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Key takeaways
- Today's top CD rate across terms is 5.25% APY, offered for a three-month CD.
- The leading 18-month term has decreased from 5.00 percent to 4.90 percent APY.
- For various CD terms, national averages are only yielding around one-third of the highest rates.
A certificate of deposit (CD) can be a useful tool for meeting your savings goals. Whether you’re saving to buy a house, a new car or your dream vacation, a CD allows you to calculate up front exactly how much interest you’ll have earned when the term is up. This is possible due to a CD’s fixed annual percentage yield (APY).
Today, the highest APY on an 18-month CD has fallen from 5.00 percent to 4.90 percent. For perspective, this would translate to around $8 less in total interest if you were to open such a CD with a $5,000 deposit. Competitive CD rates have been decreasing gradually in 2024, with 13 drops in leading rates in August, to date. By way of comparison, the months of July and June each saw only five such decreases. Various banks have been lowering their APYs while anticipating a Federal Reserve rate cut in September.
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 top 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 | America First Credit Union | 5.25% | 1.27% | $64 |
| 6-month | America First Credit Union | 5.15% | 1.76% | $127 |
| 9-month | America First Credit Union | 5.15% | N/A | $192 |
| 1-year | Bread Savings | 5.10% | 1.81% | $255 |
| 18-month | Bask Bank | 4.90% | 1.86% | $372 |
| 2-year | Bask Bank | 4.75% | 1.52% | $486 |
| 3-year | TAB Bank | 4.35% | 1.42% | $681 |
| 4-year | Schools First Federal Credit Union | 4.20% | 1.46% | $894 |
| 5-year | Schools First Federal Credit Union | 4.35% | 1.43% | $1,186 |
Note: Annual percentage yields (APYs) shown are as of August 29, 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.
What’s been going on with CD rates?
As of late, many financial institutions have been pulling back on CD rates as they anticipate one or more Federal Reserve rate cuts in the remainder of 2024. However, top CD yields remain higher than they were just two years ago, and current rates continue to outpace the rate of inflation. Opening a fixed-rate, high-yielding CD now locks in a guaranteed APY that might be higher than rates on new CDs a year from now, for instance.
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 eight 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 2.9 percent.
“The Committee does not expect it will be appropriate to reduce the target range until it has 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 July 31.
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?
As of late, top CD rates are declining due, in part, to strong signals from the Fed that it plans to cut interest rates in September, if not sooner, and fears arising from recent market downturns. It's best to take advantage of still-high CD rates now while you still can.
"Now is the time to lock in attractive returns on CDs as the Federal Reserve is poised to begin cutting interest rates,” 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
CD glossary
Here are some terms you’ll likely come across when choosing a CD.
Add-on CD: A CD that enables you to make additional deposits after your initial investment. This feature affords more flexibility than traditional CDs, which only allow one deposit at the beginning of the term.
Annual percentage yield (APY): A percentage that indicates how much interest a CD earns in one year, which takes into account the effect of compounding.
Brokered CD: A type of CD issued by a bank but sold through a brokerage firm or other financial institution.
CD ladder: An investment strategy that involves purchasing multiple CDs with varying maturity dates to provide liquidity and take advantage of higher rates.
Early withdrawal penalty: A fee charged if funds are withdrawn from a CD before the maturity date. Penalties often range anywhere from 90 days to 365 days’ worth of interest.
Grace period: A specific time after the maturity date during which an account holder can make changes to the CD without penalties. A grace period typically ranges from five to 14 days.
IRA CD: A CD that’s held within an individual retirement account.
Minimum opening deposit: The lowest amount of money required to open a CD account, which can vary by institution. Some institutions don’t have a minimum deposit requirement.
No-penalty CD: A type of CD that allows you to withdraw your money without facing a penalty while providing a fixed APY.
Promotional CD: Also known as a bonus or special CD, it’s a CD with an above average APY. These may be offered by banks and credit unions as a way to obtain new customers.
Jumbo CD: A CD that has a high minimum balance requirement, typically $100,000, sometimes as low as $95,000. This type of CD tends to offer a higher interest rate than regular CDs with the same term.
Bump-up CD: Also known as a “raise-your-rate CD,” a bump-up CD provides savers with the option to increase the CD’s APY without having to change its term. Generally, only one rate increase is allowed during its term.
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.
