It’s beginning to look like the Federal Reserve is easing on the accelerator when it comes to raising rates. You can still get the highest yielding five-year CD yields in more than a decade. But your window on this opportunity could be closing.

Here are eight ways to know if a CD is right for you now to plan for your future.

Long-term CD rates may be peaking now

The outlook for where interest rates are heading over that period of time is what drives long-term yields up, says Greg McBride, CFA, Bankrate’s chief financial analyst.

In comparison, the highest yielding 5-year CD rate is only 4.54 percent APY — the highest since around late 2008. But not as high as one-year CDs available at top-yielding banks.

“And if the Fed is seen as being close to the end of their rate hiking cycle, there’s not ongoing fuel to push those longer-term yields higher,” McBride says.

CD APYs between the two- and five-year terms are peaking on or about right now, McBride says.

On March 1, 2022, the highest-yielding one-year CD was 0.9 percent annual percentage yield (APY). Around 13 months and nine straight Federal Reserve rate increases later, you can find a one-year CD with a yield more than five times that, with the highest yielding one-year CD currently at more than 5 percent APY.

8 reasons why now might be the time for a long-term CD

1. You have long-term money in a savings account

A Bankrate survey recently found that only 22 percent of Americans with savings have a savings account with a yield of at least 3 percent APY. People with money in those high-yield accounts have likely seen their yield increase dramatically in the past year.

But if some of that is longer-term money — and rates do decrease in the future — you might be glad you opened a longer-term CD now.

2. You have funds you won’t need for a period of time

Having your emergency fund and other savings in a high-yield savings account is a good first step. But longer-term money might belong in a CD if you won’t need the money during the CD term. A CD can potentially help you earn a higher APY than a savings account, which generally has a variable APY. Another benefit of a CD over a savings account is if the Fed lowers rates, your savings APY will likely decrease. But your regular CD has a fixed APY for the term of the CD.

Make sure you won’t need these funds during your CD term. Otherwise, you could incur an early withdrawal penalty. You could consider a no-penalty CD for funds that you think you might need during a CD’s term.

3. CDs offer a guaranteed return

There are few guarantees in life. But money in a CD — as long as it’s within the FDIC’s limits and following the FDIC’s rules — is protected from a bank failure and will earn a guaranteed APY, as long as you keep the money in the CD for the entire term.

“So if you’ve had your eye on one of those multi-year maturities, I think this is a good time to lock that in — they may not get much better,” McBride says.

4. 5 percent is an attractive yield for any investment

During more normal times, a 2 or 3 percent yield would likely be close to keeping up with inflation.

“Even in the grand scheme of other investment classes and investment categories, a 5 percent return is a pretty strong return,” says Adam Stockton, director at Curinos, a data provider. “I think from that side, the downside risk of putting money into a CD is almost certainly lower now than a year ago.”

5. Long-term CD yields are good if you think rates will come tumbling down soon

You shouldn’t try to time the market. And you shouldn’t try to find the absolute perfect time to deposit money into a new CD.

People need to ask themselves whether they’d feel more burned missing out on 6 percent APYs or missing out on 5 percent APYs, Stockton says.

But one thing is clear: None of us can 100 percent predict the future path of rates. Just look at the surprise of the pandemic — and rates dropping to near-zero levels very quickly — as just one example.

You could consider a bump-up CD if you didn’t want to miss out on the potential for CD APYs increasing more.

6. A CD ladder could be beneficial in this environment

A CD ladder is a great way to spread CD maturities out over time with different terms of CDs. Traditionally, in your typical ladder, five-year CDs have a higher yield than one-year CDs.

But these days, you’re likely to see a CD with a term of around one year or 18 months have the highest yield in your ladder.

7. Earn a market-like return without market risk

A fixed APY during your CD term and Federal Deposit Insurance Corp. (FDIC) insurance coverage are two ways a CD offers you guarantees. And these days, you’ll get a competitive return with a CD.

“Overall a 5 percent return is what a lot of people suggest is kind of a benchmark for an overall investment portfolio,” Stockton says. “So hey if you can get that return on just the cash for your portfolio, that’s a pretty good deal.”

With FDIC insurance, always make sure you are within the FDIC limits and following the FDIC’s rules.

8. You’re retired

People who are retired might want to lock in a CD yield now. That way they can potentially keep up with or even be ahead of long-term inflation. But of course, there’s no guarantee that inflation will stay at 5 percent or decrease further. It could increase again in the future, for all we know.

Bottom line

Either you have money that you aren’t planning to need or use that’s a good fit for a long-term CD — with a term between two years and five years — or you don’t. For those who don’t, one-year CDs are still paying very attractive yields. An introductory rate on a liquid account — such as a savings account or money market account with a fixed rate for a limited time — can also be a good deal during this uncertain rate environment.