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Yesterday, the Federal Reserve lowered interest rates by 25 basis points, as many experts had anticipated. This is the third rate cut by the Fed this year, and after each previous cut, certificate of deposit (CD) rates have significantly decreased.
Despite the cuts, you can still find CDs offering rates as high as 4.70%—more than double the national average for certain terms. However, with this recent rate cut and more expected in 2025, it’s a good idea to lock in your APY now. If you delay, you might miss out on these favorable rates.
Here are some of the top CD rates available right now, along with potential earnings from a $5,000 deposit:
Today’s Best CD Rates
Term | Highest APY | Bank | Estimated Earnings
6 months | 4.70% | Rising Bank | $117.50
1 year | 4.47% | NexBank | $223.50
3 years | 4.15% | America First Credit Union | $648.69
5 years | 4.25% | America First Credit Union | $1,156.73
Experts recommend comparing rates before opening a CD to secure the best possible APY. Enter your details below to get the top rates from CNET’s partners in your area.
Why CD Rates Are Expected to Fall After the Fed’s Latest Decision
The Fed is scheduled to meet for the last time this year on December 17 and 18. While the Fed doesn’t directly set CD rates, its decisions influence how banks determine their APYs on consumer products like CDs and savings accounts. Typically, when the Fed cuts the federal funds rate, banks follow by lowering APYs on these products, and vice versa.
Between March 2022 and July 2023, the Fed increased interest rates 11 times to combat post-pandemic inflation, causing CD rates to soar, peaking at 5.65% APY. However, since the beginning of this year, CD and savings rates have been gradually declining.
The Fed’s rate cut in September—its first since March 2020—was followed by another cut in November, leading to a quicker decline in CD and savings rates. At the start of 2024, the average APY on a six-month CD was 4.92%. After September’s rate cut, it dropped to 4.38%, and this week it stands at 4.14%. We can expect further decreases following yesterday’s rate cut.
Here’s how CD rates have changed from the start of this week compared to last week:
How CD Rates Have Changed in the Last Week
Term | Last Week’s CNET Average APY | This Week’s CNET Average APY | Weekly Change
6 months | 4.14% | 4.15% | +0.0024
1 year | 4.07% | 4.08% | +0.24
3 years | 3.52% | 3.52% | No change
5 years | 3.46% | 3.46% | No change
Why Now Is the Time to Open a CD
If you’re focused on increasing your savings, there’s still time to secure an attractive APY. If you have savings that you won’t need to access for a few years, locking in a high, guaranteed return with a CD now could be beneficial.
“CDs offer a steady way to get a predictable return while managing the period you don’t have access to your money,” says Bobbi Rebell, Certified Financial Planner® and Personal Finance Expert with BadCredit.org. “Rates remain high historically.”
Additionally, Faron Daugs, CFP, founder and CEO at Harrison Wallace Financial Group, notes that “locking in a CD rate now could be advantageous if the Fed adopts a more aggressive rate-cutting stance in 2025.”
If you need easy access to your funds, a high-yield savings account (HYSA) can also offer a competitive rate. HYSAs are ideal for emergency funds since you can withdraw money anytime without a penalty.
What to Look for in a CD
While a competitive APY is crucial when comparing CD accounts, it’s not the only factor to consider. Here are some additional points to evaluate:
– **When you’ll need your money:** Early withdrawal penalties can reduce your interest earnings. Choose a term that aligns with your savings timeline. Alternatively, consider a no-penalty CD, though its APY may not be as high as a traditional CD of the same term.
– **Minimum deposit requirement:** Some CDs require a minimum amount to open an account, typically ranging from $500 to $1,000. Others do not. The amount you can set aside can help narrow your options.
– **Fees:** Maintenance and other fees can diminish your earnings. Many online banks don’t charge fees due to lower overhead costs compared to banks with physical branches. Always read the fine print for any account you are considering.
– **Federal deposit insurance:** Ensure any bank or credit union you’re considering is an FDIC or NCUA member so your money is protected if the institution fails.
– **Customer ratings and reviews:** Check sites like Trustpilot to see customer feedback about the bank. Look for a bank that is responsive, professional, and easy to work with.
Methodology
CNET evaluates CD rates based on the latest APY information from issuer websites. We assessed CD rates from over 50 banks, credit unions, and financial companies. Our evaluation considers APYs, product offerings, accessibility, and customer service.
The current banks included in CNET’s weekly CD averages are Alliant Credit Union, Ally Bank, American Express National Bank, Barclays, Bask Bank, Bread Savings, Capital One, CFG Bank, CIT, Fulbright, Marcus by Goldman Sachs, MYSB Direct, Quontic, Rising Bank, Synchrony, EverBank, Popular Bank, First Internet Bank of Indiana, America First Federal Credit Union, CommunityWide Federal Credit Union, Discover, Bethpage, BMO Alto, Limelight Bank, First National Bank of America, and Connexus Credit Union.
*APYs as of December 18, 2024, based on the banks we track at CNET. Earnings are calculated based on APYs and assume interest is compounded annually.
**Weekly percentage increase/decrease from December 9, 2024, to December 16, 2024.
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