Certificates of deposit (CDs) can be a stable way to grow your savings by planning ahead with your finances. You’ll give up some flexibility with your cash in a CD, but the upside is strong interest returns.
The best rates today top out at 5.40%, but available rates will fluctuate and vary by the term. Below you’ll see how CD rates are trending and the best rates across CD accounts of different terms.
Highest CD rates today
Compared with last week, rates have stayed the same, and the best interest rate available is 5.40% with a 6-month CD. The top 3-month CD rate right now is 5.39%.
A CD is a type of savings account with a fixed interest rate and term. This means that you deposit your money into the account and it’s locked up for the term, which can range from a few months to several years. If you want to withdraw your money early, you’ll usually face stiff penalties in the form of fees or loss of interest.
Once the CD term is over, you can withdraw your initial deposit and the interest you earned, or you can renew the CD for another term.
Today’s CD rates by term
3-month CD rates
If you’re looking for high returns and flexibility, a 3-month CD might be right for you. The current average for a 3-month CD is 1.29%, and the highest available rate is 5.39%. Last week, the average 3-month CD interest rate was 1.28%, so rates have increased slightly week-over-week.
With the current highest available rate of 5.39%, you would earn $330.27 over three months with a deposit of $25,000.
6-month CD rates
A 6-month CD maintains much of the flexibility of a 3-month CD, but you can usually find even better interest rates. The national average rate for a 6-month CD is 1.83%, which is the same as last week’s rate. The highest rate available for a 6-month CD is 5.40%.
You would earn $666.13 in interest if you put $25,000 in a 6-month CD with the highest rate of 5.40%.
1-year CD rates
One-year CDs are a sweet spot for many because they don’t lock up your deposit for too long, but you can still find attractive interest rates. The best interest rate available for a 1-year CD is 5.37%. The national average for 1-year CD rates is 1.99%, which is the same as last week’s national average.
If you deposited $25,000 into a 1-year CD with the current highest interest rate of 5.37%, you would earn $1,342.50 in interest.
18-month CD rates
CD terms of more than one year require more planning, as your money will be tied up for longer, decreasing your flexibility. Right now, the national average for 18-month CD rates is 1.69%, which is slightly higher than last week’s national average rate of 1.68%.
The highest available 18-month CD rate is 5.29%, which is higher than the best available rate last week.
With the current highest available rate of 5.29%, you would earn $2,009.76 over 18 months with a deposit of $25,000.
2-year CD rates
The national average for 2-year CD rates is 1.73%, the same as last week’s rate.
The highest rate for a 2-year CD is 5.03% and would earn $2,579.30 in interest with a $25,000 deposit.
3-year CD rates
The national average rate for a 3-year CD is 1.64%, which is the same as last week’s rate.
The highest rate available for a 3-year CD is 4.75% and would earn you $3,731.11 in interest if you deposited $25,000 and kept your money in the account for the full term.
5-year CD rates
If you have the flexibility to lock up your money for five years, you should be able to find favorable interest rates. The national average interest rate for 5-year CDs is 1.64%, which is up slightly from last week’s rate of 1.63%.
The highest rate for a 5-year CD today is 4.60% and would earn about $6,306.89 in interest with a $25,000 deposit.
Here’s a look at historical CD rates:
Tips for choosing a CD
CDs are a great way to grow your money but can be limiting, based on the length of the term you choose to move forward with. Do your research and pay close attention to the following factors when selecting a CD:
- Term: CD terms range from a few months to several years. You may earn more interest with a longer term, but remember that you lose flexibility because your funds will be tied up in an account for longer.
- Rate: In addition to the term, this is a crucial factor to consider. The higher the rate, the more money you’ll make off of your deposit (all else being equal).
- Penalties: With most CDs, if you withdraw your funds before the term ends, you’ll incur penalties. There are some no-penalty CD accounts available and, if you’re not completely sure you can keep your deposit locked in for the full term, a no-penalty CD could be a good option.
Pros and cons of CDs
Some of the pros and cons of CDs depend on what you’re hoping to get out of a CD as well as general market conditions. Here are some points worth considering.
Pros:
- CDs are low risk, thanks to a fixed interest rate.
- CDs usually offer higher returns than savings accounts.
Cons:
- Because the interest rate is fixed, changes in market conditions can mean your investment makes less than other types of accounts or maybe even loses money with inflation.
- Your money is locked in and unavailable for emergencies, unless you want to pay penalties to withdraw early.
Methodology
Curinos focused on CDs intended for personal use to find the average certificate of deposit (CD) rates. CDs that fall into these categories were excluded: promotional offers, relationship-based rates, private, youth, senior, student/minor, affinity, bump-up, no-penalty, callable, variable, step-up, auto transfer, club, gifts, grandfathered, internet-only and IRA CDs. All rates quoted are based on a $25,000 minimum deposit.
Frequently asked questions (FAQs)
If you’re looking for a steady return and you’re comfortable setting aside money for a certain period of time, investing in a CD could be a good option. CDs usually offer higher returns than regular savings accounts and are much less risky than investing in the stock market.
CDs usually provide higher returns compared to regular savings accounts, but you lose flexibility because you can’t access your funds for the length of the CD without penalty.
CD terms usually range from a few months up to five years. Generally, as you increase the length of the term, you will earn more interest on your deposit.
You’ll usually be penalized with fees for closing a CD early. These can be substantial and often take away much of the interest you had earned. Some banks offer no-penalty CDs, which offer increased flexibility.
