A certificate of deposit (CD) allows you to set aside your cash in an ultra-low-risk account while earning a guaranteed return for several months or years.
Until recently, savers enjoyed the highest CD interest rates in nearly two decades. However, after the Federal Reserve began a series of cuts to the federal funds rate in 2024 and 2025, those sky-high rates have been on the decline — until recently.
If you’re looking to grow your savings in 2026, you may be wondering if CD rates will hold steady, continue dropping, or even go back up. Here’s what could happen, according to experts.
Where are CD rates headed in 2026?
After several years of unusually high yields, CD rates had been slowly trending downward in 2026. The biggest reason is the Federal Reserve. CD rates are closely tied to the federal funds rate, which influences how much banks pay consumers to keep money on deposit. When the Fed raises rates, banks typically increase CD yields to attract deposits. When the Fed cuts rates, CD yields usually fall as well.
However, the outlook has become more uncertain in recent months.
Earlier in the year, many economists expected the Fed to continue cutting rates throughout 2026 as inflation cooled and economic growth slowed. Those expectations led banks to prepare for lower deposit rates.
But inflation has proven stickier than expected; rising energy prices and geopolitical tensions in particular have caused some economists and Fed officials to rethink the possibility of additional cuts. In fact, some major firms, like Barclays, revised their forecasts and said they no longer expect Fed rate cuts this year because inflation risks remain elevated.
As a result, some CD rates have started ticking back up.
“The Federal Open Market Committee (FOMC) once again held rates steady, however the committee was unusually divided, which is likely due to economic signals that continue to conflict,” stated Mary Grace Roske, Head of Marketing and Communications at CD Valet, in their latest RateWatcher Report. “As inflation remains high and there is persisting uncertainty around future Fed cuts, we’re seeing banks and credit unions maintaining their CD yields or even edging them higher, especially for short-term CDs such as 12-month offerings.”
According to CD Valet’s analysis of more than 40,000 publicly listed CD rates from nearly 5,000 U.S. banks and credit unions, there were more CD rate increases than decreases over the past month. Further, the average APY increase was 28 basis points and 12-month CDs made up over 20% of total CD rate hikes.
Today, the national average CD rate for a 12-month term is 1.55% (that average was slightly higher this time last year, at 1.75%). That said, the best CD rates earn around 3%-4%, which is still relatively high by historical standards.
Is now a good time to invest in CDs?
CDs are sensitive to a number of factors, and understanding those variables can help you make a more informed decision about whether a CD is the right fit for your savings goals.
Short-term CDs are most directly influenced by the Fed’s benchmark rate, according to Cristian deRitis, deputy chief economist at Moody’s Analytics. “It directly influences the interest rates on short-term Treasury bills and CDs of less than one year.”
As for longer-term Treasury bonds and CDs, deRitis said rates are impacted by investors’ expectations for economic growth and inflation. “Financial conditions also play a role, with economic weakness and uncertainty pushing more investors to seek the relative safety of government bonds and CDs instead of stocks, cryptocurrencies, or other risky assets,” he explained. “During times of economic turmoil, this ‘flight to quality’ increases demand for fixed-income assets, driving their prices up and their yields (or interest rates) down.”
So, is now a good time to park your money in a CD? That depends on your financial goals. CD rates have decreased from post-pandemic highs, but they still offer some of the highest rates available among deposit accounts.
“For savers, this environment is all about timing and choice,” Roske stated. “Many institutions are still competing aggressively for deposits, especially on short‑term CDs, which means there are several opportunities to lock in competitive yields. “ She added that it’s important to shop around and not assume your financial institution is offering the best deal.
It’s not possible to say with certainty how the Fed will (or won’t) adjust the federal funds rate moving forward. If things change and the Fed raises its target rate, locking up your savings in a CD could mean missing out on better returns elsewhere.
If you’re on the fence about investing in a CD, consider an alternative such as a high-yield savings account or money market account, which offer similar rates to CDs and allow for more flexibility when it comes to withdrawing your funds. You could also set up a CD ladder, which allows you to take advantage of today’s high CD rates without tying up all of your money for several years.
