This month, the Federal Reserve lowered the federal funds rate for the third time in 2024. That means deposit account rates are now on the decline as well.
The good news: You can lock in competitive returns on a certificate of deposit (CD) today and keep your earning power. Read on for an insight into today's CD rates and where to find the best offers.
CD rates have remained high by historical standards, particularly for shorter periods. For example, it is possible to find rates of 4.00% APY or higher for about a year and below. Although interest rates for longer term CDs are not as high, the best rates available still hover near 3%-4% APY for a period of three years or more.
Today, the highest CD rate 4.27% APY, offered by NexBank on its 1-year CD. However, a large opening deposit of $25,000 is required.
The next highest rate can be found at two banks: Synchrony (13 month term) and Marcus by Goldman Sachs (one year). Both banks offer 4.25% APY.
Here's a look at some of the best CD rates available today from our trusted partners:
See our picks for the best CD accounts available today >>
CD rates are attached to the federal funds rate; when the Fed increases its target rate, deposit account rates usually follow suit, and vice versa.
The Fed kept interest rates steady for most of 2024, with a target rate of 5.25% – 5.50%. However, as inflation cooled and economic growth improved, the federal funds rate finally cut by 50 basis points in September, and another 25 basis points in November and December. Experts believe there will be additional rate cuts in 2025.
As a result, CD rates have started to fall. That means now may be the last chance for savers to lock in higher CD rates today.
Read more: APY vs. interest rate: What's the difference?
Whether or not you should put your money in a CD depends on several factors. Getting a competitive interest rate is important, but it's not the only consideration to keep in mind. Here's a closer look at some of these key factors to think about:
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Interest rates: CDs are a more attractive investment option when interest rates are high or tend to fall as they lock in the current rate for the entire term. Given the recent trends in interest rates, it could be a good time to put your money on a CD and secure a guaranteed rate of return.
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Financial goals: CDs are a safe investment choice if you want to preserve capital and earn a steady return. They are insured by the FDIC up to the federal limit and can't 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 since market investments tend to provide higher returns, on average.
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Liquidity needs: CDs require you to lock your money in for a certain period, which is the term. If you think you will need to access your money before the end of the term, you may want to avoid CDs, as they 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 do you need to open a CD?
CDs are available from most banks. However, if you are interested in open a CDit's important to look beyond your current bank. Not all CDs offer competitive rates, even in a high interest rate environment. That's why comparing multiple CD account options is important, 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 those savings on to customers in the form of lower fees and higher rates on deposits. So, if you are interested in opening a CD with a high rate, online organizations are a great place to start.
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Credit unions: As non-profit financial cooperatives, credit unions tend to 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 find out if you're eligible to join any.
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Community banks: Local banks strive to serve their communities and often provide a more affordable and personalized service than large national banks. They also usually offer more competitive interest rates on deposits.
Read more: Can you give a CD as a gift?