According to a financial planner, this account provides the highest return for earning more on your cash.

Despite the Federal Reserve's decision to lower interest rates, it is still possible to secure a competitive rate on a certificate of deposit.

Fixed interest rates for CDs range from a few months to several years and are typically higher, around 4% to 5%, compared to the average savings account rate of 0.57%.

You can earn a higher interest rate on a $10,000 deposit with a CD compared to a savings account, which is the best option without taking on additional risk.

With a CD, you can secure a high interest rate, but your money will be tied up for a specified period of time, typically several months or years.

According to certified financial planner Jeremy Keil in Wisconsin, CDs are an excellent option for storing cash if you don't require it immediately.

Why CDs might be the best place to store your cash for now

CDs are a smart option for people saving up for a purchase, such as a down payment on a home or car, because they are low-risk and typically insured by the Federal Deposit Insurance Corporation, which protects deposits up to $250,000 per depositor, per bank.

To avoid penalties that can wipe out the interest earned, it is important not to withdraw funds before the term ends.

CDs guarantee a fixed interest rate for the entire term, while savings account rates are variable and may decline as the Fed continues to lower its rates, with further cuts expected.

By 2026, the benchmark interest rate is predicted to decrease to 2.5%, which is lower than its current range of 4.75 to 5%. This will likely result in a decrease in savings account rates as well.

Keil explains that CDs provide more certainty and a higher interest rate compared to holding cash in a high-yield savings or money market account.

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