zero levels of 2020-2021. A 4.23% 12-month CD still earns roughly $431 on a $10,000 deposit, compared to just $50-$75 during the zero-rate era.
Current CD Yield Curve: What the Shape Tells You
The yield curve shows how rates differ across CD terms. In a normal environment, longer terms pay more to compensate for tying up your money. When shorter terms pay more (an inverted curve), it signals that the market expects rate cuts ahead. Here is what today's curve looks like:
| Term | Best Rate | Bank | Min. Deposit |
|---|---|---|---|
| 3 months | 4.00% | Brilliant Bank | $1 |
| 6 months | 4.20% | United Fidelity Bank, fsb | None |
| 1 year | 4.23% | GECU | $50 |
| 18 months | 4.10% | USALLIANCE Financial | $500 |
| 2 years | 4.20% | Mountain America Credit Union | $500 |
| 3 years | 4.10% | United Fidelity Bank, fsb | None |
| 5 years | 4.15% | United Fidelity Bank, fsb | None |
| HYSA (variable) | 4.50% | SoFi | None |
The curve is inverted: 6-month CDs (4.20%) pay more than 5-year CDs (4.15%). This confirms that the market expects the Fed to cut rates significantly over the next few years. For savers, this means short- to mid-term CDs currently offer the best combination of yield and flexibility.
Should You Lock In a CD Rate Now?
The short answer: yes, for money you can afford to set aside. Here is the case-by-case breakdown:
Lock In Now If...
- ✓You have savings beyond your emergency fund that you will not need for 6-24 months
- ✓You want to guarantee your return regardless of what the Fed does
- ✓You are saving for a specific goal with a known timeline (down payment, tuition, etc.)
- ✓You want to earn 4.23% on a 12-month CD before rates decline further
Stay in a HYSA If...
- •You may need the money before the CD matures (early withdrawal penalties apply)
- •This is your emergency fund (keep it liquid in a high-yield savings account)
- •You believe the Fed will hold or raise rates (contrarian view)
- •The HYSA rate is very close to CD rates, making the lock-in premium minimal
The smart middle ground: Use a CD ladder to split your money across multiple terms. This locks in today's high rates while giving you periodic access as each rung matures. Try the CD ladder calculator to model your exact scenario.
Best CD Terms to Lock In Today
6-Month CDs: Best for Short-Term Certainty
A 6-month CD locks in your rate through the next one or two Fed meetings. Good for savers who want rate protection but may need access within a year. Top rate: 4.20% at United Fidelity Bank, fsb.
| Bank | APY | Min. Deposit |
|---|---|---|
| United Fidelity Bank, fsb | 4.20% | None |
| Limelight Bank | 4.15% | $1 |
| Pacific National Bank | 4.15% | None |
| Communitywide Federal Credit Union | 4.10% | $1 |
| Newtek Bank | 4.10% | None |
12-Month CDs: The Sweet Spot for Most Savers
The 12-month term is the most popular CD for good reason: it locks in a competitive rate without an excessively long commitment. At 4.23%, a $10,000 deposit earns roughly $431 in guaranteed interest.
| Bank | APY | Min. Deposit |
|---|---|---|
| GECU | 4.23% | $50 |
| E*TRADE from Morgan Stanley | 4.10% | None |
| Limelight Bank | 4.10% | $1 |
| Pacific National Bank | 4.10% | None |
| Popular Direct | 4.05% | $10 |
24-Month CDs: Lock In Through the Rate-Cut Cycle
A 2-year CD at 4.20% locks in today's rate through most or all of the expected Fed cutting cycle. On a $10,000 deposit, that is roughly $875 in total interest over two years, regardless of how far rates fall.
| Bank | APY | Min. Deposit |
|---|---|---|
| Mountain America Credit Union | 4.20% | $500 |
| United Fidelity Bank, fsb | 4.10% | None |
| E*TRADE from Morgan Stanley | 4.00% | None |
| Merrick Bank | 4.00% | $25 |
| USALLIANCE Financial | 3.95% | None |
5-Year CDs: Maximum Rate Protection
A 5-year CD at 4.15% guarantees your rate through 2030. This makes sense if you believe rates will continue falling and want to lock in a 4%+ yield for the long term. The trade-off is reduced flexibility, since early withdrawal penalties on 5-year CDs are typically steeper.
| Bank | APY | Min. Deposit |
|---|---|---|
| United Fidelity Bank, fsb | 4.15% | None |
| Advancial | 4.14% | $1 |
| State Savings Bank | 4.06% | None |
| Mountain America Credit Union | 4.00% | $500 |
| Sallie Mae Bank | 4.00% | $2 |
What Drives CD Rates?
