Certificates of deposit (CDs) can be a great choice if you’re looking for a low-risk investment to generate interest on cash you don’t need to use immediately. Based on Curinos data, CD rates have been relatively stable over the past week even in the midst of a rate hike pause by the Federal Reserve.
| CD RATES TODAY | ||
|---|---|---|
Term | Average APY | High rate |
3-month CD | 1.26% | 5.39% |
6-month CD | 1.79% | 5.40% |
1-year CD | 1.95% | 5.37% |
2-year CD | 1.70% | 5.00% |
3-year CD | 1.62% | 4.75% |
Source: Curinos. Data accurate as of May 15, 2024. Quoted rates are based on a $25,000 deposit.
Three-month CD rates
Rates on three-month CDs have seen no change since this time last week, remaining at 1.26% today.
Over the past month, rates on three-month CDs have climbed marginally.
The current national high for a three-month CD is 5.39%, which would earn more than $330 in interest with a $25,000 deposit.
Six-month CD rates
By choosing a top-rated six-month CD, you benefit from a winning mix of competitive interest rates and a short-term commitment.
The national average APY for six-month CDs is 1.79%, the same as last week and up from 1.76% one month ago.
The current top national rate for a 6-month CD is 5.40%, according to the data available from Curinos. Shopping around can help you find better deals.
With that rate, you’d earn almost $670 in interest if you deposited $25,000.
One-year CD rates
If you’re willing to lock away your savings for 12 months, you can snag even better rates. One-year CDs can give you returns as high as, or even higher than, longer-term options.
Rates on 12-month CDs aren’t moving much. The national average APY is 1.95%, the same as last week and up three basis points from a month before.
The current national high for a 12-month CD is 5.37%, which would earn around $1,340 in interest with a $25,000 deposit.
Two-year CD rates
Rates on two-year CDs have remained fairly stable.
The national average APY is 1.70%, the same as a week ago, although up one basis point from one month ago.
The current national high for a 24-month CD is 5.00%. Locking in a rate close to this high will maximize your returns on this longer-term investment.
If you invest $25,000 in a 24-month CD at the high rate of 5.00% you’d earn roughly $2,570 in interest.
Three-year CD rates
The national average APY for a three-year CD stands at 1.62%, which is the same as last week and up from 1.60% a month ago.
The highest rate was 4.75%, which would net almost $3,731 in interest if you invested $25,000.
Methodology
To establish average certificate of deposit (CD) rates, Curinos focused on CDs intended for personal use. CDs that fall into specific categories are excluded, including 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. The average CD rates quoted above are based on a $25,000 deposit.
Frequently asked questions (FAQs)
You’ll need a few key details to open a CD: your name, address, Social Security number, government-issued ID and phone number. You can open a CD online or in person, but you’ll probably find better rates online. Once you get the green light, you can fund the CD with cash from a linked bank account or one that’s not affiliated with the bank at all.
A CD ladder helps you take advantage of higher rates offered by longer terms without tying up your money indefinitely.
For instance, let’s say you have $12,000 to invest and decide to create a ladder of three CDs. You invest $4,000 each into one, two and three-year CDs. When the one-year CD matures, you convert your principal and earned interest to the higher-rate 36-month CD, and do the same with the 24-month CD the next year. This way, you’ll eventually end up with three 36-month CDs with high APYs, with one maturing each year.
Here’s how you can build your own CD ladder:
- Split the amount you want to invest by the number of CD terms you’d like.
- Research the best CDs to find top providers and the best rates for various lengths.
- Set up the CD accounts you’ve chosen.
- As the CDs mature, reinvest the cash into longer-term CDs.
The second step is crucial. Just because the Fed has raised interest rates doesn’t mean you’ll get the same or even similar rates from different financial institutions for the same CD term.
CD rates change on a regular basis, but the higher the better. As of May 14, 2024, the national average interest rate for a 12-month CD sat at 1.95% APY, according to data from Curinos. But you can find plenty of banks advertising APYs well above this average, especially if you take a look at the top contenders in our ranking of the best CD rates.
A basis point is the term used to describe one hundredth of one percentage point. Therefore, if the yield on a CD increased from 1.50% to 1.60%, it increased by 10 basis points.
