A certificate of deposit is an easy way to guarantee high earnings on your savings. CD rates are fixed when you open the account, which means your annual percentage yield, or APY, will stay the same even if rates go down. And with APYs on CD’s topping 5.5% this week, now is a great time to lock in higher earnings before rates go down.
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.
“Short-term CDs are better right now, particularly 10- to 12-month CDs since they are offering the most competitive rates,” said Bernadette Joy, a personal finance coach and CNET Financial Review Board member. “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.”
Read on to learn more about today’s best CD rates and how to choose the best term for you.
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
|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|
Where will CD rates go from here?
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.
Is a short-term or long-term CD right for you?
So, should you choose a short CD term, given where today’s rates are? That depends.
“Short-term CDs are preferable in today’s rate environment for savers seeking flexibility and lower interest rate risk, especially if they require liquidity or anticipate rising rates for future reinvestment,” said William Bevins, a certified financial planner and certified trust and fiduciary advisor.
That said, many CDs charge an early withdrawal penalty if you take out funds before the term is up. This can eat into your earnings and negate any benefit from a higher APY. And with CD rates expected to drop in the next several months, a longer term would allow you to stretch high rates further.
“Long-term CDs benefit savers with a longer investment horizon aiming to secure current higher rates,” Bevins said. “Especially if they expect rates to hold steady or decline.”
Ultimately, you should choose a CD term that fits your timeline. If you need to access your money in the near future, a shorter term will help you avoid paying a penalty. If you can afford to let your funds sit for more than a year, you’ll enjoy a higher rate for longer with a longer term.
Tips for choosing the right CD
Rates are only one factor to weigh when comparing your CD options. You should also consider:
- How soon you’ll need the funds: Most banks charge a penalty if you take out your funds before the CD term ends. This can chip away at 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 a bank insured by the Federal Deposit Insurance Corporation or a credit union insured by the National Credit Union Administration. They 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.