If you want to earn interest on your savings and you can set aside some money for a certain period, a certificate of deposit is worth considering. CD rates are generally as high — if not higher — than high-yield savings account rates. But unlike savings accounts, which have variable rates, your CD rate is locked in when you open the account. And with rates expected to drop later this year, securing a good rate now can protect your income.
However, choosing the right account can make a big difference in how much you earn.
“Annual percentage yield (APY) can vary greatly, between institutions and between options,” said Jesse Carlucci, chief investment officer of Arrow Investment Management LLC.
Right now you can find CDs that offer APYs as low as 5.5% — if you know where to look. Read on to see how much you can earn on today’s top CDs.
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:
How the Fed affects 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 tend to follow suit, raising interest rates on consumer products such as credit cards, savings accounts and CDs to attract new customers.
Beginning in March 2022, the Fed regularly raised the federal funds rate to combat inflation, and CD rates rose in response. But with inflation starting to cool, the Fed has held off on raising rates at its last four meetings. As a result, CD rates are rising at the end of 2023, and banks have been cutting rates on CD terms for the past few months.
Here’s where APYs stand compared to last week:
|CNET average APY
|Average FDIC rate
*Weekly percentage increase/decrease from Jan. 29, 2024, to Feb. 5, 2024.
Generally, long-term CD rates are higher than short-term ones because banks want to encourage customers to keep their money with them longer. But with the Fed expected to cut rates later this year, banks may be hesitant to lock customers into a high APY for an extended period of time. Currently, short-term CDs — those with terms of one year or less — offer higher rates than long-term ones.
“I personally put money in CDs between nine and 12 months because that has the highest rates and allows me the flexibility to evaluate my cash holdings over a year or more,” said Bernadette Joy, a personal finance coach and CNET Member of the Financial Review Board.
Why don’t you wait to open a CD
A fixed APY isn’t the only perk of opening a CD today. CDs offer attractive benefits in any rate environment.
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.
What to look for in a CD account
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 easy to work with.
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.