- 1.Federal Reserve policy
The fed funds rate is the single biggest driver. When the Fed raises rates, CDs follow within weeks. When the Fed cuts, CDs drop. CD rates generally track within 0.5%-1.5% of the fed funds rate.
- 2.Bank competition for deposits
Online banks compete aggressively for deposits, which pushes rates higher. When banks need deposits to fund loans, they raise CD rates. When they have excess deposits, rates drop even if the Fed holds steady.
- 3.Inflation expectations
If inflation stays elevated, the Fed keeps rates higher for longer, supporting CD yields. If inflation drops quickly toward the 2% target, the Fed cuts sooner and CD rates fall faster.
- 4.Economic growth and employment
A strong economy with low unemployment supports higher rates. A recession or economic slowdown leads to aggressive rate cuts as the Fed tries to stimulate borrowing and investment.
- 5.Treasury yields
CD rates compete with Treasury bills and notes for saver dollars. When Treasury yields are high, banks must raise CD rates to remain competitive. When Treasury yields fall, CD rates tend to follow.
CDs vs HYSAs When Rates Are Falling
In a declining-rate environment, CDs and HYSAs behave very differently. Understanding this distinction is critical for maximizing your returns:
| Factor | CD | HYSA |
|---|---|---|
| Rate when Fed cuts | Stays locked at your original rate | Drops within days to weeks |
| Liquidity | Locked until maturity (penalty for early withdrawal) | Fully liquid, withdraw anytime |
| Best rate today | 4.23% (12-mo) | 4.50% |
| Ideal for | Money with a known timeline | Emergency fund, flexible savings |
For a detailed comparison, see our HYSA vs CD guide.
Frequently Asked Questions
Will CD rates go up or down in 2026?
Most forecasters expect CD rates to drift lower through 2026 as the Federal Reserve gradually cuts the federal funds rate. The Fed held rates at 4.25%-4.50% through early 2026, and markets project two to three quarter-point cuts before year-end. Each Fed cut typically translates to lower CD APYs within a few weeks, so the trend is downward, though the pace depends on inflation data and economic conditions.
Should I lock in a CD rate now or wait?
If the consensus is correct that rates will decline, locking in now guarantees today's rate for the full term. Waiting risks securing a lower rate later. However, a CD ladder strategy hedges this risk by splitting your deposit across multiple terms, so some portion always matures near the best available rate. For savers with a clear time horizon, locking in a 12- to 24-month CD now captures a rate that will likely be higher than what is available later in 2026.
Why are longer-term CD rates sometimes lower than short-term rates?
This is called an inverted yield curve. It happens when the market expects the Fed to cut rates in the future. Banks set longer-term CD rates based on where they think rates are going, not where they are today. When rate cuts are expected, longer CDs pay less because the bank anticipates lower funding costs over the CD term.
How does the Federal Reserve affect CD rates?
The Fed funds rate sets the floor for short-term borrowing costs across the economy. When the Fed raises its target rate, banks must pay more to borrow, so they increase CD and savings rates to attract cheaper deposit funding. When the Fed cuts, borrowing costs drop and banks lower deposit rates accordingly. CD rates generally track within 0.5% to 1.5% of the federal funds rate.
What is the best CD term to lock in right now?
The best term depends on your rate outlook and when you need the money. If you believe rates will fall, a 12- to 24-month CD locks in a high rate for longer. If you are unsure, a CD ladder across 6-, 12-, 18-, and 24-month terms hedges your bets. Short-term CDs (3-6 months) make sense if you expect rates to rise or need the money soon.
Are CD rates going down in 2026?
Yes, CD rates are expected to decline gradually through 2026. The Fed began cutting its benchmark rate in September 2024, and markets expect additional cuts in 2026. Each quarter-point Fed cut typically reduces top CD rates by a similar amount within a few weeks. However, the pace of decline depends on inflation, employment data, and any economic surprises.
Is a HYSA better than a CD when rates are falling?
It depends on your priorities. A HYSA rate adjusts immediately when rates fall, so your yield drops in real time. A CD locks in the current rate for the full term, protecting you from rate declines. In a falling-rate environment, CDs have an advantage for money you can set aside. A HYSA is better for funds you may need on short notice.
What were CD rates at their peak?
Top CD rates peaked in late 2023 through mid-2024, with the best 12-month CDs reaching 5.50%+ APY and some shorter-term promotional CDs exceeding 5.65%. These levels reflected the Fed funds rate at 5.25%-5.50%, the highest in over two decades. Rates have since declined as the Fed began cutting in September 2024.
Should I break my current CD to get a higher rate?
Rarely. Early withdrawal penalties typically cost 3-6 months of interest, which can wipe out any rate advantage from switching. Run the math: compare your remaining interest at the current rate minus the penalty against the interest you would earn at the new rate for the same remaining period. In most cases, you are better off waiting until maturity and then locking in the best available rate.
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