A certificate of deposit (CD) is typically a smart way to grow and safeguard your money, regardless of the economic climate in which you open it. But, in recent years, these sorts of accounts have seen their benefits surge thanks to inflation and an elevated interest rate climate, causing returns on CDs to grow exponentially. In recent years, savers haven't needed to search too far to find a CD offering a rate of 4% or higher in both short-term and long-term account versions.

However, the window of opportunity to open such accounts could soon be closing. Thanks to a consistently cooling inflation rate, which dropped for the third consecutive month in June, today's higher rates may soon be adjusted. And with the next Federal Reserve meeting to discuss interest rates set for July 30, savers should prepare accordingly. Below, we'll detail three specific reasons why it's worth opening a long-term CD before the July Fed meeting.

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Why you should open a long-term CD before the July Fed meeting

Not sure if you should open a long-term CD now or wait to see how things evolve? Here are three reasons why you should strongly consider opening a long-term CD before the July Fed meeting.

Rates are still elevated

Long-term CD rates, while not as high as the most competitive short-term versions, are still elevated, with some as high as 5.75% right now. With a 3-year CD at that rate, savers stand to earn hundreds and possibly thousands of dollars, depending on the initial deposit amount. But you'll need to shop around to find a rate that high — and you'll need to be willing to both lock your money away for the full CD term (or pay an early withdrawal penalty) and consider using an online bank (which tends to offer more competitive rates than their counterparts with physical branches). If those prerequisites are met, however, it makes sense to take advantage of these long-term CD rates while you can still find them.

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Rates may be cut soon

Sure, most experts expect the federal funds rate — currently stuck at a range between 5.25% and 5.50% — to remain the same in July, but the September meeting could be different. The CME FedWatch tool currently has an interest rate cut for that meeting pegged at a 91.7% likelihood. While that could change before the Fed meets on September 17, it's not worth taking the risk for many savers when today's high rates are still available. 

And remember that a formal rate cut doesn't need to take place for rates on CDs to drop. Lenders use the federal funds rate as a benchmark but what they offer savers isn't directly dictated by it. So they could start lowering CD rates soon in anticipation of a formal rate cut to come later. 

You'll earn high returns for multiple years

A short-term CD could come with a great rate right now, but that rate will be gone shortly, possibly before the end of the year if you open a 3-month CD, for example. But with long-term CDs (those with terms longer than 12 months), you'll earn high returns for years to come. For example, 2-year, 3-year, 5-year and 10-year CDs all offer compelling rates right now, which savers can utilize to earn predictable returns, no matter any uncertainty or changes in the rate climate that otherwise would have affected rates. By opening a long-term CD now, before the July Fed meeting, then savers can immediately start protecting against rate volatility to come. 

The bottom line

While the rate climate of the last two years has been an opportune one for savers, it could soon be changing, perhaps as early as this summer. To take advantage of today's high rates, then, savers should look to long-term CDs. Not only are rates on these specific accounts still high but by acting now they can lock one in before any rate adjustments — formal or otherwise — affect what's available. And by opening one of these long-term CDs now, savers can earn an elevated rate before and after the July Fed meeting and, potentially, for many years to come.

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