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Key takeaways
- The highest CD rate across terms is 5.50% APY, offered on a three-month CD.
- In addition to choosing a CD based on APY, be sure to pick a term that suits your financial goals.
- Competitive APYs for most terms are currently several times greater than national averages.
Opening a fixed-rate certificate of deposit (CD) with a term of at least one year, today, should give you peace of mind that your savings will continue to earn the same annual percentage yield (APY) should rates begin to retreat later this year. APYs on competitive CDs have been high as of late because they follow the federal funds rate, which is currently at a range of 5.25-5.50 percent — the highest it has been since early 2001. But with the Federal Reserve expected to lower rates later this year, CD APYs could eventually drop, in turn.
This week, the highest rate across CD terms increased to 5.50 APY%, which is available on a three-month term. That remains the top APY today, and all other top rates also hold steady. Locking in a high rate now means you'll earn that APY for the entire term, even if going rates on new CDs continue to decline. CD rates remain at an overall high, although they've been decreasing slightly since late 2023. Currently, traders see high odds of a Federal Reserve rate cut in September, which could trigger further rate drops on competitive CDs.
Check out Bankrate’s table below for the highest APY on CD terms from three months to five years, as well as how much $5,000 would earn for each term.
Today's best 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 | Quontic Bank | 5.50% | 1.25% | $67 |
| 6-month | Bask Bank | 5.35% | 1.72% | $132 |
| 9-month | America First Credit Union | 5.25% | N/A | $196 |
| 1-year | Bask Bank | 5.30% | 1.81% | $265 |
| 18-month | Bask Bank | 5.00% | 1.90% | $380 |
| 2-year | First Internet Bank of Indiana | 4.76% | 1.54% | $487 |
| 3-year | First Internet Bank of Indiana | 4.61% | 1.42% | $724 |
| 4-year | First Internet Bank of Indiana | 4.45% | 1.46% | $951 |
| 5-year | First Internet Bank of Indiana | 4.50% | 1.43% | $1,231 |
Note: Annual percentage yields (APYs) shown are as of July 17, 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.
When is a CD a good idea?
A CD can be a good option when you find one with a competitive rate and you can afford to lock in the money for the entire term. Most CDs charge an early withdrawal penalty for taking out the money before the maturity date. An upside to such a penalty structure is you’ll be less tempted to withdraw the money early and use it for impulse purchases.
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 seven 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 3 percent.
“We have stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have 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 June 12.
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?
“This a great environment for CDs as interest rates are at, or near, a peak for this cycle and the Federal Reserve is expected to begin cutting interest rates later this year,” 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.</
