Before the Fed cuts rates, consider locking in some returns with CDs

The fight to keep your money is heating up with a couple of credit unions now offering to match or beat the return you’re getting at your current financial institution, according to findings from rate watcher CD Valet.
For a limited time, RiverLand Federal Credit Union in New Orleans, will top any 6- to 36-month certificate of deposit (CD) rate by 0.05% annual percentage yield (APY) when the new CD is opened. Consumers Federal Credit Union in Brooklyn, New York will match the 5-year CD rate of any U.S. financial institution.
The offerings can be a win-win for both credit unions and savers with the Federal Reserve expected to begin cutting rates in September.
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“Consumers are particularly attuned to interest rates and how any changes will impact the returns they can earn on their savings,” and credit unions are “eager to hold on to their existing deposits and bring in new deposits with these eye-catching promotional offerings,” said Mary Grace Roske, CD Valet’s senior vice president of marketing communications.
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RiverLand Federal Credit Union offers a Match & Raise Certificate.  If members move funds from another financial institution, Riverland will top the best certificate of deposit (CD) rate they can find by 0.05% annual percentage yield (APY) when they open a new CD with RiverLand.
CD terms are limited to a minimum of six and a maximum of 36 months. Proof of the advertised rate, including terms and offer date, is required as well as a minimum $1,000 investment.
Consumers Federal Credit Union in Brooklyn will match the 5-year CD rate of any U.S. financial institution if you open a new one at Consumers. Only members can receive the offer and the minimum investment is $500 with no maximum, said Stephen Jacoby, the credit union’s chief executive.
“If they don’t have rate proof, we will make every best effort to look it up for them and make it easy for them, too,” he said.
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One-year CDs are the most popular and are offering high rates, according to CD Valet. It found 600 rates nationwide of 5.00% APY and above with 1-year terms and from April through June, 65% of online searches were for 1-year CDs.
Shoppers can earn even more with rates of 6.00% APY and higher if they qualify for membership at select credit unions, it said. CD Valet has seen twice as many rates at 6.00% and higher APY in April through June than it did in the first three months of the year.
Express Credit Union in Washington state tops the list with its 90th Anniversary Special. Through December 9th, it will pay 9% APY on a 1-year CD if you open the CD on the 9th of the month, on balances up to $5,000. You must be a member to receive this special, and it’s one CD per member, it said.
“That means you could earn $450 in 12 months just by opening the CD at 9%,” it said on its website.
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“Now is the perfect time,” said Ronnie Thompson, investment adviser representative and owner of True North Advisors, a financial advising firm in Northville, Michigan.
With Federal Reserve Chairman Jerome Powell suggesting Wednesday the central bank could begin cutting its benchmark short-term federal funds rate in September, Thompson said financial institutions will immediately start slashing the interest rates they pay on deposits.
“Banks will be waiting with bated breath to cut rates because rates have been high for such a long time,” Thompson said. “So, it’s reasonable for people to look into locking in these higher rates.”
Lower rates would encourage businesses and consumers to borrow, which means more lending by financial institutions.
Many people may also have CDs they’ve bought over the last year or two that are coming due and need somewhere to park their money, Thompson said.
When you buy a CD, remember that money will be locked in for the duration of the CD unless you pay a penalty to withdraw your money early.
So, if you have enough money, Thompson suggests creating a CD ladder, which is splitting your money and buying a variety of terms.
“Maybe buy a 1, 3 and 5-year, which allows some money to become (available) during that period,” he said. “They all have different rates so you take the aggregate of those rates and collectively, that’s a bigger rate over the 5-year period.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.