Today’s best interest rates on CDs—certificates of deposit—range as high as 4.40%, 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 4.30%, according to data from Bankrate.com. If you land a 12-month CD with a rate in that vicinity, you’ve found a good deal. One week ago, the best rate was a lower 4.00%.
The average APY, or annual percentage yield, on a one-year CD is now 1.95%, up from 1.91% a week ago. APY provides a more accurate calculation of the yearly interest you’ll earn with a CD because it takes into account 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 3.92%. That’s an increase from a week ago, when the top rate was 0.00%. The current average APY for a six-month CD is 1.42%, compared to 1.40% last week at this time.
Nine-month CDs today are being offered at an average APY of 1.95%, the same as 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 3.81%; you’ll do well if you can find a rate in that range.
The highest rate on an 18-month CD is currently 4.30%—up from 4.00% a week ago. The average APY is 2.59%, up from 2.55% a week ago.
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 4.10%. Two-year CDs now have an average APY of 2.15%. That’s a jump from 2.14% last week at this time.
CDs are time deposit savings accounts that pay a fixed interest rate. Investors are discouraged from touching their deposit until a CD’s term is up. 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 up for years.
Today’s highest rate on a three-year CD is 2.48%, 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 2.48%. The average APY on a three-year CD is now 2.28%, up from 2.24% a week ago.
On a five-year CD, the highest rate today is 4.40%, up from 4.25% one week ago. APYs are averaging 2.40%, up from 2.35% 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 In 2022?
How CDs Work
CDs may seem a little exotic as bank accounts go, but how they work is actually pretty simple. You open the account with an amount of money, leave your deposit alone for a period of months or years, and let the compound interest work its magic.
Many CDs and their cousins, the share certificates offered by credit unions, require you to deposit hundreds, thousands or even tens of thousands of dollars to open your account. Other financial institutions have no minimum deposit requirement, meaning you could open the account with as little as a penny.
But banks and credit unions typically won’t allow you to add to your deposit once the term begins and the clock starts ticking. And they’re serious about not letting you crack open your CD or share certificate too soon. The early withdrawal penalties can be so tough they’ll eat into your principal, not just take back some of your interest.
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
- CD Rates Today: November 7, 2022—Top Rates Range From 3.92% To 4.40%
- CD Rates For The Week Of November 7, 2022: Rates Inch Up
- CD Rates Today: November 4, 2022—Rates Generally Move Up
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
