Current interest rates on certificates of deposit (CDs) are among the highest we’ve seen in more than a decade thanks to several rate hikes by the Federal Reserve. However, the Federal Reserve finally cut its target rate in September, so now could be its last chance to lock in a competitive rate.
CD rates vary widely among financial institutions, so it’s important to make sure you’re getting the best rate possible when purchasing a CD. The following is a breakdown of current CD rates and where to find the best deals.
Historically, longer-term CDs offered higher interest rates than short-term CDs. Generally, this is because banks would pay better rates to encourage savers to keep their money on deposit longer. However, in the current economic climate, the opposite is true.
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As of November 17, 2024, CD rates remain high by historical standards. However, the highest CD rates can be found for shorter terms, around a year or less.
Today, the highest CD rate is 4.50% APY, offered by Barclays Bank on their 6-month CD. No minimum opening deposit required.
Below are some of the best CD rates available today from our verified partners:
The amount of interest you can earn on a CD depends on the annual percentage rate (APY). This is a measure of your total earnings after one year by taking into account the base interest rate and how often the interest is compounded (interest on certificates of deposit is usually compounded daily or monthly).
Let’s say you invest $1,000 in a one-year CD with an APY of 1.88%. At the end of that year, your balance would grow to $1,018.96: your initial deposit of $1,000, plus $18.96 in interest.
Now let’s say you choose a one-year CD that offers 5% APY. In this case, your balance would grow to $1,051.16 over the same period, including $51.16 in interest.
The more you deposit into a CD, the more you can earn. If we took the same example of a one-year CD with a 5% APY, but deposited $10,000, your total balance when the CD matures would be $10,511.62, meaning you would earn $511.62 in interest.
Read more: What is a good CD rate?
When choosing a CD, the interest rate is usually the most important thing. However, the rate is not the only factor you should consider. There are several types of CDs that offer different benefits, although you may have to accept a slightly lower interest rate in exchange for greater flexibility. Below are some of the common types of CDs you can consider beyond traditional CDs:
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Enhanced CD: This type of CD allows you to request a higher interest rate if your bank’s rates increase during the term of the account. However, you are typically allowed to “increase” your rate only once.
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CD without penalty: Also known as a liquid CD, this type of CD gives you the option to withdraw your funds before maturity without paying a penalty.
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giant CD: These CDs require a higher minimum deposit (typically $100,000 or more) and often offer a higher interest rate in return. However, in the current CD rate environment, the difference between traditional and jumbo CD rates may not be much.
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negotiated CD: As the name suggests, these CDs are purchased 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.