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January 17, 2024 — Earn up to 5.51% APY

Like savings accounts, certificates of deposit (CDs) can be a safe place to earn some interest on your money. Unlike savings accounts, CDs typically hold your money for a set period of time, often in exchange for earning an annual rate of return (APY) that is higher than the APYs on many savings accounts.

Although rates for the top-grossing CDs have fallen somewhat in recent weeks, CDs are still worth considering. The highest generally available APY is 5.51 percent on a one-year term.

The highest yielding CDs still easily beat inflation, and they are a safe place for your money when offered by a federally insured bank or credit union. The table below shows current CD rates, national average rates, and how much a $5,000 investment would earn over terms.

Key learning points

  • The highest rate you can find on a commonly available CD is 5.51%, offered over a one-year term.

  • The best APYs with terms of up to two years are 5 percent APY or higher, while the best interest rates with terms of three to five years are between 4.5 percent APY and 4.75 percent APY.

  • Top rates are more than three times higher than national averages, and the most competitive APYs are often available from online-only banks.

Today’s CD rates by term

How to choose a CD

In addition to a CD’s APY, you should also pay attention to factors such as the minimum deposit requirement and the early withdrawal penalty. The required minimum deposit for a CD can range from $0 to $10,000 or more. Although you should only put money toward a CD that you can afford to part with until it reaches maturity, it’s still helpful to be familiar with the terms of the early withdrawal penalty.

CD rates in 2022 through 2024

The national average CD interest rate rose steadily in 2023 as the Federal Reserve continued to raise rates at the fastest pace since the 1980s. In total, Fed officials have raised rates 11 times between 2022 and 2023, bringing the Fed Funds rate to its current target range of 5.25-5.5 percent. Along with these rate increases, average CD APYs rose to their highest levels in many years, with APYs on some competing CDs rising as much as 7 percent.

This year is expected to be a showcase for CD savers. Greg McBride, CFA, Bankrate’s chief financial analyst, predicts two Fed rate cuts in 2024, but he says CD yields will continue to outpace inflation. “Savers will have another good year in which their returns will rise, while inflation is expected to fall further,” he says.

McBride also emphasizes the importance of shopping for the highest APY. “High-yield offers will still provide a notable advantage (over lower-yield offers),” he adds.

Frequently asked questions about CDs

  • How do CDs work?

    A CD is a deposit account that provides a fixed return in exchange for tying up your money for the entire term. CD terms often range from three months to five years, although it is possible to find CDs with terms that are shorter or longer. A CD can be a good place to store money for savings goals, such as a down payment on a house or a new car. When choosing the best CD term, you need to consider when you will need to access the money.

  • Who should get a CD?

    Because CDs usually come with a penalty for early withdrawal, it is best to only put money on a CD that you will not need in the meantime for living expenses or emergencies. Money that you may need sooner is best kept in a liquid account, such as a high-yield savings account, that gives you access to your money at any time.

  • Why are credit union CDs called “stock certificates”?

    Both CDs and stock certificates are deposit accounts where your money typically grows at a fixed rate over a period of time. The main difference between the two is in the name: CDs are offered by banks, while stock certificates are offered by credit unions. Additionally, CD income is called interest, while stock certificate income is called dividends. And because credit unions are not-for-profit, their profits are distributed to members (primarily credit union shareholders) in the form of dividends. Dividends work similarly to CD yields, but some credit unions may offer higher rates or lower fees as a result of profit sharing.

    CDs and stock certificates are insured through federally insured banks and credit unions, respectively. For example, banks are insured by the Federal Deposit Insurance Corp. (FDIC), while credit unions are insured through the National Credit Union Administration (NCUA). At such federally insured banks and credit unions, CDs and stock certificates are each insured for up to $250,000 per depositor, per insured bank, for each category of account ownership.

Methodology

Bankrate calculates and reports the national average APYs for various CD terms. The national average rates incorporate the competitive APYs commonly offered by online banks, along with the very low rates often found at major brick-and-mortar banks.

In June 2023, Bankrate updated its methodology that determines national average CD rates. This process now surveys more than 500 banks and credit unions each week to obtain national averages. These institutions include those that offer wide availability and high returns, as well as some of the country’s largest banks.

CD rates are at historic highs

Rates will exceed inflation

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