Today Certificate of Deposit (CD) Interest rates are some of the highest we've seen in more than a decade thanks to several rate hikes by the Federal Reserve. However, the Fed finally cut its target rate in September, so now could be your last chance to lock in a competitive rate.
CD rates vary widely across financial institutions, so it's important to make sure you're getting the best possible rate when shopping around for a CD. The following is a breakdown of today's CD rates and where to find the best offers.
Historically, longer term CDs offered higher interest rates than shorter term CDs. Generally, this is because banks would pay better rates to encourage savers to keep their money on deposit for longer. However, in today's economic climate, the opposite is true.
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Today, the highest CD rate 4.30% apy, offered by Marcus from Goldman Sachs on his 9 month CD. An opening deposit of $500 is required.
Here's a look at some of the best CD rates available today from our verified partners:
The amount of interest you can earn from a CD depends on the annual percentage rate (Apy). This is a measure of your total return after one year taking into account the base interest rate and how often interest compounds (CD interest typically compounds daily or monthly).
Say you invest $1,000 in a one-year CD with 1.81% APY, and interest compounds monthly. At the end of that year, your balance would grow to $1,018.25 – your initial $1,000 deposit, plus $18.25 in interest.
Now let's say you choose a one year CD that offers 4% apy instead. In this case, your balance would grow to $1,040.74 over the same period, which includes $40.74 in interest.
The more you deposit into a CD, the more you stand to win. If we took the same example of a one-year CD at 4% APY, but deposited $10,000, your total balance when the CD matured would be $10,407.42, which means you would earn $407.42 in interest.
Read more: What is a good CD rate?
When choosing a CD, the interest rate is usually top of mind. However, the rate is not the only factor you should consider. There are several types of CDs that offer different benefits, although you may need to accept a slightly lower interest rate in exchange for more flexibility. Here's a look at some of the common types of CDs you can consider beyond traditional CDs:
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Bump-Up CD:: This type of CD allows you to request a higher interest rate if your bank's rates rise during the term of the account. However, you are usually only allowed to “hit” your rate once.
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CD no penalty:: Also known as a liquid CD, this type of CD gives you the option to withdraw your money before maturity without paying a penalty.
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Jumbo CD:: These CDs require a higher minimum deposit (usually $100,000 or more), and often offer a higher interest rate in return. In today's CD rate environment, however, the difference between traditional and jumbo CD rates may not be much.
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Brokered cd:: As the name suggests, these CDs are bought through a brokerage rather than directly from a bank. Brokered CDs can sometimes offer higher rates or more flexible terms, but they also carry more risk and may not be FDIC insured.