Should I Lock In CD Rates Now or Wait?
Fed funds rate context (September 2026)
Here is the rate environment as of September 28, 2026:
| Metric | Value | What it means for CDs |
|---|---|---|
| Fed funds target range | 3.75-4.00% (since September 16, 2026) | Top of bank cost-of-funds curve |
| Last FOMC move | +0.25 point (September 16, 2026) | A hike. The Fed made no cuts in 2026. |
| Earlier in 2026 | Held at 3.50-3.75% (January, March, April, June, July) | The last cut was in December 2025 |
| Next FOMC meetings | October 27-28 and December 8-9, 2026 | Outcome not known in advance |
| 5-yr Treasury yield | 4.98% (September 25, 2026) | Anchors longer-dated CD pricing |
| Best nationally available 5-yr CD | 4.35-4.50% APY (September 25, 2026) | Top of the retail shelf |
| Best nationally available 1-yr CD | 4.35-4.50% APY (September 25, 2026) | CD shelf is flat from 1 to 5 years |
Sources: Federal Reserve FOMC statements, 2026; U.S. Treasury daily par yield curve, September 25, 2026; DepositAccounts, September 25, 2026.
Translation: An earlier version of this page (June 2026) described a Fed cutting cycle. That was wrong: the Fed held all year, then raised 0.25 point on September 16, 2026. When the Fed does cut, short-term CD yields have historically fallen faster than long-term CD yields, because longer rates already reflect expected policy. After a hold or a hike, CD shelves tend to stay put or drift up. A locked term takes that uncertainty off the table in either direction.
The math: what happens if you wait 6 months
$250,000 at three scenarios: top-of-shelf 5-year CD rates:
| Scenario | 5-yr APY | Year-5 ending balance | Total interest | Cost of waiting |
|---|---|---|---|---|
| Lock today (June 2026) | 4.55% | $312,403 | $62,403 | n/a |
| If the Fed cuts -50 bps, then you lock (hypothetical) | 4.10% | $305,569 | $55,569 | -$6,834 |
| If the Fed cuts -75 bps, then you lock (hypothetical) | 3.85% | $301,824 | $51,824 | -$10,579 |
| Fed pauses, you wait, rates flat | 4.55% | $312,403 | $62,403 | $0 (best case for waiting) |
The asymmetry is the entire point. If you lock today and rates drop, you locked the high. If you lock today and rates rise, you can buy more at the higher rate with new money, and your existing CD still earns 4.55%. Waiting only pays if rates hold or rise. In 2026 they did: the Fed held through July and raised on September 16, 2026, and the best 5-year CDs in late September (4.35-4.50% APY on September 25, DepositAccounts) were close to this page's June figures.
Worst-case if you wait
The worst case is not "rates stay the same." The worst case is a fast drop in rates. That is a risk, not a forecast; the Fed's latest move (September 16, 2026) was a hike. Three historical Fed cutting cycles compared:
- 2001 cycle: Fed cut 475 bps in 12 months. Top 5-yr CD APY went from 6.10% to 3.30%.
- 2008 cycle: Fed cut 500 bps in 15 months. Top 5-yr CD APY went from 4.95% to 2.50%.
- 2019-2020 cycle: Fed cut 225 bps in 7 months. Top 5-yr CD APY went from 3.10% to 0.85%.
The pattern is consistent: once the cutting starts, the 5-year shelf falls faster than the 1-year shelf, because the long end prices in future cuts immediately. By the time you "see" the cuts in the front end, the back end is already gone.
Action checklist
- Lock at least 50% of your cash today in a 5-year CD or MYGA (on September 24, 2026 the best 5-year CDs paid 4.35% to 4.50% APY per DepositAccounts, and A-rated 5-year MYGAs about 5.50% to 6.05% per public carrier rate sheets). You eliminate reinvestment risk on that half.
- Keep 25% in a 1-year CD or HYSA for optionality. If rates rise, as the Fed's target did on September 16, 2026, you can reinvest.
