With the possibility of the Fed pausing rate hikes for the first time since March 2022, experts don't expect savings rates to climb much higher. If you're interested in a long-term CD, we recommend comparing options now, and waiting to see what the Fed decides next week before making any moves. They may stop, and when the economy is hit hard enough, they will be cut again." If rates continue to go up, but you lock in a long-term APY now, you could miss out on a better rate. "We don't 100% know they are going to keep rising. However, if you lock in a solid three- or five-year CD rate now, there's a chance that the Fed continues to raise rates, echoed Cary Carbonaro, a certified financial planner and Director of the Women and Wealth Division at Advisors Capital Management. "The interest rate you can get is still high, around 4 to 5% APY." Considering the possibility of a recession and likelihood that inflation will continue decreasing, he added that we may not see rates this high six months from now. "If you save for the long term and don't need the money soon, it may be the right time to lock your rate for long-term CDs, such as for one to three years, depending on your needs," said Silvermann.
With experts torn on whether the Federal Reserve will raise rates by another 0.25% or pause on rate hikes, we may have reached the tipping point for savings rates. In a normal rate environment, long-term CDs have higher average rates than short-term CDs. Right now, rates are experiencing an inverted yield curve, meaning short-term CD rates are higher than longer term CDs. Over the past year, experts have advised against locking in long-term CDs with the caution that rates will go up. It's time to start locking in a long-term CD
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