Investors looking to secure income ahead of another rate cut by the Federal Reserve can still find stable yields on certificates of deposit. Some have a yield of 4%. According to the CME FedWatch tool, markets are pricing in an 87% chance that the central bank will cut rates by a quarter of a percentage point at next week’s meeting. Interest rates on physical products such as money market funds and high-yield savings accounts are expected to follow suit. The current seven-day annualized yield on the Crane 100 list of largest taxable money market funds is 3.79%. According to BTIG research, the median annual interest rate for high-yield savings accounts is 3.65%. American Express lowered its online savings rate by 0.10 points to 3.40% last week, BTIG analyst Vincent Kaintic said in a note Sunday. “Slowly and steadily week after week, it looks like each bank will end up cutting rates once in Q4 2025,” Kaintic wrote. “Perhaps the increasing likelihood of a federal funds rate cut in December is driving confidence in online banks’ savings rate cuts.” Investors can lock in yield on CDs ahead of a decline in the cash rate. The current median one-year CD rate is 3.8%, Caintic said. None of the banks he covers lowered their annual percentage yields (APYs) last week, but Capital One cut its yield this week from 4.05% to 3.90%. Still, investors should make sure they don’t need the cash while it’s in the CD. Otherwise, you will be subject to penalties for early withdrawals. Another option is to build a CD ladder. In other words, you buy CDs with different maturities that give you income at different times. Chelsea Ransom Cooper, co-founder and chief financial planning officer at Zenith Wealth Partners in Philadelphia, suggests investors build a ladder that ranges from three to 14 months. “This gives them a little bit of a hedge in case they need the cash right away, so they’re not waiting for the money on a certain date, but they have a few different options as to when they can take it out,” Ransom Cooper, a member of the CNBC Financial Advisors Council, recently told CNBC. Although CD rates have come down from their highs, they are still attractive compared to the era of zero interest rates. For example, as of June 2021, the average APY for the year was just 0.17%, according to Bankrate.
