In its first meeting of the year, the Federal Reserve voted to hold interest rates in the 4.25% to 4.5% range. That’s disappointing news for those hoping to refinance a mortgage, but it’s great news for consumers looking to save. As we head into the new year, there are still plenty of CDs offering yields above 4%. That’s higher than CD rates have been in the last decade and higher than inflation, which currently sits at 3.2% as of December.
Your best bet is to lock in those higher rates for as long as you can with a 5-year CD. Right now, the best 5-year CD rates are above 4%. While shorter-term CDs are a little higher, the benefit of securing higher yields for the next five years is worth taking the slightly lower rate.
Despite the pause this month, the Fed is still expected to resume rate cuts later this year, aiming to hit 2.5% or lower by the end of 2026. By the time your short-term CD matures in a few months or a year from now, you’re unlikely to find offers this good again. So, if you can afford to lock up your cash for a few years, a 5-year CD is one of the best places to store your cash in 2025.
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5-Year CDs we recommend after the Fed meeting
With 5-year CD rates still well above 4%, this is a great time to lock in inflation-beating yields for the long term. Since rates are fixed for the entire term, these longer term CDs allow you to secure today’s above-average rates before the decreases expected later this year.
Here are some of the top 5-year CD accounts you can open today:
| Account | APY | Min. Deposit |
|---|---|---|
| Transportation Federal Credit Union | 4.40% | $1,000 |
| SchoolsFirst Federal Credit Union | 4.25% | $500 |
| Mountain America Credit Union | 4.25% | $500 |
| Credit Human | 4.16% | $500 |
| MYSB Direct | 4.01% | $500 |
| Securityplus Federal Credit Union | 4.00% | $1,000 |
| CoVantage Credit Union | 4.00% | $1,000 |
Short-term CDs are still a good choice if you need flexibility
Locking up your cash for five years isn’t a realistic option for everyone. If you know you’ll need to tap into those savings sooner, there are plenty of attractive shorter-term CDs to choose from.
The best 1-year CD rates are hovering near 4.5%. You can also find 3-month or 6-month CDs offering similar yields. So if you need a little more flexibility with your funds, it’s worth considering a shorter-term CD.
Check out our Bankrate tool below to compare the best CD rates by term and APY.
When to consider a high-yield savings account
With the pause on rate cuts, now is also a great time to open a high-yield savings account. You won’t be able to lock in rates for a fixed term like you can with a CD, but there’s also no penalty for dipping into those savings as needed.
With some of the best high-yield savings accounts offering close to 5% APY, this is the best place to stash your emergency fund, vacation savings, or other cash that you need regular access to.
Use our Bankrate tool to find the best fit for your savings.
The bottom line
In terms of maximizing yields, a 5-year CD is your best bet after the Fed paused rate cuts in its January meeting. With offers above 4%, these long-term CDs still outpace inflation and allow you to secure higher rates ahead of the expected decline in CD rates later this year. But if you need more flexibility with your funds, a shorter-term CD or high-yield savings account are great alternatives.
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