The Federal Reserve has raised interest rates twice so far in 2023 in a continued effort to control inflation. Rates for certificates of deposit, reacting to interest rate hikes, are climbing to highs not seen since the early 2000s. Experts expect rates to continue to climb through the second half of 2023, but that doesn’t mean annual percentage yields for CDs will continue to follow suit.
Chris Moore, director of deposit and payment strategy for Alliant Credit Union, acknowledged that predicting the future movement of CD rates is a fool’s errand. “The Fed has been raising rates for just over a year now, and the rates on CDs have generally increased in that same time frame. Banks and credit unions consider several things when setting rates, including the need for deposits, operating model and competition,” he says.
This week in CD rates
The Fed wrapped up its recent FOMC meeting on March 22. One-year CD rates ticked up slightly, leaving three- and five-year CD rates largely unchanged, some declining slightly. “Banks may adjust their interest rates differently depending on their internal needs as well as market competition,” Moore says. “Generally, we can expect CDs to be offered at higher interest rates for longer time commitments, but we have seen shorter-term CDs with higher rates,” he adds.
What is a CD?
CD stands for “certificate of deposit,” a deposit account that offers a fixed interest rate for a specific period of time, called a term. CDs generally pay a higher annual percentage yield than checking or savings accounts, but you’ll usually pay a penalty if you withdraw your money early, before the term ends. They’re considered low-risk investments because they’re generally insured by either the Federal Deposit Insurance Corporation or the National Credit Union Association for up to $250,000 per person, per account.
All CD accounts list the APY in their disclosures or term agreements. APYs are also advertised on bank and credit union websites. The APY shows you how much money you’ll earn on your invested money over the course of one year -- essentially your annual interest rate.
Average CD APYs
| 6-month | 1-year | 3-year | 5-year | |
| FDIC | 0.97% | 1.49% | 1.31% | 1.35% |
| CNET | 3.97% | 4.90% | 4.34% | 4.27% |
Note: APYs shown are as of March 28, 2023. CNET’s editorial team updates this information regularly. Source: FDIC.
Best CD rates*
| Bank | Minimum deposit | 5-year APY | 3-year APY | 1-year APY | 6-month APY | 5-year return on $10,000 |
| CFG Bank | $500 | 4.50% | 4.60% | 5.15% | N/A | $2,462 |
| Popular Direct | $10,000 | 4.45% | 4.40% | 5.00% | 4.55% | $2,432 |
| First Internet Bank of Indiana | $1,000 | 4.49% | 4.54% | 5.06% | 4.52% | $2,456 |
| Alliant Credit Union | $1,000 | 4.35% | 4.45% | 5.00% | N/A | $2,373 |
| Synchrony Bank | $0 | 4.30% | 4.30% | 4.50% | 4.25% | $2,343 |
| Barclays | $0 | 4.30% | 4.30% | 5.00% | N/A | $2,343 |
| Bread Savings | $1,500 | 4.25% | 4.50% | 5.05% | N/A | $2,314 |
| Ally | $0 | 4.25% | 4.25% | 4.50% | 3.40% | $2,314 |
| Colorado Federal Savings Bank | $5,000 | 3.95% | 3.95% | 5.15% | 4.40% | $2,137 |
| PenFed | $1,000 | 3.90% | 4.10% | 4.60% | 2.70% | $2,109 |
*Ranked based on five-year APY.
APYs shown are as of March 28, 2023. CNET’s editorial team updates this information regularly. APYs may have changed since they were last updated and may vary by region for some products.
Best CD rates by bank
- 5-year APY: 4.50%
- 3-year APY: 4.60%
- 1-year APY: 5.15%
- Minimum deposit: $500
- Early withdrawal penalties: 7 days’ worth of interest
About the bank:
- Physical bank branches in New England and the mid-Atlantic regions.
- Also offers checking, savings and money market accounts.
- Four CD terms range from 12 to 60 months.
- 5-year APY: 4.45%
- 3-year APY: 4.40%
- 1-year APY: 5.00%
- 6-month APY: 4.55%
- Minimum deposit: $10,000
- Early withdrawal penalties: 89 to 730 days’ worth of simple interest
About the bank:
- Offers savings and CD accounts only.
