Interest rates were pretty high last year. While it wasn't great for homebuyers or credit card users, for savers, it was a boon — making it easier to earn on cash stored in savings accounts and certificates of deposits (CDs).

Those days could be numbered, though. With the Federal Reserve poised to cut interest rates this year, 2024 could see rates on savings accounts and CDs fall as well. So if you're eyeing a move for your savings, the time is now to solidify a strategy.

"Banks set rates on CDs based on the Federal Reserve's lending rate," says Chance Robinson, chief financial strategist at Strong Point Financial in Kissimmee, Florida. "With rates holding steady at the Fed's last meeting and their prediction for multiple rate cuts, it's very likely that CD interest rates will drop in 2024. Especially now that we're also entering an election year, the best thing the Fed can do is lower interest rates to stimulate the economy."

Specifically, you might want to look into CDs, which allow you to lock in today's current interest rates for periods of anywhere from a month to five or 10 years. Need help deciding which CD term is best for your money? Below, we'll break down what you need to know.

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Why a long-term CD may be better in 2024

Long-term CDs historically have had higher interest rates, so if you're looking to maximize your earnings and can keep your money untouched for a while, these may be your best bet.

"The longer a person keeps their CD open, the longer the bank has to do business with the money and loan it out," Robinson says. "Banks will give people a better rate on a long-term CD to encourage them to keep their money in that CD for a longer period of time."'

You might also choose a long-term CD if you don't need the money in the next few years or you're saving up for a far-off goal — like buying a house or something similar.

"Generally speaking, people who don't have an immediate need to use the money are better suited for long-term CDs," Robinson says. "You have to be in a position to let the money sit for several years to reap the benefits of a long-term CD."

Explore your long-term CD interest rate options today.

Why a short-term CD may be better in 2024

Short-term CDs are likely your best bet if you want easier access to your money. This might be the case if you need a financial safety net, you're worried about your job or you just want the opportunity to put your money toward other ventures in the near future.

"Short-term CDs are ideal for those that want flexibility for other purchases or investment options," says Matt Willer, partner at Phoenix Capital Group Holdings in Colorado.

You might also consider a short-term CD if you want to make some fast cash on your savings or you need to cover a known expense a few months down the road. As Michael Arvay, CEO of Marvelous Retirement Planners in Toledo, Ohio, explains, "If someone has an upcoming purchase they would like to make in, let's say, nine to 12 months, for example, then having a couple of extra bucks saved in a higher rate might help."

They can also be a good idea if you need to pad your income a bit in the near term — something that might be particularly helpful to seniors or those nearing retirement. 

"If we have someone in their 70s or older, they may want to take advantage of a couple extra guaranteed spending dollars," Arvay says. "Personally, I would recommend older investors invest in short-term CDs more than anyone else."

Combine short- and long-term CDs with a CD ladder

You don't have to choose between short- and long-term CDs. Instead, many investment professionals recommend "laddering" your CDs — splitting your initial deposit into several chunks and spreading them across CDs with varied maturities. 

"Combining short- and long-term CDs is a very good idea, especially for the very conservative investor," Arvay says. "Laddering your timeframe on your CDs can help with interest rate risk. Capitalizing on the highest overall rate of return with long-term CDs and some added liquidity with short-term CDs gives diversity." 

With CD ladders, you'll have easier access to your money. When the first CD comes to maturity, you can choose to either keep the funds (and use them toward expenses you might be dealing with) or reinvest them in another CD, possibly one with a higher interest rate.

If you're not sure what CD terms you should explore — or whether a CD ladder is right for your goals, consider speaking to an investment professional. They can help you make the right move for your money. 

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