The best interest rates on CDs—certificates of deposit—today are as high as 4.55%, depending on the CD’s term. And, the average CD yields are edging higher. Take a look at the top rates and typical yields being offered on CDs of various durations.
Related: Compare the Best CD Rates
Highest CD Rates Today: 1-Year, 6-Month, 9-Month Terms
The highest interest rate currently being offered on a 12-month CD—one of the most popular CD terms—is 4.55%, according to data from Bankrate.com. If you discover a 12-month CD with a rate in that neighborhood, you’ve found a good deal. One week ago, the best rate was a lower 4.50%.
The average APY, or annual percentage yield, on a one-year CD is now 2.13%, up from 2.09% a week ago. APY provides a more accurate view of the yearly interest you’ll earn with a CD because it factors in compound interest. That’s the interest you earn not only on your deposit (or principal) but also on the interest itself.
If you’d prefer a CD with a shorter term than one year, today’s best rate on a six-month CD is 4.21%. That compares with 4.11% a week ago. The current average APY for a six-month CD is 1.59%, compared to 1.53% last week at this time.
Nine-month CDs today are being offered at an average APY of 2.21%, up from 2.13% a week ago.
Highest CD Rates Today: 15-Month, 18-Month and 2-Year Terms
On a 15-month CD, today’s best interest rate is 4.40%; you’ll do well if you can find a rate close to that. One week ago, the top rate also was 4.40%.
The highest rate on an 18-month CD within the last week has been 4.40%.
If you can hold out for two years, 24-month CDs today are being offered at interest rates as high as 4.31% APY. The top rate last week at this time was a similar 4.31%. Two-year CDs now have an average APY of 2.33%, an increase from 2.29% last week.
CDs are time deposit savings accounts that pay a fixed interest rate. You’re not supposed to touch your deposit until the CD’s term is up, whether that’s in six months, one year or five years. Your patience is rewarded with interest that’s usually better than what you’d earn from a regular savings account.
If you withdraw money from a CD before “maturity”—when it hits the end of its term—and you can be slapped with stiff penalties. For example, you can lose up to six months’ worth of interest if you make an early withdrawal from a one-year CD.
Highest CD Rates Today: 3-Year and 5-Year Terms
CDs with longer terms tend to have some of the most attractive interest rates and APYs—if you’re willing to keep your money locked away for years.
Today’s highest rate on a three-year CD is 4.00%, so you’ll want to shop around for that rate or something near it. Last week at this time, the best rate on a three-year CD was also 4.00%. The average APY on a three-year CD is now 2.47%, up from 2.43% a week ago.
On a five-year CD, the highest rate today is 4.45%, the same as one week ago. APYs are averaging 2.59%, compared to 2.56% at this time last week.
The longer the term, the harsher the early withdrawal penalty. It’s not unusual to lose one full year’s worth of interest or more if you break open a five-year CD too soon. Be absolutely certain you understand the penalty before you make your investment.
Related: CD Interest Rates Forecast: How Good Will They Get?
How CDs Work
You “purchase” a CD from a financial institution by opening the account with a lump-sum deposit, which becomes the CD’s principal. CDs and share certificates (the credit union equivalent of bank CDs) often require that you make a minimum deposit. Minimum requirements vary by institution and range from a dollar to tens of thousands of dollars. Some institutions don’t require a minimum at all.
Once you deposit your principal, you start the clock on your timed investment and begin earning interest. The bank or credit union will provide you with regular statements showing how much interest you’re accumulating.
Remember, avoid the temptation of tapping into your CD before the term ends. Early withdrawal penalties can be so severe that they can not only take back your interest and then, but also start eating into your principal..
Are CDs a Good Deal?
CDs typically pay higher interest than other savings vehicles, even the best high-yield savings accounts and money market accounts. And while they may not offer the kind of enviable returns that are possible with stocks, CDs beat the more attention-getting investments in one regard: They’re one of the safest places to put your money.
Investors lost millions in the 2022 crypto crash, and putting your money into the stock market, real estate or gold and other commodities can be risky, too. But when you buy a certificate of deposit or credit union share certificate from a federally insured financial institution, you can sleep easily with the knowledge that your investment is protected.
The FDIC provides you with up to $250,000 in coverage in the event the bank issuing your CD ever fails. For share certificates purchased from federal credit unions and most state-chartered credit unions, the NCUA insures your money up to the same limit.
More From Advisor
- How To Get The Best CD Rates In 2023
- CD Rates Today: November 30, 2022—Rates Mostly Move North
- Barclays Bank CD Rates: December 2022
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
