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The best interest rates on CDs (certificates of deposit) currently range from 4.35% and up, depending on the CD’s term. Here’s a look at how CD rates are trending, along with an overview of the best rates across CDs with different terms.
Related: Compare the Best CD Rates
Highest CD Rates
| CD Rates Today | ||||
|---|---|---|---|---|
| Term | Highest Rate | Average APY | ||
| 6 Months | 4.35% | 1.82% | ||
| 12 Months | 4.51% | 2.36% | ||
| 18 Months | 4.74% | 2.91% | ||
| 24 Months | 4.40% | 2.47% | ||
| 60 Months | N/A* | 2.78% | ||
| Source: Bankrate.com | ||||
| *Highest reported in the last week. Data unavailable for today. | ||||
Current 6-Month CD Rates
If you’d prefer a CD with a shorter term than one year, today’s best rate on a six-month CD is 4.35%. That’s up from 4.21% a week ago. The current average APY for a six-month CD is 1.82%, steady with last week at this time.
APY provides a more accurate portrait of the yearly interest you’ll earn with a CD because it factors in compound interest. That’s the interest you earn not only on your deposit (or principal) but also on the interest itself.
Current 9-Month CD Rates
Nine-month CDs today are being offered at an average APY of 2.50%, up from 2.49% a week ago.
Current 1-Year CD Rates
The highest interest rate currently being offered on a 12-month CD—one of the most popular CD terms—is 4.51%. If you land a 12-month CD with a rate in that neighborhood, you’ve found a good deal. One week ago, the best rate was the same.
The average APY, or annual percentage yield, on a one-year CD is now 2.36%, the same as a week ago.
Current 2-Year CD Rates
If you can hold out for two years, 24-month CDs today are being offered at interest rates as high as 4.40% APY. The top rate last week at this time was a similar 4.40%. Two-year CDs now have an average APY of 2.47%. That’s the same as last week at this time.
Current 3-Year CD Rates
CDs with longer terms tend to have some of the most attractive interest rates and APYs—if you’re willing to keep your money locked away for years.
The average APY on a three-year CD is now 2.68%, up from 2.67% a week ago.
Current 5-Year CD Rates
APYs are averaging 2.78%, the same as this time last week.
The longer the term, the harsher the early withdrawal penalty. It’s not unusual to lose one full year’s worth of interest or more if you break open a five-year CD too soon. Be absolutely certain you understand the penalty before you make your investment.
Related: CD Interest Rates Forecast: How Good Will They Get?
How CDs Work
You “purchase” a CD from a financial institution by opening the account with a lump-sum deposit, which becomes the CD’s principal. Many CDs and share certificates (accounts similar to bank CDs but offered by credit unions) have minimum deposits that must be met, and those can be in the tens of thousands of dollars.
Once you deposit your principal, you start the clock on your timed investment and begin earning interest. The bank or credit union will provide you with regular statements showing how much interest you’re accruing.
Remember, avoid the temptation of tapping into your CD before the term ends. Early withdrawal penalties can be so severe that they can not only take back your interest and then, but also start eating into your principal..
Building a CD Ladder
Want to earn higher yield, but wary of keeping your money chained up for years? A CD ladder can help you earn good returns and make your investment feel more liquid.
You build a ladder by investing your money in multiple CDs with terms of different lengths. You might buy a one-year CD, a two-year CD, a three-year CD, a four-year CD and a five-year CD. As each of the shorter-term CDs matures, you replace it with a new five-year CD.
Follow this course, and in a few years you’ll have one better-yielding five-year CD maturing each year. If you’re ever having a bad year, you could take some of the cash from the expiring CD and use it to pay bills instead of pouring it all into a fresh CD.
You must comparison shop to track down the best CD rates. Banks and credit unions compete by offering alluring yields to win your business, so shopping around is a must before you purchase any bank CD or credit union share certificate.
