If you’re looking for a safe place to store your savings, a certificate of deposit (CD) may be a good choice. These accounts often offer higher interest rates than traditional checking and savings accounts. However, CD rates can vary widely. Learn more about CD rates and where to find high-yield CDs at the best rates available today.
CD rates today compared to the national average
Today’s CD rates are all over the map. Overall, CD rates have increased due to the Fed’s decision to forgo rate cuts for the time being and maintain the current benchmark rate. However, not all banks offer competitive CD rates.
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For those that are, top rates exceed 5% APY. This is especially true for shorter terms of approximately one year. Contrary to historical norms, longer term CDs pay slightly less, with the best rates currently hovering around 4% to 5% APY for terms of two years and longer.
Here’s a look at some of the best CD rates currently available from our verified partners:
Compare these rates to the national average as of May 2024 (the most recent data available from the FDIC):
Compared to today’s top CD rates, the national averages are much lower. This underlines the importance of shopping around for the best CD rates before opening an account.
Why do online banks have the best CD rates?
Online banks and neobanks are financial institutions that operate exclusively via the Internet. This means they have lower overhead costs than traditional brick-and-mortar banks. As a result, they can pass those savings on to their customers in the form of higher interest rates on deposit accounts (including CDs) and lower fees. If you’re looking for the best CD rates available today, an online bank is a good place to start.
However, online banks aren’t the only financial institutions offering competitive CD rates. It’s also worth contacting credit unions. As nonprofit financial cooperatives, credit unions return their profits to customers, who are also member owners. While many credit unions have strict membership requirements limited to those who belong to certain associations or work or live in certain areas, there are also several credit unions that virtually anyone can join.
Do you need to open a CD?
Whether or not you should put your money in a CD depends on your savings goals. CDs are considered a safe and stable savings tool; they don’t lose money (in most cases), are covered by federal insurance, and allow you to lock in the best rates today.
However, there are some disadvantages to consider. First, you must keep your money on deposit for the entire term or you will be subject to an early withdrawal penalty. If you want flexible access to your money, a high-yield savings account or money market account may be a better choice.
Furthermore, while current CD rates are high by historical standards, they do not match the returns you can earn by investing your money in the market. If you’re saving for a long-term goal such as retirement, a CD won’t provide the growth you need to reach your savings goal in a reasonable time frame.
Read more: Short or long term CD: which one suits you best?
