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How Rate Cuts Affect CDs, Treasurys and Savings Accounts
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From CDs to Treasurys, What Happens to Yields When Rates Are Cut?
Some saving and investing products are more sensitive to rate cuts than others. Here's how CDs, cash accounts, Treasurys and savings accounts will respond to rate cuts.
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9 years of experience Expertise Stocks ETFs economic newsSam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree from the University of Maryland in 2016. Sam has previously written for Investopedia, Benzinga, Seeking Alpha, Wealth Daily and Investment U, and has worked as an editor for Investment U, Wealth Daily and Haven Investment Letter. He is based in Brooklyn, New York.
Sam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree from the University of Maryland in 2016. Sam has previously written for Investopedia, Benzinga, Seeking Alpha, Wealth Daily and Investment U, and has worked as an editor for Investment U, Wealth Daily and Haven Investment Letter. He is based in Brooklyn, New York. Published in Lead Writer + more + more
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Arielle O’Shea leads the investing and taxes team at NerdWallet. She has covered personal finance and investing for nearly 20 years, and was a senior writer and spokesperson at NerdWallet before becoming an editor. Previously, she was a researcher and reporter for leading personal finance journalist and author Jean Chatzky, a role that included developing financial education programs, interviewing subject matter experts and helping to produce television and radio segments. Arielle has appeared on the "Today" show, NBC News and ABC's "World News Tonight," and has been quoted in national publications including The New York Times, MarketWatch and Bloomberg News. She is based in Charlottesville, Virginia. Published in At NerdWallet, our content goes through a rigorous editorial review process. We have such confidence in our accurate and useful content that we let outside experts inspect our work. Head of Content, Investing & Taxes + more + more
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12 years of experience Expertise Brokerage accounts stock market cryptocurrencyChris Davis is a Managing Editor on the Investing team. He has passed the Series 65 (Uniform Investment Adviser Law Exam) and covered the stock market, investing strategies, investment accounts and cryptocurrency. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet.
Chris Davis is a Managing Editor on the Investing team. He has passed the Series 65 (Uniform Investment Adviser Law Exam) and covered the stock market, investing strategies, investment accounts and cryptocurrency. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet. Published in Managing Editor + more + moreOver the last couple of years, savers have enjoyed some of the highest yields in decades on savings accounts, bonds, CDs and other products. But the Fed has now cut rates four times in the last 12 months.
Over the last couple of years, savers have enjoyed some of the highest yields in decades on savings accounts, bonds, CDs and other products. But the Fed has now cut rates four times in the last 12 months.While Federal Reserve chair Jerome Powell indicated after the October meeting that another rate cut in December is not a "foregone conclusion," it's not off the table, either. If interest rates continue to decline, how can savers preserve their yields? Below, we’re breaking down the interest rate sensitivity of a variety of different savings products.
While Federal Reserve chair Jerome Powell indicated after the October meeting that another rate cut in December is not a "foregone conclusion," it's not off the table, either. If interest rates continue to decline, how can savers preserve their yields? Below, we’re breaking down the interest rate sensitivity of a variety of different savings products.Cash management accounts
Cash management accountsWhat are they?
What are they?Cash management accounts are online accounts that often combine features of savings accounts (such as high interest rates), checking accounts (such as debit card and direct deposit privileges) and brokerage accounts (such as the ability to directly purchase stocks, bonds or other investments with the money).
Cash management accounts are online accounts that often combine features of savings accounts (such as high interest rates), checking accounts (such as debit card and direct deposit privileges) and brokerage accounts (such as the ability to directly purchase stocks, bonds or other investments with the money).They are frequently offered by brokerage firms as a place to park uninvested cash and earn some interest on it. However, in recent years some institutions have started to offer freestanding cash management accounts that are not connected to an investing platform. (NerdWallet offers a cash management account via Atomic Brokerage with a 3.90% APY.)
They are frequently offered by brokerage firms as a place to park uninvested cash and earn some interest on it. However, in recent years some institutions have started to offer freestanding cash management accounts that are not connected to an investing platform. (NerdWallet offers a cash management account via Atomic Brokerage with a 3.90% APY.)Cash management accounts typically lend funds out to a network of banks, who in turn lend the money to their own customers to generate a yield. This multi-bank structure sometimes comes with another perk: Cash management accounts may have a higher level of Federal Deposit Insurance Corp. coverage than the typical $250,000 limit in a traditional bank account.
Cash management accounts typically lend funds out to a network of banks, who in turn lend the money to their own customers to generate a yield. This multi-bank structure sometimes comes with another perk: Cash management accounts may have a higher level of Federal Deposit Insurance Corp. coverage than the typical $250,000 limit in a traditional bank account.How sensitive to interest rate changes are they?