- CD terms range from three months to five years.
- Most restrictive early withdrawal penalties on this list.
- 5-year APY: 4.49%
- 3-year APY: 4.54%
- 1-year APY: 5.06%
- 6-month APY: 4.52%
- Minimum deposit: $1,000
- Early withdrawal penalties: 360 days’ worth of interest
About the bank:
- Offers a full suite of banking products including checking, savings and money market accounts, IRAs, credit cards, loans and CDs.
- CD terms range from three months to five years.
- Claims to be the first ever state-chartered, FDIC-insured bank to serve its customers completely online.
- 5-year APY: 4.35%
- 3-year APY: 4.45%
- 1-year APY: 5.00%
- Minimum deposit: $1,000
- Early withdrawal penalties: 90 to 180 days’ worth of dividends
About the credit union:
- Membership is open to people who live in or near Chicago, are members of one of its more than 250 partner organizations or who join Foster Care to Success (membership fee is $5).
- Also offers checking, savings and money market accounts.
- Provides six CD terms ranging from one to five years.
- 5-year APY: 4.30%
- 3-year APY: 4.30%
- 1-year APY: 4.50%
- 6-month APY: 4.25%
- Minimum deposit: $0
- Early withdrawal penalties: 90 to 365 days’ worth of simple interest at current rate
About the bank:
- Online-only bank that doesn’t accept cash deposits.
- Offers savings and CD accounts only.
- Provides four standard CD terms from six months to five years, no-penalty and bump-up CDs.
- 5-year APY: 4.30%
- 3-year APY: 4.30%
- 1-year APY: 5.00%
- Minimum deposit: $0
- Early withdrawal penalties: 90 to 180 days’ worth of simple interest
About the bank:
- Operates as an online-only bank in the US.
- Offers savings and CD accounts only.
- CD terms range from one to five years.
- 5-year APY: 4.25%
- 3-year APY: 4.50%
- 1-year APY: 5.05%
- Minimum deposit: $1,500
- Early withdrawal penalties: 90 to 180 days’ worth of simple interest
About the bank:
- CD terms range from one year to five years.
- Bread Savings, formerly known as Comenity Direct, is an online-only banking subsidiary that focuses on credit cards, savings accounts, loans and CDs.
- 5-year APY: 4.25%
- 3-year APY: 4.25%
- 1-year APY: 4.50%
- 6-month APY: 3.40%
- Minimum deposit: $0
- Early withdrawal penalties: 60 to 150 days’ worth of interest, depending on term
About the bank:
- CDs range from one to five years.
- Specialty CDs include step-up and no-penalty CDs.
- It’s a full-service online-only bank that offers a full suite of deposit accounts.
- 5-year APY: 3.95%
- 3-year APY: 3.95%
- 1-year APY: 5.15%
- 6-month APY: 4.40%
- Minimum deposit: $5,000
- Early withdrawal penalties: One to six months’ worth of interest
About the bank:
- Offers savings and CD accounts only.
- CD terms range from one month to five years.
- A no-penalty specialty CD is also available.
- 5-year APY: 3.90%
- 3-year APY: 4.10%
- 1-year APY: 4.60%
- 6-month APY: 2.70%
- Minimum deposit: $1,000
- Early withdrawal penalties: The amount of dividends earned up to the time the money is withdrawn, up to 365 days.
About the bank:
- Membership is available to everyone nationwide.
- It offers a full suite of deposit accounts.
- Money market certificate terms range from six months to seven years.
Other CD options to consider
Specialty CDs provide a work-around to some of the drawbacks associated with standard CDs. A no-penalty CD will allow you to withdraw your money without incurring an early withdrawal penalty. Bump-up and step-up CDs allow you to take advantage of a higher rate for your CD term if one becomes available after you open the CD. In each case, the APY may be lower than a standard CD. Determine the most important factors regarding your money before establishing an account, such as unrestricted access or the highest possible growth.
