Here's the Single Best Strategy for Investing in CDs Now

The Fed is widely expected to begin cutting rates this fall. And when that happens, certificate of deposit (CD) yields — especially on shorter terms — will likely drop right along with them.

So here’s the move. Consider spreading your money across multiple CD terms (aka CD ladder). But instead of spreading your savings evenly across CDs, try weighting your ladder toward longer-term CDs that still offer top-tier APYs.

This lets you lock in higher APYs now, for a longer period, while still keeping your cash regularly available.

What is a CD ladder and why people love it

A CD ladder is when you divide your money across multiple CDs, each with different maturity dates.

The reason people do this is so they can earn higher interest than a savings account, without locking up all their cash long-term.

For example, instead of putting $20,000 into a single 2-year CD, you could split it like this:

• $5,000 into a 6-month CD
• $5,000 into a 12-month CD
• $5,000 into an 18-month CD
• $5,000 into a 2-year CD

As each CD matures, you have access to withdraw that $5,000 (plus the interest it’s earned). At that time, you could reinvest the money into a new CD, or use it if needed.

One small downside though, is that when interest rates are falling, you’ll almost certainly be renewing at a lower rate. This is why putting more money into longer terms and less into shorter terms might make sense.

Why 2025 calls for a weighted CD ladder

We’re in a weird but temporary sweet spot: Interest rates are still high, but not for long.

According to the CME FedWatch Tool, there’s a nearly 90% chance of a rate cut during the Fed’s September 2025 meeting. And more cuts could follow.

Once that happens, CD rates will likely drop. And six months from now, your chances of seeing a 4.00% APY might be all gone.

So if you’re building a CD ladder now, it may make sense to skew your allocation toward 2- to 3-year terms. That way, you lock in today’s higher rates for longer and insulate yourself from future drops.

Here’s an example of a weighted CD ladder with $25,000:

Data source: Author’s calculations.

That’s $2,000 in interest by the time your ladder is fully matured — likely way more than you’d earn putting the same $25,000 into a short-term CD over and over.

But of course, not all banks offer strong rates across every term. Some only shine on short-term CDs, while others are better for locking in long-haul.

Act while rates are still high

There’s no single “right” way to set up a CD ladder. Some people like to space out terms every six months. Others prefer to go heavier on long-term CDs, or even keep some cash on the sidelines in a high-yield savings account.

You get to design it your way. Adjust your strategy based on your timeline, your comfort level, and your cash flow needs.

But no matter how you build it, act before rates drop. If the Fed starts cutting rates in the coming months, we may not see 4.00% APYs for a long while.

Compare the best CD rates available now and start building your weighted CD ladder.