CD account pros and cons to know this March

If you paid attention to the interest rate climate of the last five years, it was obvious when certificates of deposit (CD) accounts were valuable (and when they weren’t). In the low interest rate climate of 2020 and 2021, rates on the accounts were mainly under 1%, making them an unreliable way to earn any significant returns. But in the interest rate climate of 2022 through 2024, rates on these accounts grew exponentially, making them an integral part of many savers’ financial strategies.

In the early months of 2025, however, the benefits of these accounts have become less clear. Inflation is down from where it was in 2022, but it’s risen in four consecutive months. Interest rates, meanwhile, were cut three times in 2024 but are now on a seemingly permanent hold until inflation gets back under control. In this climate, prospective CD account holders should know the pros and cons of opening an account this March. Below, we’ll break down what to know.

Start by seeing how much more you could be earning with a CD account here.

CD account pros and cons to know this March

Here are four critical pros and cons to know this March:

Pro: Interest rates are still relatively high

Are CD interest rates still available in the 6% to 7% range from recent years? No, they’re not. But with a little research and the use of an online bank, specifically, savers can still earn a rate of 4% to 4.50%. That’s $4 earned on every $100 deposited, made easily by transferring a portion of your funds into a high-earning account. Compared to the sub-1% rates on traditional savings accounts and the rate variability that comes with high-yield savings accounts, these high rates become even more attractive.

Get started with a high-rate CD online now.

Con: Rate increases are unlikely

The consistent increases in the federal funds rate and, thus, CD rates, that savers were accustomed to in 2022 and 2023 seem to be a thing of the past now. Interest rate cuts were issued multiple times toward the end of 2024. And even with inflation rising slightly, it hasn’t done so dramatically enough to warrant a reversal in the Fed’s rate cut campaign. So that means interest rates will likely remain the same when the bank meets again in March (the CME Group’s FedWatch tool has it listed at an almost 98% certainty).

Pro: Predictable returns in an unpredictable climate

The hope after interest rates and inflation steadily declined last year was that both would continue their downward trend this year, but that hasn’t been the case. Interest rates have stagnated and inflation is now a full percentage point above the Federal Reserve’s target 2% goal. This uncertainty makes the predictable returns a fixed-rate CD can provide particularly beneficial now. By opening a high-rate CD for March, savers can exactly determine what they stand to make, even if rates jump up and down during that CD term.

Con: Higher deposits are required

While not impossible, it’s a bit more complicated to earn a high return on a CD now that rates have dipped from recent highs. Use that $100 deposit as an example. Previously, you could potentially earn $6 or $7 for each $100 deposited. To get that now, however, savers will need to deposit between $135 and $156 (for a 12-month CD). Higher deposits are required, in other words, to earn the same amount that was readily available a year or two ago. And that dynamic is highly unlikely to change in March 2025.

The bottom line

The CD account interest rate climate of March 2025 is certainly different from March 2024 or March 2023. But it’s not nearly as low as what it was in March 2020, either. Savers will just need to understand these pros and cons and apply them strategically to their CD account approach. There are still big earnings to be had if savers first take the time to compare rates, lenders, terms and early withdrawal penalties. 

Learn more about your current CD options here.