No-penalty CD
| Bank | Term | APY |
| Ally | 11-month | 4.75% |
| Synchrony | 11-month | 3.90% |
| Colorado Federal Savings Bank | 11-month | 3.10% |
Bump-up CD
| Bank | Term | APY |
| Synchrony | 24-month | 3.70% |
Step-up CD
| Bank | Term | APY |
| Ally | 2- and 4-year | 3.75% |
Note: APYs shown are as of March 24, 2023. CNET’s editorial team updates this information regularly. APYs may have changed since they were last updated and may vary by region for some products.
Types of CDs
CDs come in many different types and terms and vary based on the offering institution. Some common types include:
Standard
A standard CD is a deposit account that earns a fixed APY and sets a maturity date that is typically three months to five years from the date of purchase. Standard CDs have a strict early withdrawal penalty and are FDIC- or NCUA-insured.
High-yield
High-yield CDs pay APYs that are generally much higher than average rates. High-yield CD rates can be as much as double that of standard CDs.
Bump-up
A bump-up CD enables the CD holder to take advantage of increasing interest rates with a one-time option to “bump up” the interest rate paid. The bump-up CD yields a lower rate than that of a standard CD.
Step-up
The bank will automatically increase the APY incrementally on a step-up CD over time.
Add-on
Most CDs don’t allow additional deposit into the account after the CD is purchased until the maturity date expires. With add-on CDs, additional deposits can be contributed during the term.
Brokered
A brokered CD is purchased from an investment firm or broker and isn’t always FDIC-insured. Brokered CDs offer higher APYs and can be sold before the maturity date on a secondary market.
Liquid/No-penalty
This specialized CD generally pays a lower interest rate than a standard CD, but doesn’t impose a penalty for withdrawing before the maturity date.
How to choose a CD
CDs are good for investors who want a fixed rate of interest with little to no risk of losing their money. Unlike investments in stocks and bonds, which will vary in their rate of return, CDs provide an exact interest rate that won’t change in exchange for agreeing to invest your money for a specific period of time. Because they’re low-hassle, they could be a good option for parents who want to put aside money for their children, for households saving for a future expense or individuals who want a “rainy day” fund.
If you know that you’ll need a certain amount of money at a specific time in the future, a CD interest calculator can quickly let you know how much you need to invest, and you won’t need to think about it again until the CD matures and you withdraw your money.
Consider the following features when deciding on the best CD:
- Term: How long can you leave the money deposited in a CD account?
- APY: Look for the highest yield available for the terms you’ve selected.
- Type: Determine the type of CD that best fits your needs.
- Penalties: What are the early withdrawal penalties associated with the CD you’ve chosen?
Pros and cons of CDs
Pros
CDs offer consistent, fixed-rate growth.
CDs have a national average APY that is at least double the average savings account interest rate of 0.23%.
CDs purchased through federally insured banks and credit unions are insured by up to $250,000 per person, per account type, minimizing risk of loss of the original principal.
Cons
The deposit will incur a penalty, such as the loss of 365 days’ worth of interest earned, if withdrawn before the CD reaches the maturity date.
A CD is locked into the interest rate set at the time of purchase, which can represent a loss of earning potential if interest rates rise.
CDs restrict access to money that may be needed in emergency situations.
Is a CD or savings account better?
Determining whether a CD is better than a savings account depends on individual goals and uses for each account. A CD can provide better returns compared to savings accounts, however, access to the deposited funds will be restricted for a period of time. Savings accounts offer more liquidity, but your money earns less interest and can lose purchasing power more quickly in this era of high inflation.
A money market account may offer higher rates than a traditional savings account with check-writing privileges, but rates are still lower than CDs in most cases. Each account offers pros and cons that should be considered when determining which option is best for your needs.
Is a CD right for you?
A CD is ideal for investors looking for a fixed-rate savings vehicle that doesn’t risk any loss to the original principal, yet offers higher APYs than traditional savings or money market accounts.
CDs work best for:
- Risk-averse savers looking for higher yields than traditional savings accounts
- Savers who leave all or part of their savings in place for a specific period of time
- Those looking for a consistent rate of return
How to purchase a CD
Most retail banks and credit unions sell CDs, as do online “neobanks” that don’t have banking charters but offer financial services. Because neobanks lack traditional overhead expenses like physical branches and in-person customer service, they can often provide higher APYs on CDs, passing on savings to customers in the form of higher rates.
