Weighing the Cut: Should You Lock in a CD Rate Now?

CDs tend to pay higher rates than traditional savings accounts in any economic environment. Rido/Shutterstock

The Federal Reserve in December slashed interest rates by 0.25 percent, marking the third time it has cut rates this year. And even though the central bank has hinted it may lower rates at a slower pace next year, it still signaled two potential rate cuts for 2025.

So why does this matter to your wallet? When the Fed cuts interest rates, banks tend to do the same on annual percentage yields (APYs) that they pay on savings accounts and certificates of deposit (CDs).