Experts weigh CDs versus money-market accounts as Fed rate outlook tightens

With the Federal Reserve likely to raise its benchmark soon, deposit products are offering yields near 4%, slightly above current inflation. Derik Farrar of U.S. Bank observes that the expectation has moved from multiple cuts to a possible increase, which could lift returns on savings vehicles. Jeff Judge of Chesapeake Financial Planners argues that a certificate of deposit locks in today’s high rate, protecting funds from future declines and suiting money earmarked for a specific date.

Conversely, Christopher Stroup of Silicon Beach Financial favors money-market accounts for their flexibility and variable rates that may rise if the Fed hikes later in the year. Farrar adds that high-yield savings accounts also provide competitive, adjustable returns without early-withdrawal penalties. The consensus is that the optimal choice depends on individual timelines and the desire for either certainty or liquidity.