Images by GettyImages; Illustration by Hunter Newton/Bankrate
The Federal Open Market Committee (FOMC) will wrap up its rate-setting meeting today, and any rate moves the Fed makes could impact yields on certificates of deposit (CDs) — although the strong consensus among market watchers is that officials will choose to leave rates untouched.
“CD yields have peaked and already started a slow retreat, which will accelerate as we get closer to the time when the Federal Reserve starts cutting interest rates,” says Greg McBride, CFA, Bankrate chief financial analyst. “If you’ve been eyeing a CD, especially those maturing in a year or more, now is the time to lock in. Those yields won’t get better from here so there is no benefit to waiting.”
No matter which CD term you decide is right for you, it’s important to shop around for the highest rates. A one-year term of 5.51 percent APY is currently the top yield you’ll find across terms. Bankrate’s table below provides top APYs for terms between three months and five years.
Key takeaways
- CIBC Bank USA currently offers the top APY across terms, which is 5.51% APY on a one-year term.
- The second highest APY is 5.50%, which is offered by separate banks on three-month and six-month terms.
- National average CD APYs are roughly just one-third the amount of top-earning APYs.
Today’s CD rates by term
| CD term | Institution offering top APY | Highest APY | National average APY | Estimated earnings on $5,000 with top APY |
|---|---|---|---|---|
| Note: Annual percentage yields (APYs) shown are as of Jan. 31, 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. | ||||
| 3-month | America First Credit Union | 5.50% | 1.26% | $67 |
| 6-month | Bank5 Connect | 5.50% | 1.59% | $136 |
| 9-month | EverBank | 5.35% | N/A | $199 |
| 1-year | CIBC Bank USA | 5.51% | 1.75% | $276 |
| 18-month | Alliant Credit Union | 5.30% | 1.74% | $403 |
| 2-year | TAB Bank | 5.00% | 1.52% | $513 |
| 3-year | First Internet Bank of Indiana | 4.75% | 1.41% | $747 |
| 4-year | First Internet Bank of Indiana | 4.54% | 1.47% | $972 |
| 5-year | SchoolsFirst FCU | 4.60% | 1.42% | $1,261 |
Keep in mind:Federal Reserve rate setting meetings typically take place every six weeks, and Fed rate moves often impact CD APYs.
What will the Federal Reserve do with rates this week?
There’s a good chance the Fed will hold rates steady, which most market watchers believe will happen. Coming out of the previous Fed meeting on Dec. 13, 2023, Fed Chair Jerome Powell said the Central Bank would likely lower interest rates by the end of 2024. After this week’s meeting, the next Fed meeting is scheduled for March 19-20.
CD rates in 2022 through 2024
National average CD yields rose steadily in 2023, as the Federal Reserve continued to hike interest rates at the fastest pace since the 1980s. In all, Fed officials increased rates 11 times between 2022 and 2023, bringing the federal funds rate to its current target range of 5.25-5.5 percent. Along with these rate hikes, average CD APYs rose to the highest they’d been in many years, with APYs on some competitive CDs climbing as high as 7 percent.
This year is expected to be a banner one for CD savers. Greg McBride, CFA, Bankrate’s chief financial analyst, predicts two Fed rate cuts in 2024, yet he says CD yields will continue to top inflation. “Savers have another good year in which their returns will shine, with inflation expected to decline further,” he says.
McBride also stresses the importance of shopping around for the highest APY. “Top-yielding offers are still going to deliver a notable advantage [over lower-yielding ones],” he adds.
CD FAQs
Although Federal Reserve rate cuts are widely expected in 2024, and banks may lower deposit account rates as a result, CD yields are expected to remain strong and outpace inflation. Overall, average yields remain higher than they’ve been in years, while the top APYs on many terms are more than triple the national averages.
Opening a competitive CD now means you won’t be missing out on a high APY should rates start to fall later this year. Because a CD typically earns a fixed rate, you’ll continue to earn the same yield throughout its entire term, even if rates on new CDs start to drop.
Before committing money to a CD, make sure you’re comfortable parting with the funds for the entire term; withdraw the funds early and you’ll likely be hit with an early withdrawal penalty. As such, a CD isn’t a good place for your emergency fund. Other factors to consider include:
- Annual percentage yield, or APY: Not all banks are equal when it comes to APYs, so it pays to check out what various banks are offering. Online-only banks are known for paying high yields, so they’re a good place to start your search.
- When you’ll need access to the money: CDs commonly come in terms between three months and five years, although you’ll sometimes be able to find terms as short as one month and as long as 10 years. Make sure you choose a term that corresponds with when you’ll want the money for a planned purchase or other investment.
- Minimum deposit requirement: Some banks, such as Ally Bank and Synchrony Bank, don’t require any set minimum deposit, while others may require $1,000, $5,000 or even as much as $10,000. When shopping around, find a CD with a minimum deposit that aligns with your saving goals.
- Federal deposit insurance: Before opening a CD, make sure the bank is insured by the Federal Deposit Insurance Corp. (FDIC). Likewise, if it’s a credit union, make sure it’s insured through the National Credit Union Administration (NCUA). This way, should the financial institution close its doors, your funds will be insured for up to $250,000 per depositor, per insured bank or credit union, for each account ownership category.
Your money is protected in a CD when it’s with a bank insured by the Federal Deposit Insurance Corp. (FDIC) or a credit union insured through the National Credit Union Administration (NCUA). When institutions are covered by this federal insurance, CDs and share certificates are each insured for up to $250,000 per depositor, per insured bank or credit union, for each account ownership category.
CDs typically require that you lock in your money for a set term, and taking out the money before the term ends usually results in an early withdrawal penalty. This penalty causes you to lose some of your interest — and possibly also some of your principal, which is the money you originally deposited in the account.
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.
