Yields on certificates of deposit are coming down fast, but top-paying CDs continue to offer competitive APYs that can help you stay in front of lower rates, offering a solid way to leverage today's best earning potential long after current rates are gone.
That's because CDs come with fixed rates that won't change over the life of term you lock in, providing a low-risk way to save for life's milestones — like a loved one's graduation, a family holiday or long-planned home renovations — or balance out riskier investments with guaranteed, predictable yields.
While the highest rates right now are on shorter terms of six months to a year, it could be a smart time to build a CD ladder that diversifies your deposit across a series of terms, leveraging the best of today's yields with regular, staggered returns on your investment.
But with the Federal Reserve's expected to lower its benchmark rate again next month, now's the time to lock in the best CDs right now — with low or no minimums and signup in minutes.
???? Today's best savings rates: With cuts on the table, now's the time to earn up to 5.30% APY
Today's best rates of returns are found at FDIC-insured digital banks and online accounts paying out up to 4.65% APY with low or no minimums at Barclays, NexBank and other trusted providers as of Tuesday, October 15, 2024.
Select APY to sort by yields, or sort by term to find the best fit with your financial goals.
Online-only banks and digital accounts may not sound as familiar as bigger names, though each is FDIC-insured or partners with an FDIC-insured bank to offer deposit accounts that are protected for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) — just like those at your neighborhood bank.
Dig deeper: How much should you keep in a certificate of deposit?
A CD is a type of savings or deposit account that's offered by banks, credit unions and other financial institutions. Unlike a traditional savings account, a certificate of deposit holds your money for a fixed period of time — terms of one month to five years or longer — paying out your initial deposit and interest you've earned after the term expires or "matures."
Typical CD rates are fixed, which means you're guaranteed a rate of return that doesn't change. While you can't add to or access your cash until the CD matures, the trade-off is a safe, stable way to earn a much higher yield than you'd find with a traditional savings account.
Dig deeper: How CDs work — including 7 types for boosting your savings
The Federal Deposit Insurance Corporation tracks monthly average interest rates paid on certificates of deposit and other savings accounts. Created by Congress, the FDIC is an independent government agency charged with maintaining stability and public confidence in the U.S. financial system and providing insurance on consumer deposit accounts.
Here's how FDIC national deposit rates on a $10,000 minimum deposit compare between August and September 2024, showing longer terms trending down.
The FDIC is an independent government agency charged with maintaining stability and public confidence in the U.S. financial system and providing insurance on consumer deposit accounts.
Dig deeper: Best low-risk investments for retirees with steady returns on your nest egg
CD rates strongly track with the key interest rate set by the Federal Reserve, the U.S.'s central bank. This Fed rate is the benchmark that affects rates on deposit accounts, loans, mortgages, credit cards and other financial products. Typically, as the Fed rate rises, so do APYs on savings products like CDs, high-yield accounts and money market accounts — surging to 4% and higher today to accelerate your savings.
After increasing the target interest rate 11 times from March 2022 to July 2023 in an effort to combat the highest inflation in four decades coming out of the pandemic, the Federal Reserve announced a highly anticipated half-point cut to its federal funds target interest rate after its September 2024 policy meeting.
At the conclusion of its sixth rate-setting policy meeting of 2024 on September 18, 2024, the Federal Reserve announced it was lowering the federal funds target interest rate by 50 basis points to a range of 4.75% to 5.00% — the first cut since the Fed began raising rates in March 2022 — from a 23-year high of 5.25% to 5.50%.
A half-point cut isn’t typical of the Fed’s decisions, which historically call for measured quarter-point reductions, but points to an urgency in keeping the economy healthy, easing a slowdown in the labor market and averting a recession.
In its post-meeting statement, the Federal Reserve said it was lowering the target range "in light of the progress on inflation and the balance of risks," acknowledging it's "gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance."
Economists estimate at least two additional rate cuts this year with an additional four cuts anticipated in 2025.
It's too early to predict what the Federal Reserve will decide at its next policy meeting on November 6 and November 7, 2024, though many experts expect the Fed will announce additional cuts to the federal funds rate in the year to come. The CME FedWatch Tool, which measures market expectations for Fed fund rate changes, projects an 90% chance the Fed will cut rates by a quarter percentage point to a range of 4.50% to 4.75% at its November meeting.
