Finding CD rates at or near 4%
Investors looking to lock in income ahead of another likely rate cut from the Federal Reserve can still find solid yields in certificates of deposit. Some are even yielding 4%. The market is pricing in 87% odds that the central bank will reduce rates by a quarter of a percentage point at its meeting next week, according to the CME FedWatch tool . Rates on cash instruments like money market funds and high-yield savings accounts are expected to follow suit. The current annualized seven-day yield on the Crane 100 list of the largest taxable money market funds is 3.79%. The median annual percentage rate on high-yield savings accounts is 3.65%, BTIG found. Last week, American Express cut its online savings rate by 0.10 percentage point to 3.40%, BTIG analyst Vincent Caintic said in a note Sunday. “It appears to us that, slowly but steadily each week, each bank will eventually cut once in 4Q25,” Caintic wrote. “Perhaps increasing probabilities of a December Fed Funds Rate cut … is aiding online bank confidence in cutting deposit rates.” To get ahead of a dip in cash rates, investors can lock in yield with CDs. The median one-year CD rate today is 3.8%, Caintic said. No banks in his coverage reduced their annual percentage yield (APY) last week, but Capital One decreased its yield this week to 3.90% from 4.05%. Still, investors should make sure they don’t need the cash while it is locked up in a CD, otherwise they face penalties if they make an early withdrawal. Another option is building a CD ladder. In other words, buy CDs of varying maturities that provide income at different times. Chelsea Ransom-Cooper, co-founder and chief financial planning officer at Zenith Wealth Partners in Philadelphia, suggests investors build a ladder ranging 3 months to 14 months. “It gives them a bit of a hedge in case they need the cash sooner rather than later, so they’re not waiting for their money at one specific date, but they have a few different options on when they could pull the cash out,” Ransom-Cooper, a member of the CNBC Financial Advisor Council , recently told CNBC . While CD rates are down from their highs, they are still attractive from the days of zero interest rates. Back in June 2021, for example, the average one-year APY was just 0.17%, according to Bankrate .
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