Certificate of deposit rates remain attractive, with top CDs now offering annual percentage yields, or APYs, of up to 5.5%. But we’ve seen APYs fall in CD terms over the past few months, and they’re likely to continue to fall in the coming months. So, if you’ve been thinking about opening a CD, now is the time to act.
When you open a CD, your APY is locked in for the life of the CD, or term. That means that even if rates go down, your rate of return is fixed. By opening an account now, you can protect your income from future rate cuts.
Read on to find out what the best CD rates are today and where you can get them.
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
Short-term CDs currently offer the best APYs
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 do the same, raising interest rates on consumer products such as credit cards, as well as savings accounts and CDs. But banks are also raising savings rates to attract new customers, stay competitive and improve their cash flow.
Beginning in March 2022, the Fed regularly raised the federal funds rate to combat rampant inflation, and CD rates rose in response. But since inflation has started to cool, the Fed has chosen to hold off on rate hikes at its last three meetings – and CD rates have been lowered. The last months of 2023 saw many banks starting to lower the rates of CD terms.
Here’s where APYs compared last week:
|CNET average APY
|Average FDIC rate
*Percentage increase/decrease from Jan. 16, 2024, to Jan. 22, 2024.
Generally, long-term CDs offer the highest savings rates, because you agree to lock up your money for a longer period of time. But right now short-term CDs — those with terms of up to a year — offer the best rates.
“I find that CD rates between nine and 12 months offer the best rates, and I think that’s a good term for most people because it’s hard to plan further out than of that,” says Bernadette Joy, a personal finance coach and CNET Member of the Financial Review Board.
The next meeting of the Fed is January 30-31, and experts hope that the central bank will opt for another stop on rate hikes. So, there is still time to lock in a high CD rate, but you won’t have to wait long. Experts expect the Fed to begin lowering rates in mid- to late 2024. This is one reason why banks may still offer higher rates for short-term CDs than in the long-term — banks may be reluctant to lock customers into high rates for a longer period of time, knowing that rates are likely to drop in the coming months.
Why don’t you wait to open a CD
A fixed rate of return (especially if prices fall) is not the only benefit 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 up to $250,000 per person, per institution in the event of bank failure. This makes them a low-risk way to grow your savings.
Additionally, most banks charge a fee if you withdraw money before the CD matures. This can eat into your income and give you pause if you’re thinking of tapping your funds before you need them. And you can set aside the money without worrying about spending it (plus you’ll earn interest).
How CD accounts compare
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.