We independently evaluate all recommended products and services. If you click on links we provide, we may receive compensation. Learn more.
- PERSONAL FINANCE NEWS
- CD NEWS
Nortonrsx / Getty Images
KEY TAKEAWAYS
- CD rates surged to a 20-year peak last fall, thanks to the Federal Reserve's aggressive battle against decades-high inflation.
- Though rates have come down slightly, you can still earn a historically high return by committing some of your savings to a CD.
- CD rates are largely influenced by the federal funds rate, which is set by the Fed.
- Since it's possible the Fed will start lowering rates in 2024, and perhaps continuing in 2025, it's a smart time to lock in one of today's stellar CD rates for a term of 2 years or more.
- Our daily rankings of the best CDs offers 14 great options for locking in your rate until at least 2026, and up to 2029.
The full article continues below these offers from our partners.
Today's Best Rates on Medium- to Long-Term CDs
Our daily ranking of the best CD rates always provides you with a list of the highest nationally available offers in terms as short as 3 months. But for terms of 2 to 5 years, here's our roundup of today's hottest rates. These CDs will pay dividends until at least 2026.
All CDs listed above are available nationwide, even if offered by a credit union. And all are federally insured—covered by the Federal Deposit Insurance Corporation (FDIC) for banks or the National Credit Union Administration (NCUA) for credit unions. That means even in the very unlikely case the institution fails, your deposits of up to $250,000 are protected.
How CD Rates Got This High—And Where They're Headed Next
More than two years ago, the Federal Reserve embarked on an aggressive rate-hike campaign in a fight against decades-high inflation. With 11 increases to the federal funds rate between March 2022 and July 2023, the Fed raised that benchmark rate by a cumulative 5.25%. That's the highest level for the fed funds rate since 2001.
Bank and credit union deposit rates are directly influenced by the federal funds rate. As a result, certificate of deposit (CD) rates surged in 2023. But since then, CD rates have softened a bit, after the Fed implemented multiple rate holds.
While expectations earlier this year were that we'd see the central bank reduce the federal funds rate more than once this calendar year, rate cuts are currently far less certain. The reason is inflation. While the Fed had succeeded in tamping down inflation to about 3.0% in recent months, the March inflation reading came in at 3.5%.
The Fed has repeatedly said it will not cut rates until it feels confident inflation is coming down both sufficiently and sustainably toward the Fed's 2% target. As a result of the recent inflation uptick, it now looks far less sure whether the central bankers will get to that level of confidence in 2024.
As a result, savings account and CD rates have roughly plateaued as banks and credit unions wait for more certainty on how long the fed funds rate will stay put. What we do know is that once the Fed signals it's ready to begin lowering its rate, savings and CD returns will start to drift downwards as well. That means we could see lower deposit rates later this year—and possibly 2025 rates that are lower still.
That Makes Now a Smart Time for Multi-Year CDs
Given the possibility of falling savings account and CD rates, it's currently a good move to stash money you won't need for a while in a CD that will secure one of today's historically high rates. And the longer you can commit, the longer you'll enjoy that rate guarantee—no matter what happens with the Fed.
Right now, the highest returns are available on shorter-term CDs. But since odds are reasonable that interest rates could enter a two- to three-year slide, it could be smart to lock in a rate today that will be guaranteed for two years—or even longer if you feel confident you can live without access to the funds.
Can't Commit for Two Years? Here Are Your Next-Best Options
If you don't have funds you're willing to lock up for a couple of years, that doesn't mean you can't still benefit from today's historically high rates. Instead, you could put money in a shorter-term CD, depending on your personal timeline:
- Today's Best 3-Month CD Rates - Rates up to 5.65%
- Today's Best 6-Month CD Rates - Rates up to 5.55%
- Today's Best 1-Year CD Rates - Rates up to 5.40%
- Today's Best 18-Month CD Rates - Rates up to 5.40%
As you can see, many of these CDs pay higher rates than you'll find for terms of two years or longer. That makes them near-term winners. But your rate guarantee will end sooner.
For money you need to keep fully accessible and therefore can't commit at all, consider a high-yield savings account. Our daily ranking of the best savings account rates reaches up to 5.55% APY, with more than 10 additional offers paying 5.25% or more.
Just remember: Savings account rates are variable, meaning they can change at any time. Right now, the top high-yield savings account rate is at a 20-year high. But once a Fed rate cut appears on the horizon, savings account rates will start to decline.
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.
Banks must be available in at least 40 states. 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.