CD Rates Forecast 2026: Where Are Rates Headed?

For now, CD rates look more likely to hold steady than fall. After three rate cuts in late 2025, the Federal Reserve raised its benchmark rate in September 2026, the first increase since 2023. Its own projections point to rates staying near that level through 2027, despite earlier forecasts this year expecting CD rates to keep falling.

If you’re not sure whether to lock in, the rate you’re offered can matter as much as the forecast. In October 2026, the average 12-month CD paid 1.76%, according to the FDIC, while a 12-month Treasury yielded about 4.54%. Shopping around, including at online banks and credit unions, can turn up higher rates.

Are CD rates going down in 2026?

For most of this year, the answer looked like yes. The Fed cut its benchmark rate three times between September and December 2025, bringing it to 3.50% to 3.75%, and it held there through the summer. In September 2026, it reversed course with a quarter-point increase to 3.75% to 4.00%.

The Fed held at that level on October 28, though two voting members wanted another increase. Heading into the end of 2026, CD rates are more likely to hold steady or push higher than fall.

What’s driving CD rate changes

Inflation is the main reason rates have turned. In its October statement, the Fed said inflation “remains elevated” and described the economy as expanding at a strong pace. The Fed officials’ projections have core inflation, which leaves out food and energy prices, at 3.4% for 2026, well above the Fed’s 2% goal.

When prices are rising faster than the Fed wants, it tends to keep rates higher for longer. That gives banks less reason to cut what they pay on savings.

How the Federal Reserve affects CD rates

The Fed doesn’t set CD rates. Instead, it sets a target for the federal funds rate, the rate banks charge one another for overnight loans. When that rate goes up, banks can earn more elsewhere, so they often raise what they offer on CDs to attract deposits. When it goes down, CD rates usually follow.

Short-term CDs tend to track the Fed’s moves most closely. Longer-term CDs depend more on what markets expect rates to do over the next few years, which is why a five-year CD can pay less than a one-year CD.

Run the numbers >> Use Kikoff’s CD calculator to compare what you’d earn across a 6-month, 1-year, and 5-year term.

CD rate predictions for 2026

It’s unclear where CD rates go next. The best public guide is the Fed’s own Summary of Economic Projections, updated four times a year. In September 2026, 18 Fed officials each projected where the federal funds rate should be at the end of each year. The middle projection, called the median, had it ending 2026 and 2027 at 4.1%, then easing to 3.9% by the end of 2028.

The Fed notes that these numbers reflect each official’s view of the right policy, not a forecast of the most likely outcome. Based on past forecasting errors, the Fed puts the typical miss on short-term rates for 2027 at about 1.7 percentage points, up or down.

Short-term CD rate outlook (3 to 6 months)

The next Fed decision is on December 9, 2026. A median projection of 4.1% for year’s end sits just above today’s range, so it points to one more quarter-point increase this year if officials stick with their September view.

If that happens, short-term CD rates could inch up. If inflation cools faster than expected, the Fed could hold instead, and CD rates would likely stay about where they are. Either way, a sharp drop over the next few months doesn’t line up with what Fed officials have signaled.

Long-term CD rate outlook (12+ months)

Further out, the projections lean gradually lower: 3.9% by the end of 2028 and 3.6% by the end of 2029. That suggests today’s CD rates may be near the top of what’s likely over the next few years.

It also explains why longer CDs often don’t pay a premium right now. In the FDIC’s October 2026 data, the average 12-month CD paid 1.76%, while the average five-year CD paid 1.41%.

Read more >> How to Open a CD Account (and Keep the Interest You Earn)

Should you lock in a CD now or wait?

If you won’t need the money for the full term, locking in a competitive rate now is a reasonable move, because Fed officials aren’t signaling deep cuts. Waiting makes more sense if you might need the cash soon or you’re holding out for one more Fed increase.

Before you choose, check for the early withdrawal penalty. Federal law sets a minimum penalty but no maximum, so each bank writes its own. Ask the bank how much interest you’d lose for breaking the CD.

When locking in makes sense

• You have a set date for the money, like a car down payment next year. Match your CD term to when you’ll need to spend it.
• You already have an emergency cushion in everyday savings, so a surprise bill won’t force you to break the CD.
• You found a rate well above the national average. That rate stays fixed for the whole term, even if the bank lowers rates on new CDs later.

When waiting might be better

• You might need the money before the term ends. A penalty can wipe out some or all of the interest you earned.
• The only offers you’ve found are near the national average. It pays to shop around: At 1.76%, $5,000 in a 12-month CD earns about $88. The same $5,000 at 4% would earn about $200.
• A Fed decision is right around the corner. If you’re close to deciding, there’s little cost to waiting until after December 9 and seeing whether banks adjust.

CD laddering as a strategy

A CD ladder spreads your money across several CDs that mature at different times, giving you regular access to your money. It lets you lock today’s rates without committing all your money in one long-term CD.

Say you have $5,000 to save. With a CD ladder, you’d divide your $5,000 into smaller amounts portioned across a series of CD terms, with each CD becoming a “rung” in your ladder.

You put $1,000 each into a one-, two-, three-, four-, and five-year CD. Each year, as one CD matures, you can cash it out or roll it into a new five-year CD. After four years, every CD in the ladder is a five-year CD, and one still comes due every year.

Given that five-year CDs are paying less than one-year CDs on average right now, a short-term ladder of three-, six-, nine-, and 12-month CDs may be a better fit, providing more regular access to your cash. Compare the actual rates at each term before you build one.

Keep track of each CD’s maturity date in an app or spreadsheet so you can build in time to look for new rates or cash out your money. Banks typically give you about a week’s grace period to make changes or withdraw your money.

Read more >> How to Create a Savings Strategy

Alternatives to CDs for growing your savings

A CD isn’t the only safe place for savings, and it’s not the most flexible. If you’re not sure when you’ll need the money, one of these may be a better fit.

Bank CDs and savings accounts are insured up to $250,000 by the FDIC, and credit union accounts are insured up to the same amount by the NCUA. Treasury bills and I bonds are backed by the U.S. government and sold at TreasuryDirect.gov.

Something to keep an eye on: The average savings account paid just 0.38% in October 2026, according to FDIC data. A high-yield account can pay well above that, so it’s worth comparing before you settle for the account your bank opened by default.

Read more >> Are CDs FDIC-insured?

Bottom line

CD rates aren’t on track to fall quickly. The Fed raised rates in September, and its officials’ projections show rates near this level through 2027. If you can leave the money alone for the full term, the rate you find by shopping around matters more than waiting for a better moment.

The same Fed moves that push up CD rates also raise what it costs to borrow. And when you do borrow, whether it’s a car loan or a credit card, your credit shapes the rate you’re offered. Kikoff’s Credit Account reports your on-time payments to Equifax, Experian, and TransUnion, with no credit check to sign up. Plans start at $5 a month.