Lower rates are coming. You should check your CD rates now to keep earning, experts say.

With interest rates about to drop, savers will need to reexamine their investment strategies sooner rather than later.

Certificates of deposit (CDs) have been a saver’s delight as the Federal Reserve hiked its benchmark, short-term federal funds rate eleven times between March 2022 and July 2023 to 5.25–5.5%, the highest level in more than 20 years, to contain inflation.

The Fed’s now widely forecast to lower rates when its policy meeting concludes on September 18, and financial institutions will quickly follow suit on their deposit rates, experts say.

“Assuming the Federal Reserve does lower interest rates, there are steps savers can still take to maximize their earnings if they make timely decisions about their savings,” said Mary Grace Roske, head of marketing for CD Valet, an online CD comparison site, in an email.

How fast and by how much could CD rates drop?

You’ve likely missed the chance to secure the highest rates. Banks have already begun cutting their deposit rates in anticipation of a rate cut, said Ken Tumin, banking expert at DepositAccounts.com, which tracks and compares savings rates.

Learn more: Best current CD rates

The average one-year online CD yield as of August 24 was 4.97%, down from this year’s peak of 5.35% in early January and 4.99% on July 24, DepositAccounts.com shows. Online returns generally are higher than those offered by brick-and-mortar shops.

Rates will likely slip further if the Fed begins a series of rate cuts, experts said.

Find the best:Best CD rates of September 2024

What should CD holders do?

Though CD rates are off their peaks, Americans can still lock in a solid return if they hurry, Roske said.

“They can go for a longer-term CD (to lock in rates) versus earlier this year when shorter terms were advised due to high rates,” Roske said.

While shorter-term promotional rates might be attractive now, longer-term CDs can provide better overall returns as interest rates drop, she said.

Her other tips include:

• Act quickly on maturing CDs

“Savers shouldn’t be ‘asleep at the wallet’ if they have CDs coming due,” Roske said. Savers need to monitor their maturity dates and avoid automatic rollovers, which may lock in lower, less favorable rates.

Nearly $950 billion in CDs are set to mature at commercial banks by mid-October, according to an analysis of Federal Deposit Insurance Corporation data by The Financial Brand, a banking trade publication.

“And that’s the first and smaller wave of a coming maturity tsunami for time investments,” wrote James White, a banking consultant at Total Expert, for the trade publication. Some $2.5 trillion in bank time deposits and a record $8.9 trillion of government debt will mature by July, he said.

Banks and credit unions typically provide a 7-to-14-day window following a CD’s maturity for consumers to renew, cash out, or transfer funds. Savers should prepare by shopping around for the best available rates before renewal.

• Shop beyond the “Big Four”

Despite their size, the nation’s four largest financial institutions – JPMorgan Chase, Bank of America, Wells Fargo and Citibank -- often offer below-market rates on CDs. With these institutions holding about 25% of the nation’s CDs, savers with accounts at large banks may find significantly higher yields online at smaller banks and credit unions.

• Watch for hidden pitfalls in short-term CDs

Short-term CDs with unusual terms like 5, 9, or 13 months often come with promotional rates that roll over into less competitive offers.

• Evaluate alternatives to money market funds

With short-term interest rates set to fall, savers should consider shifting their money market fund cash into time deposits like CDs to lock in fixed-rate yields.

• Negotiate better CD rates

Consumers renewing CDs at their current institution might have room to negotiate a higher rate, particularly if they have significant deposits or a strong banking relationship. While not all institutions will negotiate, it’s worth asking, especially if the deposit is substantial.

• Check out CD promotions

To avoid a flight of deposits, some institutions will fight for your money with promotions. Some may even add a dose of fun. For example, Blue Coast FCU in Florida is offering an 11-month, 4.5% APY CD where you get an extra 10 basis points if your chosen Florida football team wins, starting every Monday following the victory.

To participate, you need to be a member of the credit union, invest between $1,000 and $25,000 and choose either Florida State University, University of Florida or Florida A&M University (FAMU) as your team to track.

“So far FAMU is off to a 2-0 start, worth 0.20% of an increase if you picked the Rattlers!” the credit union said on its Facebook page this week.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.