Economists are keeping a close eye on inflation and labor reports amid speculation as to timing of future cuts to the Fed rate. Signs of cooling inflation paved the way for September’s first rate cut, with economic data indicating a continued decline from a peak of 9.1% in June 2022 to rates that have ranged from 2.5% and 4% since May 2023.
An eagerly awaited jobs report released October 4 showed much stronger job growth than projected and a drop in the unemployment rate. Employers added 254,000 new jobs to payrolls in September, more than the 150,000 expected, with the unemployment rate down to 4.1% from 4.2% in August, making it less likely the Fed will make another half-point cut this year.
The fresh employment data is good news for the economy amid recent twin inflation reports. The consumer price index released on October 10 showed inflation cooling to its lowest level since February 2021, with a 2.4% year-over-year increase in consumer prices in September, down from 2.5% year over year in August and closer to the Fed's 2% target.
The producer price index released on October 11 reported no change in wholesale prices — or the prices manufacturers pay to producers of goods and services — in September from August, together with consumer pricing data, pointing to easing inflation that peaked two years ago.
At a conference in Nashville on September 30, Federal Reserve Chair Jerome Powell said "the economy is in solid shape," and that the Federal Reserve "intend(s) to use our tools to keep it there," making its decisions "meeting by meeting." He added, "This is not a committee that feels like it's in a hurry to cut rates quickly.“
The Powell-led rate-setting panel will announce a rate decision at the conclusion of its meeting on Thursday, November 7, 2024, at 2 p.m. ET.
Dig deeper: When’s the next Federal Reserve meeting? What to expect — and how it affects your finances
When choosing the best certificate of deposit for your budget, compare these key factors against your specific savings or financial goals.
Term length. A CD is ideal for saving toward a specific goal with money you’re not likely to need until the account matures. Look to shorter terms for saving toward, say, a family holiday or home renovation. Terms of one to five years or longer can help you lock in today’s highest APYs before interest rates inch lower.
Rate of return. Look for the highest APY for the term you’re interested in. The APY is the amount of interest the CD earns in a year — including compounding. Unlike a savings account, CD rates are fixed, meaning they won’t change over the life of your term.
Minimum deposit. While you can find CDs without minimum starting deposits, some CDs require $100 to $1,000 to open an account. Generally, if you have the money for a higher initial deposit, you can earn a higher APY — just be sure that amount isn’t a hardship on your budget.
Type of bank or financial institution. Today’s best interest rates are offered by digital banks, with few exceptions among traditional brick-and-mortar banks or credit unions. If you aren’t comfortable with an online-only bank, look to a high-yield savings account or money market account offering a high rate without withdrawal penalties.
Penalties and fees. Life happens, and you might find yourself needing to tap into your money before the CD matures. Early withdrawal penalties are typically expressed in months of interest you’re giving up — for example, 90 days of interest for CD terms of up to 24 months. Often the longer the term, the higher the penalty fee.
Dig deeper: When is it worth it to break a CD? An expert's thoughts on early withdrawals and breaking even
Guaranteed returns. With a CD, you make one deposit and earn a guaranteed interest rate over your term that’s yours after the CD matures.
Higher rates than traditional accounts. Many banks and financial institutions offer CDs at rates that are higher than you’ll earn with the average savings or money market account — with digital and online banks offering the highest rates on average.
Range of CD terms. You can find CD terms of three months to five years or more to fit your financial goals. Rates for six-month CDs can outpace the average bank account, and longer terms offer rates comparable to the best high-yield savings accounts.
Penalty for early withdrawals. If you need to access your money before your CD term expires, you face fees equal to several months of interest — as much as three to six months’ worth, depending on the account and your term.
Not the highest investment returns. CDs are a safe way to steadily earn interest, but you stand to earn more over the long term through stocks, bonds or securities. And by locking your money in a CD, you could miss out if average rates increase.
You can’t add more money. After your CD locks, you aren’t able to add to your balance until after the CD matures — at which point, you can move your money to another account or roll it over to a new CD.
Dig deeper: High-yield savings account vs. CD: What to know when rates are high
A certificate of deposit isn’t the only low-risk way to earn interest on your savings. Look to these alternatives that offer safe, steady returns — with the flexibility to add to or withdraw your money without penalty.
