Today, if you’ve been holding out for a great rate on a certificate of deposit (CD), you’re in luck. We’ve seen some of the most attractive CD rates in over a decade, largely spurred by recent hikes from the Federal Reserve. However, with the Fed making a cut to its target rate in September, this could be your chance to snag a competitive offer before they potentially drop.
Interest rates on CDs can vary significantly from one bank or credit union to another. It’s critical to shop around to make sure you’re getting the best deal you possibly can. Here’s a rundown of where CD rates stand today and guidance on finding the top offers.
Traditionally, if you were considering a longer-term CD, you’d typically see higher interest rates compared to their shorter-term counterparts. Banks offered better rates as a way to entice you to keep your money parked with them for extended periods. Yet, given the current economic landscape, this trend is not holding as true as it once did.
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At the moment, one of the most striking CD rates available is from Marcus by Goldman Sachs, offering an impressive 4.30% APY on their 9-month CD. This account requires a minimum deposit of $500 to get started.
Let’s dive into some of the standout CD rates available today from our trusted partners:
The interest you earn on a CD is determined by its annual percentage yield (APY). This yield reflects what your earnings would look like over a year, accounting for both the base interest rate and the frequency of compounding (which occurs daily or monthly for CDs).
Imagine plunking down $1,000 into a one-year CD with an APY of 1.81%, where interest compounds monthly. By the end of the year, you’d be sitting on $1,018.25—your original investment plus $18.25 in interest.
Now, if you opted for a one-year CD that offered a 4% APY instead, your balance would swell to $1,040.74 over the same period, thanks to $40.74 in interest.
The more you put into a CD, the greater the return. Suppose you deposited $10,000 into that one-year CD at 4% APY. By the time it matured, you’d have $10,407.42, netting $407.42 in interest.
Curious about what constitutes a good CD rate? Learn more here.
While an attractive interest rate usually tops the list when picking a CD, it’s not the only thing to consider. You have various CD options, each with its own benefits. Sometimes, securing these benefits means sacrificing a bit on the interest rate to gain flexibility. Here are some common CD types worth considering beyond the traditional ones:
Bump-up CD: This type allows you to increase your interest rate if your bank hikes rates during your CD’s term. Typically, you’re allowed only one "bump up."
No-penalty CD: Also known as a liquid CD, this option lets you withdraw your funds before the CD reaches maturity without incurring a penalty.
Jumbo CD: These require a significant minimum deposit, usually $100,000 or more, offering higher interest rates as a reward. However, in the current rate environment, the interest rate difference between jumbo and traditional CDs might not be substantial.
Brokered CD: These CDs are acquired through a brokerage rather than directly from a bank. While they can offer higher rates or more flexible terms, they come with increased risk and might not always be FDIC-insured.
Navigating the CD landscape can feel overwhelming, but with the right information, you can make a choice that aligns with your financial goals and comfort level.
