Today’s CD Rates, Jan. 12, 2024: Rates Hold Steady for Long- and Short-Term CDs

Time is ticking if you plan to open a CD and want to optimize your returns. Rates are starting to fall for both short- and long-term CDs, which can impact how much of a return you can expect to get when the CD term ends. 

For now, top CDs offer annual percentage yields, or APYs, of up to 5.50% for six-month and one-year CDs. But longer terms aren’t as high. The average APY for a five-year CD is only 4.03%, for example, and experts don’t expect rates to go much higher. Instead, rates are starting to fall.

But this savings option may still be worth it, depending on your financial goals, especially since high rates continue to stick around at many banks. 

Experts recommend comparing rates before opening a CD account, to get the best APY possible. Enter your information below to get CNET’s partners’ best rate for your area.

Today’s best CD rates

Here are some of the top CD rates currently available and how much you could earn if you deposited $5,000 right now:

Don’t expect higher CD rates anytime soon

CD rates rose steadily over the past two years in response to the Federal Reserve regularly raising the federal funds rate -- with short-term CDs over 5% for some banks. When the Fed raises the federal funds rate, banks often follow suit, raising interest rates on consumer products. As a result, it makes borrowing more expensive but pushes earnings for CDs and high-yield savings accounts higher.

With inflation inching closer to the Fed’s 2% target, the last three Federal Open Market Committee, or FOMC, meetings resulted in rate hike pauses. In response, banks have begun dropping their rates across CD terms, and some have held rates steady for weeks. Here’s where APYs stand compared to last week:

This may not seem like a drastic decrease overall, but when we look at individual CD rates over the past month, we see that earning potential has decreased more markedly. Here’s how top CD rates compare from the beginning of December 2023 to the beginning of January 2024:

CD interest is compounded, which means you earn interest not only on your principal balance but also on the interest you’ve earned to date. So even a small decrease in APY can make a big difference over time when it comes to how much money you can earn. With rates dropping across the board, the longer you wait to open a CD, the more you stand to lose.

Why you shouldn’t wait to open a CD

The best way to protect yourself from anticipated future rate drops is to lock in a great APY now. But a fixed rate of return isn’t the only perk of opening a CD now.

CDs held at banks covered by 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 if the bank fails. This makes them a low-risk way to grow your savings. Plus, early withdrawal penalties can discourage you from dipping into your funds before you need them. Most banks charge a penalty if you withdraw money before the CD matures.

“CDs are a great vehicle for savers because they can take the analysis paralysis out of where to put your money for the time you leave it in there, and you can focus your attention on other parts of your finances,” said Bernadette Joy, a personal finance coach and CNET Financial Review Board member.

Even though rates are high, it’s best to make sure the CD term you choose aligns with your financial goals. If you need the money before the term ends, you could pay an early withdrawal penalty fee that eats away at your earnings -- even with a high rate. 

Factors to keep in mind when opening a CD account

In addition to a competitive APY, you should also consider the following when comparing CD accounts in any rate environment:

• How soon you’ll need the funds: Early withdrawal penalties can chip away at 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. Others have no minimum deposit requirement. How much money you have to put away can help you narrow down your account options.
• Fees: Fees can erode your balance. Many online banks don’t charge maintenance fees. They have lower overhead costs than banks with physical branches, and they pass these savings down to consumers through higher rates and fewer fees. Still, be sure to read the fine print for any account you’re considering.
• Federal deposit insurance: Confirm that any institution you’re considering is an FDIC or NCUA member to ensure your money is protected in the event of a bank failure.
• Customer ratings and reviews: Read what customers have to say about the bank you’re considering on sites like Trustpilot to make sure the bank is responsive, professional and easy to work with. “I would also try calling the customer service line so you know it will be easy to retrieve your money when you need it most,” Joy said.

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 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, Connexus Credit Union.