If the time is NOW for you to invest in a certificate of deposit (CD), savings account, or money market, you want to know: what’s the strongest rate, and which product best fits your savings needs?
CD rates continue to remain historically elevated and preserve returns better than adjustable-rate savings and money market accounts.
We have listed CDs as a UTILIZE, with a strong rate at 3.68%.
We have listed savings accounts and money markets as AVOID, but if you need a liquid account, a strong rate is 3.64%.
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SOURCE: Dollar180 Analysis of FDIC Data, May 2026.
We report strong rate indicators even when we avoid a deposit product, so you have it if needed.
Hello friend,
We return once again with a deep-dive analysis of our May perspective on deposit accounts. Will deposit rates go up or down from here?
You would think that after six weeks since our previous deep dive, the Federal Reserve would have a better handle on when it plans to lower rates. After all, the Fed has been hinting for months that its benchmark federal funds rate will drop by 25 basis points, or 0.25%, at least once this year. But given escalating geopolitical tensions in the Middle East, rising inflation and the staggering rise of gas prices in the U.S., the Fed’s Federal Open Market Committee (FOMC), has played it cautious, maintaining its fed funds rate range at 3.50-3.75%.
To add more ambiguity, the Senate announced on May 13 that it had confirmed President Donald Trump’s nominee to lead the Fed, Kevin Warsh, who will now replace the current Fed chair, Jerome Powell. How Warsh will guide Fed policy and interest rates is still anyone’s guess, although he claims he “will be an independent actor if confirmed as chair of the Federal Reserve.” But one thing is certain: Warsh wants “messier” Fed policy meetings with more debate, further complicating Fed policy decisions.
For certificate of deposit (CD) investors eager to preserve and grow their savings in a robust interest-bearing deposit account today, political and economic uncertainties have made it all the more challenging to determine U.S. monetary policy and, in turn, the proper deposit account based on interest rates and maturity. And now, with escalating political tensions and weaker economic conditions due to rising inflation and energy prices, savers face the prospect that the Fed could raise interest rates this year.
For now, CD investors are anxious to know four fundamental questions:
Is today the right time to open a CD to lock in a high-yielding interest rate—possibly for the long term?
What is considered a “good” high-yielding rate? Should you lock up your funds in a time-based investment, such as a CD or U.S. Treasury?
Which maturity date best supports strong yields over a 3-5-year horizon?
Which deposit product most protects from the wide potential for higher or lower deposit rates?
As you answer these questions, keep in mind that preserving and protecting a strong and consistent yield over the course of one to two years is potentially more important than simply choosing the highest yield today.
We are still bullish on CDs
As we have said time and again, CDs are locked-in products, impervious to changes in interest rates, unlike savings and money market accounts, which are adjustable-rate products. CD rates in recent years have been historically elevated and remain positioned to preserve returns better than savings and money markets. Currently, rate futures still indicate lower rates ahead, meaning savings and money market rates will likely be lowered by banks and credit unions.
But for those who insist on staying put in savings or money market accounts, we suggest accounts that yield at least 3.64% APY. That is worth noting because some market prognosticators suggest the Fed may raise rates if geopolitical and economic uncertainties escalate. And if interest rates rise in 2026, there could be more opportunities for savers to lock in higher annual percentage yields (APYs).
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Economics: No obvious sign whether rates will rise or fall
Rising geopolitical and economic uncertainties of late have kept the Fed cautious about predicting interest rate moves. So far, they are keeping straight-and-level at a range of 3.50-3.75%. As a result, we still do not see economic data that supports the need to lower rates soon. But here is what we are seeing:
Inflation remains above target for the Federal Reserve: Over the past 12 months ended in April, the all-items index increased 3.8 percent before seasonal adjustment. That’s considerably higher than the 3.3 percent rate reported for the 12-month period ended in March, and considerably higher than the 2.4 percent rate for February.
Potentially forecasts a no-change or rate increase in the future.
Unemployment: The latest Labor Department report on claims for jobless benefits shows the unemployment rate, as of April, stable at 4.3 percent, just like in March. Now at 211,000 weekly claims as of the latest data on May 9, the low point was 190,000 claims on Apr. 25. The high point of the past 12 months was 259,000 weekly claims on Sept. 6, 2025.
Potentially forecasts a no-change or rate increase in the future.
GDP: Projections show considerable growth. The Federal Reserve Bank of Atlanta’s GDPNow model now estimates real GDP growth (seasonally adjusted annual rate) at 4%. That is what is called a “nowcast,” which predicts GDP within the next 120 days or less. The latest nowcast is up from 3.5%. If that upward move in the GDPNow model materializes, the second quarter of 2026 will be a marked improvement over the first quarter, which the US Bureau of Economic Analysis reported at 2.0 percent.
Potentially forecasts a change or rate increase in the future.
Bottom line
For CD savers, the tea leaves in the latest data suggest the Fed’s FOMC may have less reason to lower interest rates in the near term than before. Credit the compounding uncertainties of geopolitics, rising energy prices, and inflation. If the U.S. economy did not have those uncertainties floating about, it is likely the Fed would do what it could to continue its plans to lower interest rates. Now, the data show a greater likelihood that rates will increase this year.
CDs protect your yield in uncertain times, especially if rates decline; savings accounts do not. CD rates are locked in, while savings account rates can fall quickly if institutions decide to lower deposit costs. That makes CDs useful for savers who want to protect income over a defined period, especially when the risk of rate decreases appears greater than the risk of rate increases.
Locking in for too long poses a greater risk if rates increase. Not locking in yield, on the other hand, leaves savers exposed if rates decline, particularly if higher energy costs contribute to a recession.
For now, it is important to keep vigilant on the direction of rates. You’ll do well locking in a high-yielding APY on a CD now, but be prepared that interest rates might go up later this year, possibly resulting in a higher rate as inflation rises.
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