A certificate of deposit (CD) is a safe place to set aside your savings while earning a generous return. However, if you’re considering putting your money in a CD, it’s important to choose one that pays a competitive interest rate.
CD rates began to rise sharply in early 2022 as the Federal Reserve increased its target rate. Ultimately, CD rates reached a 15-year high thanks to the Fed’s monetary policy decisions. However, the Fed paused rate hikes this year and CD rates have since flatlined.
Here’s a closer look at today’s CD rates and where you can find the best offers.
CD rates today
The best CD rates available today tend to be for terms of a year or less. The top rates on the market today hover around 5% APY. CD rates for longer terms tend to be a bit lower, with the best accounts paying closer to 4% or less.
The following is a look at some of the best CD rates available today from our verified partners.
Compared to the national average, these CD rates from online banks pay about three times more interest for similar term lengths.
National average CD rates
Here’s a look at the average CD rate by term as of March 18, 2024 (the most recent data available from the FDIC):
The highest national average interest rate for CDs stands at 1.81% for a 1-year term. However, in general, today’s average CD rates represent some of the highest seen in nearly two decades, largely due to the Federal Reserve’s efforts to combat inflation by keeping interest rates elevated.
Read more: What is a good CD rate?
Understanding today’s CD rates
Traditionally, longer-term CDs have offered higher interest rates compared to shorter-term CDs. This is because locking in money for a longer duration typically carries more risk (e.g., missing out on higher rates in the future), which banks compensate for with higher rates.
However, this pattern doesn’t necessarily hold today, with the highest average rate offered for a 12-month CD. This suggests a flattening or inversion of the yield curve, which can happen in uncertain economic times or when investors expect future interest rates to decline.
Read more: Short- or long-term CD: Which is best for you?
CD rate news
The Fed has maintained its target rate after its latest meeting in March 2024, with projections suggesting no rate increases in the coming weeks. However, there’s anticipation that the Fed might begin reducing its rate later in 2024.
If the Fed decreases its rate, CD rates are expected to follow suit, impacting both national average and high-yield CDs.
For those interested in locking in higher rates, now might be a good time due to the anticipation of rates potentially decreasing. Online banks and credit unions continue to offer competitive rates, especially compared to traditional brick-and-mortar institutions.
How to choose the best CD rates
When opening a CD, choosing one with a high APY is just one piece of the puzzle. There are other factors that can impact whether a particular CD is best for your needs and your overall return. Consider the following when choosing a CD:
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Your goals: Decide how long you’re willing to lock away your funds. CDs come with fixed terms, and withdrawing your money before the term ends can result in penalties. Common terms range from a few months up to several years. The right term for you depends on when you anticipate needing access to your money.
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Type of financial institution: Rates can vary significantly among financial institutions. Don’t just check with your current bank; research CD rates from online banks, local banks, and credit unions. Online banks, in particular, often offer higher interest rates than traditional brick-and-mortar banks because they have lower overhead costs. However, make sure any online bank you consider is FDIC-insured (or NCUA-insured for credit unions).
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Account terms: Beyond the interest rate, understand the terms of the CD, including the maturity date and withdrawal penalties. Also, check if there’s a minimum deposit requirement and if so, that fits your budget.
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Inflation: While CDs can offer safe, fixed returns, they might not always keep pace with inflation, especially for longer terms. Consider this when deciding on the term and amount to invest.