Short-Term CDs Offer High Yields, But Rates May Soon Fall

Experts weigh in on whether short-term CDs are a good investment in 2024 as the Fed plans interest rate cuts.

Apr. 11, 2026 at 8:43pm

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An extreme close-up of intricate, interlocking metal banking machinery and gears, dramatically lit to convey the complex mechanics of the financial system.As the Federal Reserve prepares to lower interest rates, the future of short-term CD yields hangs in the balance.Toledo Today

With the Federal Reserve planning multiple interest rate cuts in 2024, experts are divided on whether short-term CDs are still a good investment this year. While short-term CDs currently offer higher yields than longer-term options, those rates are expected to decline as the Fed lowers its benchmark rate. Experts say short-term CDs make sense for those who need access to their money soon, but longer-term goals may be better served by other investment vehicles.

Why it matters

The decision between short-term and long-term CDs depends on an individual's financial goals and timeline. Short-term CDs can provide a safe haven for cash needed in the near future, but may not be the best option for long-term wealth building. As the Fed moves to cut rates, understanding how that will impact CD yields is crucial for savers looking to maximize their returns.

The details

Currently, short-term CDs are offering higher interest rates than longer-term options, a reversal of the historical norm. This is due to financial institutions competing aggressively for short-term deposits. However, as the Fed is expected to lower its benchmark rate starting in the first quarter of 2024, those short-term CD rates will likely decline. Experts recommend opening a short-term CD soon to lock in the current high yields, especially for those with near-term financial goals. For longer-term savers, a CD ladder strategy may be more appropriate to balance liquidity needs with maximizing returns.

  • The Federal Reserve is expected to start cutting interest rates in March or May 2024.
  • Short-term CD rates will likely start falling even before the first Fed rate cut as market expectations shift.

The players

Jonathan Maula

Owner of wealth management firm Castle Hill Capital in Virginia.

Kevin Miller

President and CEO of Travis Credit Union in California.

Ken Tumin

Founder of DepositAccounts.com.

Michael Arvay

CEO of Marvelous Retirement Planners in Toledo, Ohio.

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What they’re saying

“Currently short-term CDs have higher rates than long-term CDs. For CDs right now, the shorter the better. The highest rates for CDs are at three months, and the rates go down from there.”

— Jonathan Maula, Owner of Castle Hill Capital

“Historically, the longer the term the higher the rate. In today's environment, because of the need for liquidity, we're seeing financial institutions compete competitively for both short-term money and long-term money with high rates.”

— Kevin Miller, President and CEO of Travis Credit Union

“When the Fed starts cutting the target federal funds rate, which appears likely to occur before the end of the first quarter in 2024, short-term CD rates will fall. Even before the first Fed rate cut, there will likely be declines in short-term CD rates as market expectations rise for a cut.”

— Ken Tumin, Founder of DepositAccounts.com

What’s next

Savers should act quickly to open short-term CDs before rates start to decline, but should also consider longer-term strategies like CD laddering for long-term financial goals.

The takeaway

The decision between short-term and long-term CDs depends on an individual's timeline and liquidity needs. While short-term CDs currently offer higher yields, those rates are expected to fall as the Fed cuts interest rates in 2024, making longer-term strategies more appealing for some savers.