If you’re thinking about keeping cash in a certificate of deposit (CD), May can be a crucial month to grow your money. Following the recent stance of the Federal Reserve (Fed) regarding benchmark interest rates, we are going to reveal whether it is in your best interest to take advantage of the current rates of return on this type of account or if it is better to wait for them to rise a little more.
First, to make it easier for you to understand where these types of bank accounts generate returns, A certificate of deposit (CD) works like when you lend money to the bank for a fixed time, in exchange for interest. The higher the rate, the better for your pocket. And here’s the interesting thing: rates have been relatively high in recent months, which has benefited those who save, although not so much those who take out loans.
Experts consulted by CBS Recordsdata agree that CD rates will likely remain very similar to todayat least in the short term. This is directly related to the decision of the Federal Reserve (Fed), which has chosen not to move its reference rate for now.
“Because the Fed funds rate is projected to stay the same over the next few months, I expect CD rates to remain relatively stable over that period,” explained Leah Evans, director of product management at Georgia’s Have Credit Union. “One moves in conjunction with the other”.
In simpler words, If the Fed doesn’t change its rate, neither will the banks. They have many reasons to modify what they offer in products such as CDs or savings accounts.
However, not everything is completely frozen. There is a chance that rates could drop slightly in the coming weeks. It wouldn’t be a drastic drop, but it would be a gradual adjustment.
“CD rates will probably continue to decline over the next month or two, but at a slower pace,” said Cassandra Hutchinson, director of marketing at CDValet.com. “Macroeconomic signals are being mixed, so banks and cooperatives are acting more cautiously.”
Factors such as inflation, the global economy or even international conflicts come into play here. All of this influences how money moves. If, for example, inflation clearly drops or the economy slows down more than expected, then we could see more notable cuts.
“Tariffs are the variable that no one can fully predict right now,” said Christopher Walsh, senior financial advisor at Capital Selection Monetary Group. “There are even active legal challenges that could undo the entire program, which would reduce inflationary pressure and give the Fed room to cut rates faster than expected.”
On the other hand, if you’re waiting for rates to rise further, experts aren’t very optimistic. Most consider that we are already close to the highest point of the current cycle.
“While the Federal Reserve has paused tightening for now, the traditional expectation is that we are at or near the peak of the rate cycle,” said Amanda Erebia, head of retail banking at Amegy Monetary Institution.
So what to do? If you have money that you won’t use soon, a CD can be a good option to lock in a current rate. But there are also more flexible alternatives, such as high-yield savings accounts, which allow you to withdraw your money without penalties.
The rates may not change much in May, but in reality, what could define your decision would lie more in whether you have capital that can remain intact for a long time to take advantage of the current rates or if you require other types of financial products that do not tie up your money.
You may also be interested in:
- GDP grew 2% year-on-year in the first quarter of 2026
- Things you should fix in your house to sell it quickly
- Costco will close all its stores one day in May: what is happening?
- Employment in sectors with Latinos plummets in Trump’s second term
- Oil reaches all-time highs and gasoline soars to its highest level since July 2022
