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Key takeaways
- The top APY across CD terms remains 5.25%, offered for a three-month CD.
- The most competitive APYs are often found at online-only banks.
- Competitive APYs for some terms are currently several times greater than national averages.
A certificate of deposit (CD) is a bank account that earns a fixed rate of return in exchange for locking in your funds for the entire term. CD terms often range from three months to five years, although it’s possible to find ones with terms shorter or longer than that. A CD can be a good place to stash money for savings goals, such as a down payment on a house or a new car. When choosing the best CD term, consider when you’ll need access to the money.
As we begin a new week, the highest annual percentage yield (APY) across CD terms holds steady at 5.25 percent. In all, leading APYs range from 4.29 percent to 5.25 percent, with longer terms earning lower rates than shorter ones. For perspective, top rates on high-yield savings accounts are similar to those currently offered on CD terms of up to 18 months. When choosing between locking your money in a CD and putting it in a liquid savings account, compare rates and consider how soon you may need access to the funds.
Bankrate monitors CD rates every weekday, and today’s top rates are listed in the table below, along with national average rates and the amount you’ll earn with $5,000 in a high-yield CD.
Today's CD rates by term
| CD term | Institution offering top APY | Highest APY | National average APY | Estimated earnings on $5,000 with top APY |
|---|---|---|---|---|
| 3-month | America First Credit Union | 5.25% | 1.26% | $64 |
| 6-month | America First Credit Union | 5.15% | 1.75% | $127 |
| 9-month | Synchrony Bank | 5.15% | N/A | $192 |
| 1-year | First Internet Bank of Indiana | 5.15% | 1.81% | $258 |
| 18-month | LendingClub | 5.00% | 1.91% | $380 |
| 2-year | Bask Bank | 4.75% | 1.54% | $486 |
| 3-year | First Internet Bank of Indiana | 4.45% | 1.44% | $698 |
| 4-year | First Internet Bank of Indiana | 4.29% | 1.49% | $915 |
| 5-year | Schools First Federal Credit Union | 4.35% | 1.44% | $1,186 |
Note: Annual percentage yields (APYs) shown are as of August 19, 2024. APYs for some products may vary by region.
N/A: Not available; Bankrate doesn’t track national averages for the 9-month CD term due to limited available data. Estimated earnings are based on the highest APYs and assume interest is compounded annually.
What to look for in a CD
Pick a CD term that corresponds with when you’ll need the money, such as a down payment on a house in three years or a vacation in one year. While you shouldn’t lock money into a CD that you may need sooner for living expenses or emergencies, be sure to take note of a CD’s early withdrawal penalty. Shop around for a high APY, since national averages are well below competitive CD rates.
What the current rate environment means for CDs
Recent federal funds rate changes: To combat high inflation, the Federal Reserve raised its benchmark interest rate 11 times in 2022 and 2023, before leaving rates unchanged for eight straight meetings. Before the string of rate hikes began in March 2022, the target range was at 0-0.25 percent, and it currently stands at a 23-year high of 5.25-5.50 percent.
What this means for deposit accounts such as CDs: Yields on competitive savings accounts and CDs tend to move in lockstep with the Fed’s interest rate moves. As such, many banks increase their yields when the Fed raises rates, and they lower yields when the federal funds rate drops. While the Fed has held rates steady since July 2023, top CD APYs ended up peaking in late 2023 and have since been decreasing gradually, as illustrated below.
How inflation factors in
The Fed has held its key benchmark rate steady since July 2023, due to inflation not slowing as quickly as it has in the past. Fed officials’ goal is to bring the annual inflation rate down to 2 percent. While the consumer price index (CPI), a measure of inflation, has decreased significantly from its decades-high annual rate of 9 percent in June 2022, it’s currently at 2.9 percent.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” Fed Chair Jerome Powell said in remarks following the Fed’s latest decision not to change rates on July 31.
The current rate of inflation is a significant factor that affects what the Fed decides to do with rates. An increase in the federal funds rate can be good for savers — translating to higher APYs on many CD and savings accounts — while it can be bad for borrowers as interest rates tend to increase on loans.
Is now still a good time to open a new CD?
As of late, top CD rates are declining due, in part, to strong signals from the Fed that it plans to cut interest rates in September, if not sooner, and fears arising from recent market downturns. It's best to take advantage of still-high CD rates now while you still can.
"Now is the time to lock in attractive returns on CDs as the Federal Reserve is poised to begin cutting interest rates,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The top-yielding CDs currently earn in excess of the inflation rate and savers have the ability to lock in that inflation-beating return for multiple years. If you have money you won’t need to touch for a period of time, now is a great time to consider a CD."
CD FAQs
Research methodology
Bankrate calculates and reports the national average APYs for various CD terms. Factored into national average rates are the competitive APYs commonly offered by online banks, along with the very low rates often found at large brick-and-mortar banks.
In June 2023, Bankrate updated its methodology that determines the national average CD rates. For the process, more than 500 banks and credit unions are now surveyed each week to generate the national averages. Among these institutions are those that are broadly available and offer high yields, as well as some of the nation’s largest banks.
