Is It Worth Putting Money in a CD Right Now?

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In case you didn’t catch the news, on Nov. 7, the Federal Reserve lowered its benchmark interest rate by a quarter of a percentage point. And that wasn’t the first time the central bank lowered the federal fund rate this year. In September, the rate fell by half a percentage point.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. As a result of the Fed’s rate cuts, CD rates have come down. Earlier this year, it was easy enough to find a CD paying 5%. Nowadays, you’re most likely looking at a rate in the 4% range, which is still pretty competitive. But whether it’s worth putting money into a CD today depends on your personal situation — and specifically, what you want to use your money for.Think about your specific goalsGenerally speaking, CDs are a great financial tool for meeting short-term goals. That’s because money in a CD is protected from losses provided you use an FDIC-insured bank and limit your deposit to $250,000.If you’re saving for a goal that’s a few years away, then investing your money becomes risky. In that situation, you don’t have a lot of time to ride out market downturns. So in that case, it pays to shop around for a great CD rate and open a CD while you can still snag a pretty good deal.But let’s say you’re saving for a goal that’s far into the future, like the retirement you expect to kick off in 30 years. Or, let’s say you’re saving for your kids’ college education and your oldest just turned six. In that case, investing your money is a better bet because the returns you earn in a stock portfolio might well surpass the CD rate you can snag today.Over the past 50 years, the S&P 500 has averaged an annual 10% return, accounting for years when the market did well and years when it did poorly. If you put $10,000 into a stock portfolio that gives you that same 10% annual return, in 30 years, you could be sitting on almost $175,000. So it’s worth taking a chance on stocks if you have a long time frame.Don’t tie up your emergency fundIf you don’t have a long time horizon, then a CD is a better option than opening a brokerage account and investing your money. But do remember that CDs aren’t paying so much more than what savings accounts are paying today. If you think you might need your money — or some of it — for emergencies or unplanned expenses, then you’re best off sticking with a savings account.Say you have $8,000 in regular savings and another $10,000 on top of that. You might think you’re good to throw that $10,000 into a CD. But if your essential monthly bills come to $3,000, an $8,000 emergency fund doesn’t even buy you three full months of protection, which is the minimum most financial experts recommend.Indeed, CDs offer you the benefit of a guaranteed interest rate on your money. With a savings account, you’re taking the risk that the rate on your savings could fall over time. And that’s actually pretty likely in the coming year, since the Fed is expected to cut rates even more.But a savings account gives you the flexibility to withdraw money whenever you want. With a CD, there’s generally a costly penalty for taking an early withdrawal. So if you’re not sure you can afford to part with your money, you may want to skip the CD and stick to a high-yield savings account.But if that’s the case, make sure your savings account is paying you as much as possible. Check out this list of the best savings accounts to see if you can snag a better deal than what you’re currently getting.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

In case you didn’t catch the news, on Nov. 7, the Federal Reserve lowered its benchmark interest rate by a quarter of a percentage point. And that wasn’t the first time the central bank lowered the federal fund rate this year. In September, the rate fell by half a percentage point.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

As a result of the Fed’s rate cuts, CD rates have come down. Earlier this year, it was easy enough to find a CD paying 5%. Nowadays, you’re most likely looking at a rate in the 4% range, which is still pretty competitive. But whether it’s worth putting money into a CD today depends on your personal situation — and specifically, what you want to use your money for.

Think about your specific goals

Generally speaking, CDs are a great financial tool for meeting short-term goals. That’s because money in a CD is protected from losses provided you use an FDIC-insured bank and limit your deposit to $250,000.

If you’re saving for a goal that’s a few years away, then investing your money becomes risky. In that situation, you don’t have a lot of time to ride out market downturns. So in that case, it pays to shop around for a great CD rate and open a CD while you can still snag a pretty good deal.

But let’s say you’re saving for a goal that’s far into the future, like the retirement you expect to kick off in 30 years. Or, let’s say you’re saving for your kids’ college education and your oldest just turned six. In that case, investing your money is a better bet because the returns you earn in a stock portfolio might well surpass the CD rate you can snag today.

Over the past 50 years, the S&P 500 has averaged an annual 10% return, accounting for years when the market did well and years when it did poorly. If you put $10,000 into a stock portfolio that gives you that same 10% annual return, in 30 years, you could be sitting on almost $175,000. So it’s worth taking a chance on stocks if you have a long time frame.

Don’t tie up your emergency fund

If you don’t have a long time horizon, then a CD is a better option than opening a brokerage account and investing your money. But do remember that CDs aren’t paying so much more than what savings accounts are paying today. If you think you might need your money — or some of it — for emergencies or unplanned expenses, then you’re best off sticking with a savings account.

Say you have $8,000 in regular savings and another $10,000 on top of that. You might think you’re good to throw that $10,000 into a CD. But if your essential monthly bills come to $3,000, an $8,000 emergency fund doesn’t even buy you three full months of protection, which is the minimum most financial experts recommend.

Indeed, CDs offer you the benefit of a guaranteed interest rate on your money. With a savings account, you’re taking the risk that the rate on your savings could fall over time. And that’s actually pretty likely in the coming year, since the Fed is expected to cut rates even more.

But a savings account gives you the flexibility to withdraw money whenever you want. With a CD, there’s generally a costly penalty for taking an early withdrawal. So if you’re not sure you can afford to part with your money, you may want to skip the CD and stick to a high-yield savings account.

But if that’s the case, make sure your savings account is paying you as much as possible. Check out this list of the best savings accounts to see if you can snag a better deal than what you’re currently getting.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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