Most neobanks partner with banks to ensure that the FDIC backs customers’ deposits for up to $250,000 per person, per account type. Be sure to confirm that there’s FDIC insurance with the banks you use, or NCUA insurance with the credit unions you use.
Most banks won’t require a hard credit check to open a CD. Ask your bank, or read your application completely, to make sure any credit inquiries are “soft” to avoid temporary damage to your credit with a “hard pull.” According to the credit reporting company Experian, hard credit checks should be mentioned or included in your application.
What is a CD ladder?
A CD ladder is a strategy that involves purchasing multiple CDs with different terms. This allows you to maximize the potential growth by locking in a high-yield rate CD on a portion of your money with the flexibility of accessing some of your money used to purchase shorter-term CDs.
If you’re in the market for a long-term CD (three to five years), Moore suggests that rates north of 4% with no volatility may be an attractive option. “A potential strategy would be laddering CDs across multiple time horizons, investing in several terms, including five-year CDs,” he says.
Let’s say you have $2,000 to purchase a CD from Ally. Instead of buying one CD with the entire balance, you can spread the balance across multiple CDs as displayed in the following example:
Ally CD ladder
| 12-month CD | 2-year CD | 3-year CD | 4-year CD | 5-year CD | |
| Balance | $400 | $400 | $400 | $400 | $400 |
| APY | 4.50% | 3.75% | 4.25% | 3.75% | 4.25% |
| Interest earned | $18 | $30.56 | $53.20 | $63.46 | $92.54 |
APYs accurate as of March 28, 2023.
FAQs
Penalties for early withdrawal vary between institutions. Most are calculated by a loss of interest or dividends for a certain period of time. A longer CD term will generally have a greater penalty for early withdrawal.
However, banks don’t share a standard calculation for early withdrawal penalties. Some may require you to withdraw the entire amount of the CD account, while others will charge a penalty only on the amount of a partial withdrawal. In some cases, if the early withdrawal penalty is greater than the interest you’ve earned, you’ll lose money on your principal investment.
Many banks tie the APY that CDs earn to the federal funds rate established by the Federal Reserve Bank. The federal funds rate is the rate that banks use to lend and borrow money. The rates on CDs can rise and fall based on the actions taken by the Fed to regulate the health of the economy.
CDs purchased through a bank or credit union in amounts of $250,000 or less are insured through the FDIC or NCUA, respectively. The value of the account is insured against loss or bank failure. CDs purchased through investment firms or brokers as brokered CDs, however, don’t always enjoy the same protections. Confirm insurance coverages before purchasing.
Additionally, interest gains can be forfeited for many types of CDs with early withdrawal penalties.
Money used to purchase a CD should remain in the account until the term expires. Otherwise, you can potentially face early withdrawal penalties that will impact the APY. CDs generally offer a grace period of a few days so you can decide to withdraw the money or renew the CD, depending on the new rates and your financial goals.
A CD ladder is a strategy that consists of purchasing multiple CDs with a variety of term lengths and dividing a lump sum across those CDs. The purchaser can take advantage of higher APYs with longer-term CDs, while having greater access to a portion of their savings once the shorter-term CDs mature.
CDs are considered safe if they’re purchased through a bank or credit union that’s insured by the FDIC or NCUA, respectively, for up to $250,000 per person. Online security is also a major concern for any banking institution. Verify the security protocol for any institution you’re considering. Safeguarding your digital devices with passwords or biometric security features will also help protect your account access.
Methodology
CNET reviews 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 selected the CDs with the highest APY for five-year terms from among the organizations we surveyed, and considered rates for shorter terms if five-year terms were identical or unavailable.
Banks surveyed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Barclays, BMO Harris, Bread Savings, BrioDirect, Capital One, CFG Community Bank, Citizens Access, Colorado Federal Savings Bank, Connexus Credit Union, Consumers Credit Union, Discover Bank, First Internet Bank of Indiana, First Tech Federal Credit Union, FNBO Direct, GO2bank, Golden 1 Credit Union, HSBC Bank, Huntington Bank, Lake Michigan Credit Union, LendingClub Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Merrick Bank, Nationwide (by Axos), Navy Federal Credit Union, NBKC, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Vio Bank, and Wells Fargo.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
