CD Rates Heading Lower in the Coming Months – Lock in Now

Over the past four years, we have seen CD rates claw their way higher from record lows brought on by the Financial Crisis and Great Recession. At the worst level, the best 1 year CD rates available online were just below 1.00 percent. The largest banks were not even interested in your money, offering 1 year CD rates as low as 0.01 percent. Currently, the highest 1 year CD rate on our rate table is from Brio Direct at 2.40 percent.

Some of the largest banks, like Chase Bank, still aren't interested in attracting deposit funds. Right now Chase is offering 1 year CD rates at 0.02 percent. Wells Fargo is currently offering 1 year CD rates at 0.20 percent, better than Chase's rate but still much lower than online CD rates.



Looking at longer-term CD rates, the highest 5-year rate is slightly higher at 2.45 percent. You may wonder why you should consider investing in a 5 year CD account for only 5 basis points higher than a 1-year rate. Right now, locking in a current 5 year CD rate at 2.45 percent isn't a bad move because CD rates will be heading lower in the coming months and into 2020. If you lock in a 1-year rate of 2.40 percent, you will likely get a rate below 2.00 percent when the CD renews in 12 months.

CD rates are falling because economic growth has been slowing and as a result, the Federal Reserve has been lowering the fed funds rate. The Fed lowered the fed funds rate twice in 2019 and is likely to make another rate cut this year. The Fed's actions have put downward pressure on CD rates and other deposit rates and will continue to do so in the coming year.