Certificates of deposit (CDs) are a good choice for those in search of a low-risk earnings-generating savings product for cash you don’t need immediately. CD rates held mostly steady over the past week, according to data from Curinos, even in the midst of a rate hike pause by the Federal Reserve. The national average for a 6-month CD with a $25,000 deposit stands at 1.83%, while a 1-year CD currently yields 1.98%. Additionally, 2-year and 3-year CDs offer average rates of 1.72% and 1.63% respectively.
| CD RATES TODAY | ||
|---|---|---|
Term | Average APY | High rate |
3-month CD | 1.30% | 5.39% |
6-month CD | 1.83% | 5.37% |
1-year CD | 1.98% | 5.37% |
2-year CD | 1.72% | 4.89% |
3-year CD | 1.63% | 4.72% |
Source: Curinos. Data accurate as of July 19, 2024. Quoted rates are based on a $25,000 deposit. | ||
Three-month CD rates
Rates on three-month CDs have increased by one basis point to 1.30% APY (as of July 19, 2024). The average APY is up two basis points from a month prior.
The current national high for a three-month CD is 5.39%, which would earn more than $330 in interest with a $25,000 deposit.
Six-month CD rates
By choosing a top-rated six-month CD, you benefit from a winning mix of competitive interest rates and a short-term commitment.
The national average APY for six-month CDs is 1.83%, up slightly from 1.82% last week and 1.81% one month ago.
The current top national rate for a 6-month CD is 5.37%, according to the data available from Curinos. Shopping around can help you find better deals.
With that rate, you’d earn almost $670 in interest if you deposited $25,000.
One-year CD rates
If you’re up for setting aside your savings for a full year, you’ll be able to pick up even more impressive rates. One-year CDs can give you returns as high as, or even higher than, longer-term options.
Rates on 12-month CDs are moving up. The national average APY is 1.98%, up one basis point from last week and two basis points from a month before.
The current national high for a 12-month CD is 5.37%, which would earn roughly $1,340 in interest with a $25,000 deposit.
Two-year CD rates
Interest rates on CDs with longer terms, such as those spanning two years, have remained stable.
The nationwide average APY stands at 1.72%, the same as a week prior yet up one basis points from one month ago.
Right now, the highest national rate for a 24-month CD is 4.89%, which would earn nearly $2,510 on $25,000 in savings.
Three-year CD rates
The national average APY for a three-year CD stands at 1.63%, which is flat to where it stood last week and up from 1.62% a month ago.
The highest rate was 4.72%, which would net almost $3,706 in interest if you invested $25,000.
Methodology
To establish average certificate of deposit (CD) rates, Curinos focused on CDs intended for personal use. CDs that fall into specific categories are excluded, including promotional offers, relationship-based rates, private, youth, senior, student/minor, affinity, bump-up, no-penalty, callable, variable, step-up, auto transfer, club, gifts, grandfathered, internet-only and IRA CDs. The average CD rates quoted above are based on a $25,000 deposit.
Frequently asked questions (FAQs)
Generally, the earnings you make from your CDs are considered taxable income by the IRS. If you earn $10 or more, the financial institution should send you (and the IRS) a yearly 1099-INT form reporting your interest earnings. Even if you don’t receive a form, you’re still required to report the income.
For earnings of at least $1,500, you’ll need to itemize your interest income sources on Schedule B of the 1040 form. The silver lining is that there are some exceptions, but they mainly apply to government-issued investment vehicles.
The tax amount you pay depends on your specific marginal tax bracket.
Interest income from treasury bills, notes, and bonds, like I bonds, is exempt from state and local income taxes.
CD rates change on a regular basis, but the higher the better. As of July 19, 2024, the national average interest rate for a 12-month CD sat at 1.98% APY, according to data from Curinos. But you can find plenty of banks advertising APYs well above this average, especially if you take a look at the top contenders in our ranking of the best CD rates.
A basis point is the term used to describe one hundredth of one percentage point. Therefore, if the yield on a CD increased from 1.50% to 1.60%, it increased by 10 basis points.