How sensitive to interest rate changes are they?Moderately sensitive. The yields that banks earn on loaned money are tied to benchmark interest rates set by the Federal Reserve, which means that they may decrease when the Fed cuts rates.
Moderately sensitive. The yields that banks earn on loaned money are tied to benchmark interest rates set by the Federal Reserve, which means that they may decrease when the Fed cuts rates.However, some cash management accounts offer high APYs for a set period of time as a promotion for new customers, which may somewhat insulate their effective yields from Fed action.
However, some cash management accounts offer high APYs for a set period of time as a promotion for new customers, which may somewhat insulate their effective yields from Fed action.» MORE: Best brokerage accounts for high interest rates
» MORE: » MORE: Best brokerage accounts for high interest rates ADEarn a 3.9%* APY on your cash
Earn a 3.9%* APY on your cashBoost your APY for 6 months with a Cash Account offered by Atomic Brokerage.
Boost your APY for 6 months with a Cash Account offered by Atomic Brokerage.Paid Non-Client Promotion
Paid Non-Client Promotion Get Started *The boosted 3.9% Annual Percentage Yield (APY) is offered on up to $250,000 in deposits for the first 6 months when you open a Cash Account offered by Atomic Brokerage LLC and deposit funds within 14 days. Balances above $250,000 will earn the standard 3.25% APY. After the 6 month introductory period, all balances will earn the standard 3.25% APY. The 3.9% boosted introductory APY is available through NerdWallet’s promotional program. APYs are accurate as of 12/17/2025 and are subject to change without notice.Certificates of deposit (CDs)
Certificates of deposit (CDs)What are they?
What are they?Certificates of deposit are savings products offered by many banks and credit unions. They typically require you to commit your money to them for some period of time (which can be as short as a few months, or as long as a few years) and pay a fixed rate of interest over that time.
Certificates of deposit are savings products offered by many banks and credit unions. They typically require you to commit your money to them for some period of time (which can be as short as a few months, or as long as a few years) and pay a fixed rate of interest over that time.Pulling money out of a CD before maturity can result in an early withdrawal penalty, which may involve forfeiting some number of months of interest. However, some CD early withdrawal penalties may eat into the principal of the CD, leaving you with less money than you put in.
Pulling money out of a CD before maturity can result in an early withdrawal penalty, which may involve forfeiting some number of months of interest. However, some CD early withdrawal penalties may eat into the principal of the CD, leaving you with less money than you put in.How sensitive to interest rate changes are they?
How sensitive to interest rate changes are they?Not sensitive at all. Traditional CDs lock up your money and pay a fixed yield until maturity, which can make them an appealing option for savers in an environment where interest rates are expected to decrease in the near future. However, rates on new CDs will fall once the Fed lowers its rate.
Not sensitive at all. Traditional CDs lock up your money and pay a fixed yield until maturity, which can make them an appealing option for savers in an environment where interest rates are expected to decrease in the near future. However, rates on new CDs will fall once the Fed lowers its rate.» MORE: Best CD rates
» MORE: » MORE: Best CD ratesHigh-yield savings accounts
High-yield savings accountsWhat are they?
What are they?High-yield savings accounts typically pay higher interest rates than the traditional type of savings account you can open at a bank branch. Many are offered by online-focused financial institutions that have few physical branches. This lets them save on overhead costs and pass the savings onto customers in the form of higher yields.
High-yield savings accounts typically pay higher interest rates than the traditional type of savings account you can open at a bank branch. Many are offered by online-focused financial institutions that have few physical branches. This lets them save on overhead costs and pass the savings onto customers in the form of higher yields.Unlike cash management accounts, high-yield savings accounts typically don’t come with features like debit cards or brokerage account integrations. And like traditional savings accounts, there may be a monthly limit on how many transfers you can make out of them. They are typically offered as standalone products for short- to medium-term saving.
Unlike cash management accounts, high-yield savings accounts typically don’t come with features like debit cards or brokerage account integrations. And like traditional savings accounts, there may be a monthly limit on how many transfers you can make out of them. They are typically offered as standalone products for short- to medium-term saving.How sensitive to interest rate changes are they?
How sensitive to interest rate changes are they?Fairly sensitive. Like cash management accounts, high-yield savings accounts generate their yield through bank loans, whose interest rates are tied to benchmarks such as the federal funds rate. That means high-yield savings account yields may decrease if and when the Fed cuts rates.
Fairly sensitive. Like cash management accounts, high-yield savings accounts generate their yield through bank loans, whose interest rates are tied to benchmarks such as the federal funds rate. That means high-yield savings account yields may decrease if and when the Fed cuts rates.Also like cash management accounts, some high-yield savings accounts offer “APY-boost” promotions for new customers. However, many of the highest-yielding savings accounts do not, and others offer a cash bonus to new customers rather than an increased yield.
