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- PERSONAL FINANCE NEWS
- CD NEWS
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KEY TAKEAWAYS
- CDs are still paying near their highest rates in 20-plus years, with a top rate of 6% and dozens of options paying 5% or more.
- If you put $5,000 into a top CD today, it could be worth $5,114 in five months or $6,321 in five years.
- Do the same with $10,000, and you could have $10,228 in five months or $12,642 in five years.
- Start with $25,000, and you could end up with $25,569 in five months or $31,604 in five years.
- While savings account rates will start to fall once the Federal Reserve cuts interest rates, which is expected later this year, CD rates are locked and guaranteed for the CD's full term.
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Today's CD Rates Are Still in the Stratosphere
Today's highest CD rate in each term is a bit lower than last fall, but the best CDs are still paying exceptionally high rates compared to what you could earn a few years ago. CD rates reached a peak in October and November 2023, rising briefly to a top rate of 6.50%. That's thanks to an inflation-fighting campaign by the Federal Reserve that began in March 2023 and pushed its benchmark federal funds rate to its highest level since 2001. Since the fed funds rate is a direct driver of what banks and credit unions pay customers for their deposits, rates on certificates of deposit (CDs) also soared.
When it looked like a Fed rate cut might be on the near horizon, banks and credit unions began to lower their CD rates a bit. But you can still earn as much as 6% APY on a 10-month CD.
How Much Can You Boost Your Savings With a CD?
CDs come in various rates and term lengths. That lets you choose the duration that fits your needs, and then shop our daily ranking of the best nationwide CDs to find a top rate in that term. So how much can you earn?
It depends first, of course, on how much you put into the CD. Next, the annual percentage yield (APY) you secure and the length of the CD term will determine the end value of your CD deposit. Below we've laid out exactly how much you can earn from the leading nationwide CDs based on a deposit amount of $5,000, $10,000, or $25,000.
FEDERALLY INSURED INSTITUTIONS ARE SAFE
It doesn't matter if your CD is held at a bank or a credit union, or if the institution is big, medium, or small. Federal protection applies equally to all FDIC banks, regardless of size, and the same is true for NCUA-member credit unions.
Advice for Savers
What the Fed does with the federal funds rate during the rest of this year is a point of speculation right now. But according to the CME Group's FedWatch Tool, it's widely predicted the central bank will reduce the fed funds rate at least once this year, and possibly twice. Once it seems clear the Fed is ready to make a move at its next meeting, rates on savings accounts and new CDs will drop.
That makes now an excellent time to lock in one of today's historically high rates while you can. And the longer your CD term, the longer you're likely to benefit from boosted earnings.
If you currently have all or most of your savings in a savings account, consider how much of that you could live without for a year or longer. Then shuttle that portion to a top-paying CD. You can still keep some money in a high-yield savings account for easy access. But a portion of your savings will continue to earn today's high rates for months or years down the road, no matter how much the Fed cuts interest rates in 2024, 2025, and beyond.
CHOOSE YOUR CD TERM WISELY
When shopping for a CD, think carefully about how long you can live without those funds. While it can pay to stretch your term out so you can lock in a rate for a longer period, it's also important to choose a CD term you feel confident you can stick to. If you can't, you'll be hit with an early withdrawal penalty, which will eat into your earnings.
How We Find the Best Savings and CD Rates
Every business day, Googlawi tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account's minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that's below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.