Fed rate cuts are looming. Here's why you should renew your maturing CD anyway.

It may be worth renewing your maturing CD account, even with rate cuts looming. Getty Images/iStockphoto

Borrower plans are changing.

That seems to be the sentiment this month as the first interest rate cut of 2025 is set to be issued by the Federal Reserve. Initially expected to be in the form of just 25 basis points, now there's potential for an even larger cut after recently released unemployment data was poor. Accordingly, the plans of borrowers stuck with high rates on everything from mortgages to personal loans and credit cards are shifting to exploit the cooler climate.

But should savings strategies be evolving, too? Those who have been able to take advantage of the hot rate climate with certificate of deposit (CD) accounts in recent years may be tempted to overhaul their approach now. And, if you have a CD account set to mature soon, it may feel counterintuitive to renew it. However, that could be a costly mistake. Even with Fed rate cuts looming, it can actually make sense to renew your maturing CD account anyway. Below, we'll explain why.

Start by seeing how high your current CD rate offers are here.

Why you should renew your maturing CD account even with Fed rate cuts looming

Don't dismiss the benefits behind a CD account renewal in today's economy. Here's why:

Interest rates are still competitive

Savers can still easily find CD rates around 4.50% right now. That's $4.50 earned for every $100 deposited, leading to significant earnings as interest compounds over time. And with rates on traditional savings accounts worth just 0.39% currently, you'd essentially be losing money by letting your maturing CD account funds roll into one of those accounts instead. That said, the best CD rates are generally found with online banks, and that will be particularly true now, as banks with physical locations look to exploit a cooler rate climate by lowering their offers to savers. Take the time, then, to shop around online to find the highest rate you can.

Start shopping for high-rate CDs online now.

Cuts may have already been priced in by lenders

The rates you're currently seeing listed on online marketplace websites may already reflect presumed rate cuts, at least for this month. That's because banks don't need to wait for the Fed to take formal rate action to adjust their offers. And, with projections of a rate cut ranging from 90% to 100%, according to the CME Group's FedWatch tool right now, it's likely that many lending institutions have already taken a cut into account. Still, if additional cuts become more likely for October and December, in the Fed's final two 2025 meetings, these rates could shift again. It makes sense, then, to lock in a high rate when found this month.

It will protect you against rate cuts still to come

Predicting future interest rate cuts before a current one has even been issued is inherently risky. But the economic motivation for additional cuts to come later this year is arguably growing. When and if those cuts are issued, savers with variable-rate accounts like traditional and high-yield savings will suffer as their rates (and returns) will decline. But savers who moved their maturing CD into a new one will be protected against these rate cuts, perhaps for multiple years, depending on the length of the CD term. 

The bottom line

A CD account maturing in the next few weeks doesn't have to mean the end of high returns and financial protection. Rates here are still competitive, especially considering that rate cuts may have already been preemptively priced in by banks. And with additional cuts in play for the months ahead, it makes sense to protect against those, too, by locking in today's still-high rates. Still, waiting to take action doesn't make sense now, either. So be prepared to act as soon as your current CD account hits its maturity date on the calendar.