Also like cash management accounts, some high-yield savings accounts offer “APY-boost” promotions for new customers. However, many of the highest-yielding savings accounts do not, and others offer a cash bonus to new customers rather than an increased yield.» MORE: Best high-yield savings accounts
» MORE: » MORE: Best high-yield savings accountsBrokerage firms
Brokerage firms
Brokerage firmson Charles Schwab's website
on E*TRADE's website
on Vanguard's website
on Fidelity's website
Money market accounts
Money market accountsWhat are they?
What are they?Money market accounts are savings-like accounts that pay high (but often fast-changing) interest rates.
Money market accounts are savings-like accounts that pay high (but often fast-changing) interest rates.The “money market” refers to the market for ultra-short-term loans among banks, large companies and government agencies. These loans often have maturities of just days or weeks; large institutions use them to cover day-to-day expenses such as payroll. Money market accounts (and money market mutual funds) pay a yield by investing in these securities.
The “money market” refers to the market for ultra-short-term loans among banks, large companies and government agencies. These loans often have maturities of just days or weeks; large institutions use them to cover day-to-day expenses such as payroll. Money market accounts (and money market mutual funds ) pay a yield by investing in these securities.How sensitive to interest rate changes are they?
How sensitive to interest rate changes are they?Very sensitive. Money market securities are fast-maturing loans to large, creditworthy organizations, which means their interest rates are very closely tied to benchmarks such as the federal funds rate.
Very sensitive. Money market securities are fast-maturing loans to large, creditworthy organizations, which means their interest rates are very closely tied to benchmarks such as the federal funds rate.It also means that there’s rapid turnover in the pool of securities that money market accounts invest in, which causes money market yields to move almost in sync with benchmark rates. For example, if the Fed cuts benchmark rates by 0.25 percentage points, the yields on money market accounts are likely to quickly drop by about that same amount.
It also means that there’s rapid turnover in the pool of securities that money market accounts invest in, which causes money market yields to move almost in sync with benchmark rates. For example, if the Fed cuts benchmark rates by 0.25 percentage points, the yields on money market accounts are likely to quickly drop by about that same amount.» MORE: Best money market accounts
» MORE: » MORE: Best money market accountsTreasury bonds, bills and notes
Treasury bonds, bills and notesWhat are they?
What are they?Treasury bonds are loans to the U.S. government, one of the most creditworthy borrowers in the world. Short-term Treasury securities (known as Treasury bills or T-bills) are typically sold at a discount to their “face value” (the amount of money you’ll get when the bond matures). The yield of a T-bill is based on the difference between the purchase price and the face value. Longer-term Treasury bonds make regular interest payments to investors until maturity.
Treasury bonds are loans to the U.S. government, one of the most creditworthy borrowers in the world. Short-term Treasury securities (known as Treasury bills or T-bills ) are typically sold at a discount to their “face value” (the amount of money you’ll get when the bond matures). The yield of a T-bill is based on the difference between the purchase price and the face value. Longer-term Treasury bonds make regular interest payments to investors until maturity.Almost all brokerage accounts offer some kind of Treasury bond fund (exchange-traded funds and/or mutual funds), and some offer individual Treasury bonds for purchase. You can also buy individual Treasury bonds directly from the government at TreasuryDirect.gov.
Almost all brokerage accounts offer some kind of Treasury bond fund (exchange-traded funds and/or mutual funds), and some offer individual Treasury bonds for purchase. You can also buy individual Treasury bonds directly from the government at TreasuryDirect.gov .Another way to earn interest from Treasury securities is through a Treasury account, a savings-account-like product that automatically invests in T-bills. (NerdWallet offers a Treasury account through a partnership with Atomic Invest, and one of the brokers we review, Public, also offers a Treasury account.)
Another way to earn interest from Treasury securities is through a Treasury account, a savings-account-like product that automatically invests in T-bills. (NerdWallet offers a Treasury account through a partnership with Atomic Invest, and one of the brokers we review, Public , also offers a Treasury account.) ADEarn a 3.9%* APY on your cash
Earn a 3.9%* APY on your cashBoost your APY for 6 months with a Cash Account offered by Atomic Brokerage.
Boost your APY for 6 months with a Cash Account offered by Atomic Brokerage.Paid Non-Client Promotion
Paid Non-Client Promotion Get Started *The boosted 3.9% Annual Percentage Yield (APY) is offered on up to $250,000 in deposits for the first 6 months when you open a Cash Account offered by Atomic Brokerage LLC and deposit funds within 14 days. Balances above $250,000 will earn the standard 3.25% APY. After the 6 month introductory period, all balances will earn the standard 3.25% APY. The 3.9% boosted introductory APY is available through NerdWallet’s promotional program. APYs are accurate as of 12/17/2025 and are subject to change without notice.How sensitive to interest rate changes are they?
