If you’re looking for a safe place to store your savings, a certificate of deposit (CD) can be a great choice. These accounts generally offer higher interest rates than traditional checking and savings accounts. However, CD rates can vary widely. Learn more about CD rates today and where to find high-yield CDs at the best rates available.
CD Rates Today Compared to the National Average
Current CD rates are spread across the map. Overall, CD rates were raised thanks to the Fed’s decision to forgo interest rate cuts for now and maintain its current benchmark rate. However, not all banks offer competitive CD rates.
For those that are, maximum rates exceed 5% APY. This is especially true for shorter time frames of around a year. Contrary to historical norms, long-term CDs are paying slightly less, with the best rates currently hovering around 4% to 5% APY for terms of two years or longer.
Here’s a look at some of the best CD rates available today from our verified partners:
Compare these rates to the national average as of April 15, 2024 (the most recent data available from the FDIC):
Compared to current major CD rates, national averages are much lower. This highlights the importance of shopping around for the best CD rates before opening an account.
Why do online banks have the best CD rates?
Online banks and neobanks are financial institutions that operate exclusively via the web. This means they have lower overhead costs than traditional banks. As a result, they are able to pass these savings on to their customers in the form of higher interest rates on deposit accounts (including CDs) and lower fees. If you’re looking for the best CD rates available today, an online bank is a great place to start.
However, online banks are not the only financial institutions offering competitive CD rates. It’s also worth checking with credit unions. As nonprofit financial cooperatives, credit unions return their profits to their customers, who are also member-owners. While many credit unions have strict membership requirements, limited to those who belong to certain associations or work or live in certain areas, there are also a number of credit unions that virtually anyone can join.
Should you open a CD?
Whether or not you should put your money in a CD depends on your savings goals. CDs are considered a safe and stable savings vehicle – they don’t lose money (in most cases), are backed by federal insurance, and allow you to lock in today’s best rates.
However, there are some disadvantages to consider. First, you must keep your money on deposit for the entire term, otherwise you will be subject to an early withdrawal penalty. If you want flexible access to your funds, a high-yield savings account or money market account may be a better choice.
Additionally, while current CD rates are high by historical standards, they don’t match the returns you could earn by investing your money in the market. If you are saving for a long-term goal such as retirement, a CD will not provide the growth needed to reach your savings goal within a reasonable time frame.
See more information: Short-term or long-term CD: Which is best for you?