High-yield savings account. An HYSA offers a way to quickly grow your savings investment at variable rates of 5% APY or higher with no penalty for withdrawals.
Money market account. Also called a money market savings account, the rate on an MMA can beat those of traditional savings accounts, with the same flexible access to your money.
Higher-risk investments. Stocks, index funds and mutual funds average higher returns than CDs, though with higher potential losses.
Dig deeper: The best low-risk investments for retirees for safe, steady returns
Learn more about how certificates of deposit work when comparing the best for your budget and financial goals.
Banks charge higher interest rates on money they lend out than the interest they pay on customer deposit accounts. The difference is called a spread, and it’s what banks rely on to make money. Unlike a traditional savings account that allows for flexible movement of your money without penalty, a CD requires you to lock in your deposit over a specified period of time, returning your principal plus interest after the account matures. That lock-in period — and penalties that discourage your early withdrawal — allows a bank to better plan how long it has to make money off your deposit, and it’s typically willing to pay a little more for that reliability.
Yes. Online-only banks and digital accounts are as safe as their traditional counterparts. They are either FDIC-insured chartered banks or partner with more recognizable banks to offer deposit accounts that are protected by the government for up to $250,000. The FDIC insures the safety of your money, even if the fintech were to fail or go out of business. Look for terms like "member FDIC," "FDIC insured" or "NCUA insured" when comparing your options. Learn more about how online banks compare to traditional banks when it comes to rates, fees and management of your money.
Compound interest is often described as earning interest on your interest. It’s a powerful way to boost your savings over time by earning interest on both your initial deposit and any interest you earn along the way. It means that every dollar you save is working harder and growing faster toward your financial goals.
An account's APY is the total amount of interest you'll earn on your deposit over one year, including compound interest, expressed as a percentage.
A jumbo CD is a certificate of deposit that requires a minimum of $100,000 to open the account. Like regular CDs, jumbo CDs come with a fixed interest rate and term. In the past, jumbo CDs offered a way for people and businesses to safely invest money at higher rates than available with a traditional CD.
However, with the Fed holding interest rates at 23-year highs, it’s not always true that jumbo CDs have a higher interest rate than traditional CDs. Learn more about jumbo CDs and why it's wise to shop around before locking your money into one.
A no-penalty CD — also called a liquid CD — is like a traditional CD through which you lock in a deposit for a guaranteed rate of return over a stated period of time, but with the flexibility of withdrawing your money without penalty before the CD matures. This flexibility comes with trade-offs, however, including lower rates of return than a traditional CD. With rates at historic highs, a high-yield savings account may offer comparable or even higher rates than a no-penalty CD with the same flexibility. Learn more about what to watch for with no-penalty CDs.
A CD ladder is a savings strategy designed to spread out your money across multiple CDs to leverage high rates without tying up your full investment into one long-term CD. The result of CD laddering is access to a portion of your investment at regular, timed intervals. With rates at all-time highs, a short-term CD ladder combines the high rates of return of a long-term CD with the flexible access to your money that a shorter-term CD offers.
Learn how to build a CD ladder that helps you lock in today's highest rates while enjoying rolling returns — before today's best rates are gone.
A brokered CD is a certificate of deposit you buy through a brokerage firm, instead of from a bank or credit union. Like traditional CDs, you choose a term length that comes with a set interest rate. But unlike with regular CDs, you can buy them through your investment account either new or “used” from other investors. Learn more about brokered CDs — and what to consider before investing in one.
Editor's note: Annual percentage yields shown are as of Tuesday, October 15, 2024, at 8:10 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change.
Sources
National Rates and Rate Caps, FDIC. Accessed September 16, 2024.
Consumer Price Index Summary, U.S. Bureau of Labor and Statistics. Accessed October 11, 2024.
Producer Price Index News Release summary, U.S. Bureau of Labor and Statistics. Accessed October 14, 2024.
Employment Situation Summary, U.S. Bureau of Labor and Statistics. Accessed October 7, 2024.
2024 Preliminary Benchmark Revision, U.S. Bureau of Labor and Statistics. Accessed August 5, 2024.
CME FedWatch Tool, CME Group. Accessed October 15, 2024.
