The 3 Biggest Mistakes You Can Make When Investing in CD in May 2025

May 1, 2025 | by ltcinsuranceshopper

Certificates of deposit (CDs) are a surefire way to earn a solid return with no risk — if you follow a few basic rules.

Otherwise, you could cost yourself a lot of money. Here are three big CD investing mistakes you don’t want to make right now.

1. Rushing to open CDs because rates might drop

CD rates are still near 15-year highs, but it seems likely that they’ll drop soon. The Federal Reserve expects to lower the federal funds rate twice in the second half of 2025. President Donald Trump is pressuring the Fed to lower rates even sooner.

If the federal funds rate is cut, most CD rates will drop soon after. That means today’s high rates may not last much longer.

Our Picks for the Best High-Yield Savings Accounts of 2025

SoFi Checking and Savings Member FDIC. APY up to 3.80%² Rate info Member FDIC.	up to 3.80%² Rate info	$0
American Express® High Yield Savings Account Member FDIC. APY 3.70% Rate info Member FDIC.	3.70% Rate info	$0
Barclays Tiered Savings Member FDIC. APY 4.10% Rate info Member FDIC.	4.10% Rate info	$0

Disclaimers

SoFi disclosure:

¹ New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/26. See full bonus and annual percentage yield (APY) terms at sofi.com/banking#1.

² SoFi members who enroll in SoFi Plus with Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi Plus members are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

³ We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

⁴ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations.

Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

⁵ We’ve partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.

⁶ Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

⁷ Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the“30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.

But that alone is not a good reason to invest in CDs.

CDs are best for money that you want to keep safe and not touch for three months to five years. That means they’re not the best place for:

Money that you may need soon, like your emergency savings. This is better off in a high-yield savings account, where it’ll earn a high APY, and you can withdraw money whenever you want.
Money that you’re investing for big long-term goals, like retirement. If you can leave your money untouched for more than five years, then you’re probably better off investing in higher-growth assets like stock market index funds.

2. Not shopping around for the best rates

Right now, you can find CDs paying about 4.50% — but there are others that pay 2.00% or less.

Here’s how big of a difference that would make in your earnings, assuming you invested $10,000 in a six-month CD:

4.50% APY: $223
2.00% APY: $100

And the more you deposit, the more a low APY will cost you. When it comes to CD investing, nothing is more important than getting the highest possible APY. So be sure to compare the best CD rates for whatever term you’d like.

3. Not making a plan for your maturity date

When a CD matures, you have a certain amount of time (usually 10 days) to decide what to do with your money.

If you do nothing, then your bank may roll the funds over into a new CD. The new CD will have the same term, but it might have a different interest rate.

Set a reminder for your CD’s maturity date, so when the time comes, you can make a smart choice. For example:

If you want to stay invested in CDs, then shop around for the best rates again. You may stick with your current bank, or you may want to move your funds elsewhere.
If you don’t want to reinvest in CDs, then transfer your money to a high-yield savings account before your bank automatically renews your CD.

The worst-case scenario is that your money gets locked into a CD with a lower rate, and you don’t even realize it for months. So keep tabs on your CDs and make a plan for where your money will go once they mature.

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