This month, the Federal Reserve cut the Federal Funds Rate for the third time in 2024. That means interest rates on deposit accounts are now falling as well.
The good news: You can lock in a competitive return on a certificate of deposit (CD) today and maintain your earning power. Read on for a snapshot of today’s CD rates and where to find the best deals.
CD rates have remained high by historical standards, especially for shorter maturities. For example, it is possible to find rates of 4.00% APY or higher for terms of approximately one year or less. While interest rates for longer term CDs are not as high, the best available rates still hover around 3%-4% APY for terms of three years or longer.
Today, the highest CD interest rate is 4.27% APY, offered by NexBank on its 1-year CD. However, a large minimum opening deposit of $25,000 is required.
The second highest rate can be found at two banks: Synchrony (term of 13 months) and Marcus from Goldman Sachs (1 year). Both banks offer 4.25% APY.
Here’s a look at some of the best CD rates currently available from our verified partners:
See our picks for the best CD accounts available today >>
CD rates are tied to the federal funds rate; when the Fed raises its target rate, interest rates on deposit accounts usually follow suit, and vice versa.
The Fed has kept rates steady for most of 2024, with a target rate of 5.25% – 5.50%. However, as inflation cooled and economic growth improved, she eventually cut the fed funds rate by 50 basis points in September, and another 25 basis points in November and December. Experts expect further interest rate cuts in 2025.
As a result, CD rates have begun to decline. That means this may be the last chance for savers to lock in today’s higher CD rates.
Read more: APY vs. Interest: What’s the Difference?
Whether or not you should put your money in a CD depends on several factors. Earning a competitive interest rate is important, but it’s not the only consideration you should take into account. Here’s a closer look at some of these important factors to consider:
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Interest rates: CDs are a more attractive investment option when interest rates are high or trending downward because they lock in the current interest rate for the entire term. Given recent interest rate trends, it could be a good time to put your money in a CD and secure a guaranteed return.
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Financial objectives: CDs are a safe investment choice if you want to preserve capital and earn stable returns. They are insured by the FDIC up to the federal limit and cannot lose money in most cases, making them a low-risk option. That said, if you’re saving for a long-term goal like retirement, a CD may not be the best choice, as market investments tend to yield higher returns.
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Liquidity needs: CDs require you to tie up your money for a certain period of time, also known as the term. If you think you need to get your money before the term ends, you might want to avoid CDs, which come with early withdrawal penalties. A high-yield savings account or another type of deposit account may be a better option.
Read more: How much does it take to open a CD?
CDs are available at most banks. However, if you’re interested in opening a CD, it’s important to look beyond your current bank. Not all CDs offer competitive rates, even in a high interest rate environment. That’s why it’s important to compare multiple CD account options, especially among financial institutions known for offering higher rates.
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Online banks: One of the best places to find high-yield CDs is online banks. Because they are less expensive to operate than traditional brick-and-mortar banks, online banks can pass these savings on to customers in the form of lower fees and higher interest rates on deposits. So if you’re interested in opening a high-rate CD, online institutions are a great place to start.
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Credit unions: As not-for-profit financial cooperatives, credit unions typically offer better rates and lower fees than for-profit banks. Research the local credit unions in your area, as well as online credit unions, and see if you qualify to join.
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Community banks: Local banks strive to serve their communities and often provide more affordable and personalized service than large, national banks. They also typically offer more competitive interest rates on deposits.
Read more: Can you give a CD as a gift?
