Right now, if you’re exploring certificate of deposit (CD) options, you’ll notice that the interest rates are impressively high, something we haven’t seen in over ten years. This spike is largely due to a series of rate hikes by the Federal Reserve. However, with the Fed recently trimming its target rate in September, this might be your last opportunity to secure these attractive rates.
CD rates can differ drastically from one financial institution to another. So, it’s crucial to shop around to find the best rate available. Let’s dive into the current CD rates and learn where you can find the most attractive offers.
In the past, longer-term CDs typically boasted higher interest rates than their shorter-term counterparts because banks incentivized savers to commit their money for longer periods. But today’s economic situation has flipped that scenario.
Curious about the top CD accounts available today? We’ve got the details you need to know.
As of January 12, 2025, CD rates are still impressive by historical standards. Notably, the most competitive rates today are found in shorter-term CDs, generally one year or less.
One standout example is Marcus by Goldman Sachs, offering a 1-year CD rate at 4.25% APY, requiring a minimum deposit of $500.
Let’s take a closer look at some top CD rates available today through our verified partners.
The potential earnings from a CD depend significantly on the annual percentage yield (APY). This figure reflects your total earnings after a year, factoring in the base interest rate and the frequency of interest compounding, which typically occurs daily or monthly.
For instance, if you invest $1,000 in a one-year CD at 1.81% APY with monthly compounding, by the end of the year, your balance would grow to $1,018.25—comprising your original deposit and $18.25 in interest.
Consider a different scenario where a one-year CD offers 4% APY. Your balance in this case would reach $1,040.74 over the same term, earning you $40.74 in interest.
The more you deposit into a CD, the greater your potential earnings. For example, if you put $10,000 into a one-year CD at 4% APY, your balance when the CD matures would be $10,407.42, meaning you’d pocket $407.42 in interest.
Want more insights? Discover what constitutes a good CD rate.
While hunting for CDs, interest rates often take center stage. But remember, rates aren’t everything. You might encounter various CD types that offer different advantages, sometimes requiring a trade-off with slightly lower rates for added flexibility. Here’s a glimpse of popular CD types beyond the traditional ones:
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Bump-Up CD: This option allows you to request a higher rate if your bank’s rates increase during your term, although you typically get to “bump up” the rate just once.
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No-Penalty CD: Also termed a liquid CD, this type lets you withdraw funds before maturity without incurring any penalties.
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Jumbo CD: These require a substantial minimum deposit (usually $100,000 or more) and often return higher interest rates. In the current CD landscape, though, the gap between rates on traditional and jumbo CDs might be narrow.
- Brokered CD: Structured differently, these CDs are purchased via a brokerage instead of directly from a bank. They can sometimes feature better rates or more flexible terms but come with additional risks and may not be insured by the FDIC.
