The Best CD Term Right Now Isn't the One Most People Are Opening

The subtle winner here is not the bank selling the CD, but the lender with the steeper intermediate curve and the strongest deposit franchise. If retail savers migrate toward 9-12 month maturities, banks can reduce funding volatility without paying up for long-dated deposits, while still avoiding the margin compression that would come from aggressively bidding 2-5 year money. That favors regional banks and online banks with sticky cash-management ecosystems; it pressures smaller institutions that rely on rate-shopping depositors and need to reprice faster to defend balances.

The second-order effect is that a falling-rate environment compresses the value of optionality for households but expands it for banks. A customer who repeatedly rolls short CDs becomes a de facto tactical trader of rates, but most will lag the market and get trapped into lower reinvestment yields. That behavioral inertia is durable: once rates start down, the average depositor tends to chase the last advertised APY rather than optimize the curve, which means banks can lower posted rates faster than deposit betas suggest.

The contrarian take is that the market may be overpricing a straight-line decline in front-end yields. If the Fed pauses or inflation re-accelerates, the 6-month roll strategy quickly regains appeal and the “middle of the curve” trade can unwind. The key catalyst is the next two CPI prints and the next FOMC meeting; a 25-50 bp repricing higher in 6-month CDs would make rolling short duration preferable again, while a clean easing path favors locking 9-12 months now.