Will CD Rates Rise or Fall This August? Experts Share Their Predictions

Inflation, which had been on a downward trend at the beginning of 2025, has shown signs of rebounding over the past two months. With the latest Consumer Price Index data revealing a 2.7% increase in June 2025 compared to the previous year, the Federal Reserve has been cautious about lowering interest rates. This has raised questions about when the Fed might implement further rate cuts, and how this will affect certificate of deposit (CD) rates in the coming months.

While high interest rates on credit cards and loans may be burdensome for borrowers, they offer an opportunity for savers to earn more on their deposits. The current interest rate environment, where the federal funds rate has remained stable, has allowed savers to benefit from higher CD rates and other interest-bearing accounts.

What Do Experts Say About CD Rates in August?

Following the rate-cutting campaign at the end of 2024, the Federal Reserve had initially appeared poised to make additional cuts in 2025. However, the Fed has remained steady in its latest meeting in July and has kept the federal funds rate unchanged for the fifth consecutive time. This stability may influence CD rates in the short term, as the federal funds rate has a significant impact on both borrowing and saving products.

Christopher Jackson, a certified financial planner at CPJ Financial, predicts that CD rates are likely to remain relatively stable through the rest of the summer and into the fall. However, this stability is not universal, and some banks are already adjusting their CD rates in anticipation of potential future rate cuts.

Dr. Lakshmi Balasubramanyan, an associate professor of banking and finance at Case Western Reserve University, notes that CD rates have been coming down in expectation of rate cuts, with some small declines observed in August.

Short-Term vs. Long-Term CDs: Which Offers Better Rates in August?

Historically, longer-term CDs have offered the highest rates for savers. However, in the current economic climate, short-term CDs are proving to be more competitive. This is due to the uncertainty surrounding potential rate cuts in the future, which has prompted banks to offer higher rates on shorter-term CDs to avoid locking in higher rates that may later decline.

Krisstin Petersmarck, a retirement income certified professional and founder of New Horizon Retirement Solution, suggests that short-term CDs of a year or less may be a good investment for the short term, offering diversification and helping to avoid the volatility of the stock market.

While Jackson agrees that shorter-term CDs may be a better option in the current environment, he also highlights the potential benefits of high-yield savings accounts and no-penalty CDs. High-yield savings accounts offer more liquidity, while no-penalty CDs can help avoid early withdrawal penalties, although they may not provide the same competitive rates as traditional CDs.

Pamela Sams, a chartered retirement planning counselor and financial advisor at Jackson Sams Wealth Strategies, offers a different perspective. She suggests that longer-term CDs may be beneficial if rates are expected to drop, as they lock in today's rates for years to come. However, she notes that high-yield savings accounts can provide similar returns and offer more flexibility.

Final Thoughts and Recommendations

As of now, the prediction for CD rates in August is that they are likely to remain stable as the Fed maintains the federal funds rate. However, with potential rate cuts on the horizon, CD account interest rates may begin to decline soon. Therefore, now may be a good time to lock in the highest rates available.

Petersmarck advises that individuals should not assume their current bank will offer the best CD rates and should research different options. She also emphasizes the importance of maintaining liquid funds, such as an emergency fund in a high-yield savings account, before committing to a CD.

Before locking up your money in a CD, it's essential to research various CD rates, terms, and review early withdrawal penalties to ensure you are making an informed decision that aligns with your financial goals.