Certificates of deposit are a low-risk place to store savings you’ve earmarked for a future expense, such as a vacation or a new car. You agree not to touch your funds for the term of the CD, and in exchange, the bank locks in your annual percentage yield (APY) for that entire term. And with terms ranging from a few months to several years, there’s likely to be a CD that fits your timeline.
Locking in an APY is extremely smart in the current rate environment. Top CDs now boast APYs as high as 5.5%, but experts predict rates will drop in the coming months. So, by opening a CD account now, you can protect your income from future rate drops.
Read on to find out what the top CD rates are today and where you can get them.
Experts recommend comparing rates before opening a CD account to get the best possible APY. Enter your information below to get the best CNET partner rates for your area.
The best CD rates today
Here are some of the top CD rates available today and how much you can make by depositing $5,000 today:
|BMO Alto; CommunityWide Federal Credit Union
|Bread Storage; CommunityWide Federal Credit Union
|First Internet Bank in Indiana
What the Fed’s decision means for CD rates
CD rates are affected by the federal funds rate, which determines how much it costs banks to borrow and lend to each other. When the Federal Reserve raises this rate, banks are likely to do the same, raising interest rates on consumer products such as credit cards, savings accounts and CDs to attract new customers, retain competition and improve their cash flow.
Beginning in March 2022, the Fed regularly raised the federal funds rate to combat inflation, and CD rates rose in response. But as inflation began to cool, the Fed chose to hold off on rate hikes at its last four meetings. As a result, CD rates have leveled off at the end of 2023, and many banks have cut rates on CD terms in recent months.
Here’s where APYs stand compared to last week:
|CNET average APY
|Average FDIC rate
*Weekly percentage increase/decrease from Jan. 22, 2024, to Jan. 29, 2024
The Fed announced it would hold rates steady at this week’s meeting, indicating it will continue on this path as it tries to bring inflation back to its 2% target. But the promise of future cuts could affect CD rates today.
“Any subtle shift in Fed communication could affect CD rates in the short term,” said William Bevins, CFP, CFTA. “The consensus remains that rates are on hold for a few more months.”
The Fed will likely start cutting rates later this year, which means CD rates will continue to decline. So, by locking in an APY now, you can protect your income from rate drops in the future.
Why CDs are a reliable investment
A fixed APY isn’t the only perk of opening a CD today.
CDs held by banks that are members of the Federal Deposit Insurance Corporation or credit unions insured by the National Credit Union Administration are protected by federal deposit insurance. That means your money is safe up to $250,000 per person, per institution if the bank fails. This makes them a low-risk way to grow your savings.
Additionally, most banks charge an early withdrawal penalty if you withdraw money before the CD matures. This can eat into your income and discourage you from tapping your funds before you need them.
Which CD is right for you?
In addition to a competitive APY, here’s what you should look for when comparing CD accounts:
- How quickly you need the funds: Early withdrawal penalties can wipe out your interest earnings. So be sure to choose a term that fits your savings timeline.
- Minimum deposit requirement: Some CDs require a certain amount to open an account – typically, $500 to $1,000. Some have no minimum deposit requirement. How much money you should deposit will help you narrow down your account options.
- Fee: Charges can destroy your balance. Many online banks do not charge maintenance fees. They have lower overhead costs than banks with physical branches, and they pass these savings on to consumers through higher fees and lower fees. However, be sure to read the fine print for any account you are considering.
- Federal deposit insurance: Confirm that any institution you are considering is a member of the FDIC or NCUA to ensure your money is protected in the event of a bank failure.Customer ratings and reviews: Read what customers are saying about the bank you’re considering on sites like Trustpilot to make sure the bank is responsive, professional and quick
CNET checked CD rates based on the latest APY information from issuer websites. We evaluated CD rates from more than 50 banks, credit unions and financial companies. We evaluate CDs based on APYs, product offerings, accessibility and customer service.
Current banks included in CNET’s weekly CD average are: Alliant Credit Union, Ally Bank, American Express National Bank, Barclays, Bask Bank, Bread Savings, Capital One, CFG Bank, CIT, Fulbright, Marcus by Goldman Sachs , MYSB Direct, Quontic , Rising Bank, Synchrony, EverBank, Popular Bank, First Internet Bank of Indiana, America First Federal Credit Union, CommunityWide Federal Credit Union, Discover, Bethpage, BMO Alto, Limelight Bank, First National Bank of America, Connexus Credit Union.