The interest rate climate of early 2025 isn’t what it was in early 2024 (or even 2023).
Inflation is dramatically lower than it was in mid-2022 when it surpassed 9%, the highest level in four decades. While still not at the Federal Reserve’s targeted 2% annual rate, at 2.9% it’s moving in the right direction. The Fed has been encouraged enough in its progress to lower its benchmark interest rate three times in recent months.
To be sure, the U.S. economy isn’t out of the woods. Inflation ticked up in October, November and December (the January 2025 reading will be released next week). With consumer prices proving hard to tame, at its first meeting this year the Fed elected to leave interest rates unchanged.
This is all-important context for savers, particularly those who have taken advantage of the unique economic climate of recent years via a certificate of deposit (CD) account. If their account is set to mature in 2025, these savers may be wondering about their next steps, including a potential account renewal. Below, we’ll explain why renewing a maturing CD account now can still be beneficial.
See how much more you could be earning with a new CD account here.
Should you renew your maturing CD account now?
Not sure if you want to lock your money away in another CD account? Here’s why that could still be the right financial move:
CD rates are still competitive
Sure, most lenders stopped offering CD rates in the 6% or 7% range. But interest rates are still competitive now with many lenders offering accounts with rates in the 4% to 5% range. Depending on the deposit and the CD term (length) chosen, that rate can still easily result in hundreds or even thousands of dollars in earned interest. There are multiple ways to earn $500 with a CD that’s opened and closed in 2025. So if you opened your account intending to earn a big return, it’s still possible to do so by renewing a maturing account now, even if it may take a bit more work than it would have a few years earlier.
Get started with a new CD online now.
Fixed rates will protect against uncertainty
One of the best features of a CD account is its fixed interest rate, which allows savers to precisely determine their future earnings. It also shields investors against interest-rate volatility in a way that accounts with variable rates, which change monthly, simply can’t. For now, meanwhile, the U.S. faces significant economic uncertainty. Inflation remains stubborn and interest rates remain elevated, while a sharp turn in federal policies and ongoing geopolitical tensions add to the risks. In this climate, savers will generally be better served by securing a fixed-rate savings vehicle like a CD.
Alternatives aren’t as advantageous right now
It may be tempting to take the big return earned from your maturing CD account and reinvest it somewhere else or simply deposit it back into your traditional savings account. But that would be a mistake, as some popular alternatives aren’t nearly as advantageous right now. Traditional savings accounts, for example, currently have interest rates under 1%, on average. High-yield savings and money market accounts offer rates that compete with the top CDs, but the rates on both are variable — that means they could fall or rise depending on what happens in the broader economy. It doesn’t make sense to take that risk when a fixed, high-rate CD alternative is still available.
The bottom line
The decision to renew a maturing CD account should be approached cautiously and strategically. But with rates on current CDs still competitive, the security against unknown economic impacts reliable, and alternative accounts that are simply not as advantageous, many savers could still benefit by renewing their current CD account, even if rates are not quite as high as they were in 2024 or 2023. Just be sure to renew it with an amount of money that can be comfortably parted with for the full term to avoid having to pay an early withdrawal penalty to gain early access.
Learn more about your current CD account options here.
