Certificate of deposit rates rose today, primarily due to BMO Alto raising rates on all of its CD terms.
CD rates have been high all year, with top CDs offering over 5% annual percentage yields, or APYs. But this week, top CD rates broke the 5.5% mark. If you’ve been contemplating opening a CD, now’s a great time -- especially since rates may be reaching their peak.
When you open a CD, you agree to keep your money in the account for the CD’s entire term. In exchange, you receive a fixed interest rate on your money. That means even if CD rates go down during your term, your earnings remain the same. High-yield savings accounts also offer competitive rates right now, but these rates are variable and could change at any time. So if you have a savings goal with a specific deadline, a CD is worth considering.
Savings and CD rates remain high, but experts recommend comparing rates to get the best APY possible. You can use the rate table below to explore savings rates from CNET partners.
Today’s best CD rates
Here’s a look at some of the best CD rates available right now and how much you could earn if you deposited $5,000 today.
|Term||Highest APY*||Bank||Estimated earnings|
|6 months||5.55%||Bask Bank||$136.88|
|1 year||5.65%||BMO Alto; Forbright; LendingClub||$290.00|
|3 years||5.10%||BMO Alto||$804.68|
|5 years||5.25%||BMO Alto||$1,457.74|
Will CD rates keep rising?
Savings rates on deposit accounts are influenced by the federal funds rate, which determines how much banks charge to lend and borrow money. The Federal Reserve periodically adjusts this rate to stimulate the economy. Banks tend to follow suit, adjusting rates on consumer products like credit cards, personal loans and savings accounts.
The Fed has regularly raised rates since March 2022 to combat persistently high inflation, leading to a steady increase in CD rates. And while the central bank has chosen to pause rate hikes during its last two meetings, CD rates remain high.
Here’s how rates for today’s top CDs currently compare to average national rates:
|Term||Average Top APY||Average FDIC rate|
However, many experts expect CD rates will begin falling mid-2024 -- and potentially sooner depending on the Fed’s next move. As inflation cools and banks begin pumping the brakes on rate increases, some experts predict we’ve already reached the peak of CD rates. That makes now a great time to open a CD and lock in a high APY before rates start dropping.
Why experts are recommending short-term CDs right now
Typically, longer CD terms (over one year) have better APYs than shorter ones (one year and under). A five-year CD usually offers the best rate since you’re agreeing to lock your money up for a longer time. But in today’s high-rate environment, short-term CDs like six-month and one-year terms are offering higher rates than long-term CDs.
If a short-term CD fits your money goals, experts recommend locking in a high rate now, before rates start falling.
“Short-term CDs are better right now, particularly 10- to 12-month CDs since they are offering the most competitive rates. It’s long enough to give people some meaningful earnings in interest but not so long that they don’t miss out on future opportunities,” said Bernadette Joy, a personal finance coach and CNET expert review board member. “I am recommending these for my community who are working on saving for things like future vacations, down payments and other goals.”
That said, make sure to choose a CD term that fits your timeline. If you need to access your money before the CD matures, you’ll likely face an early withdrawal penalty, which can significantly cut into the interest you earn.
What to look for in a CD
Rates are only one thing to weigh when comparing your CD options, but they’re not the only thing. Also consider these factors to find the best CD for you.
- How soon you’ll need the funds: Most banks charge an early withdrawal penalty if you take out your funds before the CD term ends. This can eat into your interest earnings. So, choose a term that fits your savings goals
- Minimum deposit: Some CDs have no minimum deposit requirement, while others require a certain amount to open an account (typically, $500 to $1,000). This can influence which CD is best for you.
- Monthly fees: Many online banks don’t charge maintenance fees, but be sure to read the fine print for any account you’re considering.
- Federal deposit insurance: Look for an FDIC-insured bank or NCUA-insured credit union. This will protect your savings up to $250,000 per person, per institution if the bank fails.
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 evaluate CDs based on APYs, product offerings, accessibility and customer service.
The current banks included in CNET’s weekly CD averages 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 and Connexus Credit Union.