How sensitive to interest rate changes are they?The sensitivity of Treasury bonds depends on how you’re investing in them. An individual bond, if held to maturity, has a fixed yield, regardless of what happens to benchmark interest rates.
The sensitivity of Treasury bonds depends on how you’re investing in them. An individual bond, if held to maturity, has a fixed yield, regardless of what happens to benchmark interest rates.But if you’re investing in bond ETFs or bond mutual funds, you’re likely investing in a pool of bonds with various maturity dates. A fund’s yield may fluctuate as the underlying bonds reach maturity and get rolled over into new bonds, which means that the fund’s yield may decrease if benchmark interest rates fall in the months ahead.
But if you’re investing in bond ETFs or bond mutual funds, you’re likely investing in a pool of bonds with various maturity dates. A fund’s yield may fluctuate as the underlying bonds reach maturity and get rolled over into new bonds, which means that the fund’s yield may decrease if benchmark interest rates fall in the months ahead.Treasury accounts generally offer investors the option to keep their money in specific Treasury bills until maturity, providing a fixed yield for the lifetime of the bill. But if you pull your money out before your T-bills mature, and then put it back in later, you may not be able to lock in the same yield as before. Yields may also change as bills mature and get rolled over.
Treasury accounts generally offer investors the option to keep their money in specific Treasury bills until maturity, providing a fixed yield for the lifetime of the bill. But if you pull your money out before your T-bills mature, and then put it back in later, you may not be able to lock in the same yield as before. Yields may also change as bills mature and get rolled over.If you’re interested in individual bonds as a fixed-yield savings vehicle, it’s important to note that not all brokers offer them — some only offer bonds in the form of ETFs.
If you’re interested in individual bonds as a fixed-yield savings vehicle, it’s important to note that not all brokers offer them — some only offer bonds in the form of ETFs.» MORE: Best online brokers for bonds
» MORE: » MORE: Best online brokers for bonds About the author Sam Taube Sam Taube Sam Taube writes about investing for NerdWallet. He has covered investing and financial news since earning his economics degree in 2016. See full bio.How rate cuts affect:
Cash management accounts Cash management accounts Certificates of deposit (CDs) Certificates of deposit (CDs) High-yield savings accounts High-yield savings accounts Money market accounts Money market accounts Treasury bonds, bills and notes Treasury bonds, bills and notesHow rate cuts affect:
Cash management accounts Cash management accounts Certificates of deposit (CDs) Certificates of deposit (CDs) High-yield savings accounts High-yield savings accounts Money market accounts Money market accounts Treasury bonds, bills and notes Treasury bonds, bills and notes More like this Investment Basics Investing Bonds Best Robo-Advisors: Top Picks for 2026 We spent hours testing robo-advisors to find ones that charge low fees but still offer high-quality features, including automated portfolio rebalancing, exposure to a range of asset classes and financial planning tools. 2 By Alana Benson, Sabrina Parys Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for June 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube Best Brokers for Beginner Investors: Top Picks for 2026 We spent hours analyzing the best brokers for beginners to find ones that offer low costs, helpful educational content and a broad investment selection. Our testers also looked for trading platforms that are easy to navigate. 2 By Alana Benson, Bella Avila Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana Best Brokerage Accounts for Online Investing and Stock Trading in 2026 Based on hours of analysis and hands-on testing, here are our picks for the best brokerage accounts based on their low fees, strong platforms, quality customer support and other factors. Chris Davis Best Robo-Advisors: Top Picks for 2026 We spent hours testing robo-advisors to find ones that charge low fees but still offer high-quality features, including automated portfolio rebalancing, exposure to a range of asset classes and financial planning tools. 2 By Alana Benson, Sabrina Parys Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for June 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube Best Brokers for Beginner Investors: Top Picks for 2026 We spent hours analyzing the best brokers for beginners to find ones that offer low costs, helpful educational content and a broad investment selection. Our testers also looked for trading platforms that are easy to navigate. 2 By Alana Benson, Bella Avila Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana Best Brokerage Accounts for Online Investing and Stock Trading in 2026 Based on hours of analysis and hands-on testing, here are our picks for the best brokerage accounts based on their low fees, strong platforms, quality customer support and other factors. Chris Davis Best Robo-Advisors: Top Picks for 2026 We spent hours testing robo-advisors to find ones that charge low fees but still offer high-quality features, including automated portfolio rebalancing, exposure to a range of asset classes and financial planning tools. 2 By Alana Benson, Sabrina Parys Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for June 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube Best Brokers for Beginner Investors: Top Picks for 2026 We spent hours analyzing the best brokers for beginners to find ones that offer low costs, helpful educational content and a broad investment selection. Our testers also looked for trading platforms that are easy to navigate. 2 By Alana Benson, Bella Avila Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana