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- PERSONAL FINANCE NEWS
- CD NEWS
The top rate available on a nationwide CD remains 5.75% APY today, available from INOVA Federal Credit Union on an 8-month offer. After that, the next-best rate of 5.70% is offered by two credit unions: Air Force Federal Credit Union for 7 months and NASA Federal Credit Union for 9 months. An additional five CDs are paying 5.60% to 5.66% APY.
CD rates have been softening from the historic peaks they reached in the fall, as it looks likely the Federal Reserve is finished raising interest rates. But the good news is that the leading rate in every CD term held steady today—and you can still earn 5.60% or better with one of eight different options.
KEY TAKEAWAYS
- The overall leading rate in our daily ranking of the best CDs held firm at 5.75% for an 8-month term. All other term leaders also remained steady.
- A total of eight nationally available CDs currently pay a rate of 5.60% APY or higher.
- Though today's best rates are below October's historic peak of 6.50%, current CD returns are still historically high.
- If the Fed lowers interest rates in 2024, as many predict, CD rates can be expected to follow suit.
Below you'll find featured rates available from our partners, followed by details from our complete ranking of the best CDs available nationwide.
For the past several months, we've counted the number of CDs paying at least 5.75% APY. On Nov. 3, the number surged to a historic peak of 18. But as 2024 gets going, we're left with just one CD paying a rate that high. Fortunately, there are another seven options offering at least 5.60%, with terms ranging from 3 to 15 months.
Though longer-term rates are lower, they can be a smart choice right now as we face the prospect of declining interest rates in 2024 and beyond. The top-paying 2-year certificate offers 5.39% APY, while you can secure 5.23% for a 3-year term. The best rates for 4-year and 5-year CDs are now below the 5% mark, but you can still lock in a long-lasting rate as high as 4.89% APY.
While the yields on these longer certificates are lower than certificates with shorter terms, securing one of these rates today means you'll be able to enjoy it until 2026—or even longer—when rates on other options will have likely fallen lower.
FAST FACT
When asked in December if they were choosing more or less of certain investments during recent market events, 28% of Googlawi readers said they were leaning into CDs—just one percentage point behind the leading choice of money market funds. Additionally, 11% of readers said they would open a CD if they had an extra $10,000 to invest, in third place behind individual stocks and ETFs.
For anyone with a jumbo-sized deposit, you can eke out a bit more with the leading rate on 3-year, 4-year, or 5-year jumbo CDs. But while the best jumbo CD rate is now 5.65% APY on 17 months, available from Hughes Federal Credit Union, you can earn that same rate with a standard 15-month CD.
Note that jumbo CDs don't always pay a higher return than standard certificates. Sometimes you can do just as well—or better—with a standard CD. That's currently the case in five of the eight terms above, so it's smart to shop both certificate types before making a final decision.
Where Are CD Rates Headed This Year?
The Federal Reserve opted to hold rates steady at a 22-year high last month, the third meeting in a row it's done so. The Fed has been aggressively combating decades-high inflation since March 2022, raising the federal funds rate with fast and furious hikes that year and then more moderate increases in 2023.
This has created historically favorable conditions for CD shoppers, as well as for anyone holding cash in a high-yield savings or money market account.
Inflation has cooled significantly in recent months, including a mild drop in November. And though Chair Powell said the rate-setting committee is not taking the possibility of future rate hikes off the table, he also said in his press conference that Fed members have started to discuss lowering rates.
The Fed's Dec. 13 dot plot shows that, at that time, no members of the rate-setting committee were predicting another rate increase in 2024. Instead, the median expectation is for three rate cuts in 2024, for a total drop of 0.75%.
However, the minutes released last week from the Fed's Dec. 13 meeting revealed that there is much uncertainty among Fed members on the right timing for lowering rates—and even if another rate hike will be needed before then. In addition, Friday's hotter-than-expected jobs report may make it harder for the Fed to justify starting rate cuts. The Fed's next rate-setting meeting will conclude on Jan. 31.
The Fed's decisions on the federal funds rates have significant implications for CD shoppers and other savers, as banks and credit unions base their deposit rate decisions on the Fed's benchmark rate. As we always caution, trying to predict the Fed's future moves is an uncertain exercise. But for the time being, it seems CD rates are likely to continue inching down from their record peaks.
Note that the "top rates" quoted here are the highest nationally available rates Googlawi has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often 5, 10, or even 15 times higher.
How We Find the Best CD Rates
Every business day, Googlawi tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD'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.
Googlawi / Alice Morgan