- Keep 25% in a 6-month T-bill for liquidity. State-tax-free.
- Know the next FOMC dates: October 27-28 and December 8-9, 2026. After past cuts, CD shelves repriced within about 2 weeks; after a hike, banks tend to raise more slowly.
- Compare brokered vs direct-bank CDs. Brokered (Fidelity, Schwab, Vanguard) typically run 15-30 bps higher than retail bank CDs at the same maturity.
Why waiting for the meeting is a bet
The biggest mistake is waiting for "confirmation" from the Fed. By the time the Fed actually cuts, the bond market has already priced it in for 4-8 weeks. In a cutting cycle, each month's shelf tends to be lower than the last. September 2026, after a hike, is not that environment, which is the point: nobody knows the direction in advance.
Locking is not a prediction. It is a way to stop predicting. The rate you accept today is the rate that is guaranteed regardless of what the Fed does.
Related reading: CD rates after a Fed rate cut: historical data | How much will CD rates drop if the Fed cuts 50 bps? | Should I buy a MYGA now or wait? | Should I lock a 5-year CD before the next Fed meeting?
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Get My Rate-Lock ReviewFAQ
Should I really lock now, or wait one more meeting?
Nobody knows the next meeting's outcome. In 2026 the Fed held through July and then raised 0.25 point on September 16, the opposite of the cuts many expected in June. If the money has a firm 5-year job, lock the rate you can get; if not, a ladder spreads the timing risk.
What if I lock and rates go up?
Your locked CD keeps its rate, and any new money can go in at the higher rate. That happened on September 16, 2026, when the Fed raised 0.25 point. You are not stuck, but the locked portion does miss the increase.
Are CDs still beating MYGAs?
No. On October 14, 2026, A-rated 5-year MYGAs paid about 5.50-6.05% (public carrier rate sheets) against 4.35-4.50% APY for the best 5-year CDs (DepositAccounts). The trade-off: MYGAs have a surrender charge if you need the money early; CDs only have an interest penalty.
What's the FDIC limit and how do I stay under it?
$250,000 per depositor per insured bank per ownership category. For a $500K position, use two banks. For $1M+, use brokered CDs across multiple issuers. Fidelity and Schwab handle this automatically.
Is now actually a once-in-a-cycle moment?
Nobody can say. The Fed funds target peaked at 5.25-5.50% (July 2023 to September 2024), was cut 1.75 points by December 2025, then was raised 0.25 point to 3.75-4.00% on September 16, 2026 (Federal Reserve). Rates can go either way from here.
What about brokered CDs vs. direct bank CDs?
Brokered CDs (Fidelity, Schwab, Vanguard) typically pay 15-30 bps more at the same maturity and FDIC-insure across multiple banks automatically. Downside: no early-withdrawal option. You can only sell on the secondary market, often at a loss if rates rose.
If I'm 65+, does this advice change?
Yes. At that age, the right answer usually leans more toward MYGA than CD because of the higher rate, tax-deferral, and state guaranty fund coverage. A 5-yr MYGA at 5.65% beats a 5-yr CD at 4.55% by $13,750 on $250K over the term.
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Disclosure
Product rates cited in this article reflect publicly available data as of 2026-06-27 unless another date is shown. Fed policy facts are as of 2026-09-28 (Federal Reserve FOMC statements). CD, MYGA, and HYSA rates change frequently: typically weekly for HYSAs, daily-to-weekly for CDs, and monthly for MYGAs. Always confirm current rates against the carrier's most recent disclosure and the actual contract before purchasing. This is general education, not a personal recommendation or an offer of any product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers. CDs are FDIC-insured to applicable limits; MYGAs are backed by the issuing carrier and state guaranty associations (typical coverage $250,000-$300,000 per owner per carrier); HYSAs are FDIC-insured to $250,000 per depositor per institution. MYGAs are long-term contracts with surrender charges; they are not suitable for funds you may need before the end of the surrender period. Past rate trends do not predict future rates. AM Best ratings and tax treatment are subject to change.