As interest rates prepare to decline, those saving money should reevaluate their investment plans promptly.

Certificates of deposit (CDs) have been a favored option for savers since the Federal Reserve raised its key short-term federal funds rate eleven times between March 2022 and July 2023, reaching 5.25–5.5%, marking the highest point in over two decades to manage inflation.

Experts predict that the Fed will likely decrease rates following its meeting on September 18, prompting financial institutions to adjust their deposit rates accordingly.

“If the Federal Reserve cuts interest rates, savers can still implement strategies to enhance their earnings if they act swiftly regarding their savings,” said Mary Grace Roske, marketing chief at CD Valet, an online tool for CD rate comparisons, via email.

How quickly and to what extent might CD rates decrease?

You may have missed the opportunity to secure the highest rates. Banks are starting to lower their deposit rates in anticipation of a Fed rate cut, according to Ken Tumin, a banking expert at DepositAccounts.com, an organization that monitors and compares savings rates.

As of August 24, the average yield for a one-year online CD was 4.97%, down from a peak of 5.35% early this year and 4.99% on July 24, as reported by DepositAccounts.com. Online offerings typically yield more than those from physical banking institutions.

Experts anticipate further declines in rates if the Fed embarks on a series of cuts.

What actions should CD holders take?

Even though CD rates have decreased from their highs, Roske emphasizes that Americans still have the chance to secure a good return if they act fast.

“Opting for a longer-term CD can be wise to lock in favorable rates, unlike earlier this year when shorter terms were more appealing due to higher rates,” Roske suggested.

While short-term promotional rates might be tempting at present, longer-term CDs can yield better overall returns as rates decline, she added.

She offered additional suggestions including:

• Act quickly on CDs that are maturing

“Savers shouldn’t be complacent if their CDs are about to mature,” Roske warned. Monitoring maturity dates and avoiding automatic rollovers is crucial, as these might result in lower rates.

Nearly $950 billion in CDs are expected to mature at commercial banks by mid-October, as per an analysis by The Financial Brand, a banking trade journal.

“This represents just the first wave of a significant influx of maturing time investments,” stated James White, a banking consultant at Total Expert. He anticipates $2.5 trillion in bank time deposits and a record $8.9 trillion in government debt maturing by July.

Banks and credit unions usually provide a 7-to-14-day period after a CD matures for customers to renew, withdraw, or transfer their funds. Savers should compare available rates before deciding to renew.

• Look beyond the “Big Four” banks

Despite their prominence, the four largest banks in the U.S.—JPMorgan Chase, Bank of America, Wells Fargo, and Citibank—frequently offer rates on CDs that are below market value. With these banks holding approximately 25% of all CDs, customers may find more competitive yields at smaller banks and credit unions.

• Be cautious of short-term CDs with hidden drawbacks

Short-term CDs with atypical durations such as 5, 9, or 13 months may offer attractive promotional rates that transition to less competitive ones upon renewal.

• Consider alternatives to money market funds

As short-term rates are expected to fall, savers should contemplate moving their cash from money market accounts into CDs to lock in fixed-rate returns.

• Negotiate for better CD rates

Consumers renewing CDs with their current banks might have room to negotiate for a higher rate, particularly if they have significant amounts deposited or a strong relationship with the bank. While not every institution will allow negotiations, it’s worth inquiring, especially with substantial deposits.

• Look for attractive CD promotions

To retain deposits, many banks will offer promotions; some might even include fun incentives. For instance, Blue Coast FCU in Florida is providing an 11-month CD at 4.5% APY where you’ll receive an extra 10 basis points if your selected Florida football team wins, with tracking starting every Monday after a win.

To join the promotion, one must be a member of the credit union, invest between $1,000 and $25,000, and choose between Florida State University, the University of Florida, or Florida A&M University (FAMU) as their team.

“Thus far, FAMU has started with a 2-0 record, which translates to a 0.20% increase if you picked the Rattlers!” announced the credit union on its Facebook page.

Medora Lee specializes in financial topics, markets, and Personal finance journalist at YSL News