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Key takeaways
- Today's leading CD rate across terms is 5.50% APY, offered for a 3-month CD.
- In addition to choosing a CD based on APY, be sure to pick a term that suits your financial goals.
- For most CD terms, national averages are only yielding around one-third of the highest rates.
Opening a fixed-rate certificate of deposit (CD) with a term of at least one year, today, should give you peace of mind that your savings will continue to earn the same annual percentage yield (APY) should rates begin to retreat later this year. APYs on competitive CDs have been high as of late because they follow the federal funds rate, which is currently at a range of 5.25-5.50 percent — the highest it has been since early 2001. But with the Federal Reserve expected to lower rates later this year, CD APYs could eventually drop, in turn.
Today's Fed decision will set the tone for CD rates. Banks are continuing to lower rates as they await a possibleFed rate cut. Popular Direct, for example, recently lowered the APY for its 6-month term from 5.35 percent to 5.25 percent. The new leader for this term is Bask Bank, offering 5.30 percent APY.
The leading APY across CD terms among banks we monitor is 5.50 percent, which is available on a 3-month CD from Quontic Bank and requires a minimum deposit of $500. Many shorter terms are earning higher yields than longer ones in the current rate environment.
Bankrate monitors the top and average rates every weekday, and you’ll find today’s top CD rates in the table below.
Today's best CD rates by term
| CD term | Institution offering top APY | Highest APY | National average APY | Estimated earnings on $5,000 with top APY |
|---|---|---|---|---|
| 3-month | Quontic Bank | 5.50% | 1.24% | $67 |
| 6-month | Bask Bank | 5.30% | 1.75% | $131 |
| 9-month | America First Credit Union | 5.25% | N/A | $196 |
| 1-year | First Internet Bank of Indiana | 5.26% | 1.81% | $263 |
| 18-month | Bask Bank | 5.00% | 1.93% | $380 |
| 2-year | First Internet Bank of Indiana | 4.76% | 1.56% | $487 |
| 3-year | First Internet Bank of Indiana | 4.61% | 1.44% | $724 |
| 4-year | First Internet Bank of Indiana | 4.45% | 1.50% | $951 |
| 5-year | First Internet Bank of Indiana | 4.50% | 1.44% | $1,231 |
Note: Annual percentage yields (APYs) shown are as of July 31, 2024. APYs for some products may vary by region.
N/A: Not available; Bankrate doesn’t track national averages for the 9-month CD term due to limited available data. Estimated earnings are based on the highest APYs and assume interest is compounded annually.
When a CD isn’t the best choice
A CD locks in your money for the entire length of the term, and you’ll likely be charged an early withdrawal penalty if you take out the funds sooner. As such, a CD shouldn’t be used for money that you may need in the meantime for living expenses or emergencies. A liquid savings account is a better place for funds that could be withdrawn to cover unplanned expenses such as a car repair or a medical bill.
What the current rate environment means for CDs
Recent federal funds rate changes: To combat high inflation, the Federal Reserve raised its benchmark interest rate 11 times in 2022 and 2023, before leaving rates unchanged for seven straight meetings. Before the string of rate hikes began in March 2022, the target range was at 0-0.25 percent, and it currently stands at a 23-year high of 5.25-5.50 percent.
What this means for deposit accounts such as CDs: Yields on competitive savings accounts and CDs tend to move in lockstep with the Fed’s interest rate moves. As such, many banks increase their yields when the Fed raises rates, and they lower yields when the federal funds rate drops. While the Fed has held rates steady since July 2023, top CD APYs ended up peaking in late 2023 and have since been decreasing gradually, as illustrated below.
How inflation factors in
The Fed has held its key benchmark rate steady since July 2023, due to inflation not slowing as quickly as it has in the past. Fed officials are aiming to bring the annual inflation rate down to 2 percent. While the consumer price index (CPI), a measure of inflation, has decreased significantly from its decades-high annual rate of 9 percent in June 2022, it’s currently at 3 percent.
“We have stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent,” Fed Chair Jerome Powell said in remarks following the Fed’s latest decision not to change rates on June 12.
The current rate of inflation is a significant factor that affects what the Fed decides to do with rates. An increase in the federal funds rate can be good for savers — translating to higher APYs on many CD and savings accounts — while it can be bad for borrowers as interest rates tend to increase on loans.
Is now still a good time to open a new CD?
“This a great environment for CDs as interest rates are at, or near, a peak for this cycle and the Federal Reserve is expected to begin cutting interest rates later this year,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The top-yielding CDs currently earn in excess of the inflation rate and savers have the ability to lock in that inflation-beating return for multiple years. If you have money you won’t need to touch for a period of time, now is a great time to consider a CD.”
CD FAQs
Research methodology
Bankrate calculates and reports the national average APYs for various CD terms. Factored into national average rates are the competitive APYs commonly offered by online banks, along with the very low rates often found at large brick-and-mortar banks.
In June 2023, Bankrate updated its methodology that determines the national average CD rates. For the process, more than 500 banks and credit unions are now surveyed each week to generate the national averages. Among these institutions are those that are broadly available and offer high yields, as well as some of the nation’s largest banks.
