April 18, 2024—Earn 5% Or More – Forbes Advisor – Technologist

Currently, the best interest rates on CDs (certificates of deposit) are as high as 5.50%. Rates vary by term and often fluctuate. Below, you’ll find a summary of how CD rates are leaning—plus a guide to the best rates across CDs of various lengths.

Related: Compare the Best CD Rates

Highest CD Rates Today

A CD is similar to a savings account, but the interest rate is fixed—not variable. The other major difference is that you’ll typically only earn interest on a CD account if you refrain from withdrawing funds during the term. That term could range from a few weeks to several years, depending on the CD you choose.

If you withdraw money from your CD before it “matures” (reaches the end of its term), you’ll likely get hit with steep penalties in the form of reduced interest. For instance, you may forfeit six months’ worth of interest if you withdraw money from a one-year CD before 12 months are up.

If you’re interested in accruing the maximum amount of interest possible, consider long-term CDs, which historically have the highest APYs. But again, long-term CDs are only an option if you’re willing to stash away some cash you won’t be able to touch for years.

Generally, CDs with longer terms carry more severe withdrawal penalties than short-term CDs. For instance, it’s not uncommon to lose a full year’s worth of interest if you transfer funds out of a five-year CD account before the term is over. Therefore, it’s crucial to familiarize yourself with the CD issuer’s penalties before you open your account.

Today’s 3-Month CD Rates

For short-term savings goals, three-month CDs might make sense. The current average rate on a three-month CD sits at 1.25%, but the highest rate is 5.39%. Last week, three-month CDs were earning 1.27% on average.

Today’s 6-Month CD Rates

If you’d like a CD with a shorter term than one year, today’s best rate on a six-month CD is 5.50%. That compares with 5.50% a week ago. The current average APY for a six-month CD is 1.77%, compared to 1.76% last week at this time.

APY provides a more accurate picture of the yearly interest you’ll earn with a CD because it takes into account compound interest. That’s the interest you earn not only on your deposit (or principal) but also on the interest itself.

Today’s 1-Year CD Rates

The highest interest rate currently being offered on a one-year CD—one of the most popular CD terms—is 5.37%. If you land a one-year 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 1.92%, the same as a week ago.

Today’s 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 5.03%. The top rate last week at this time was a similar 5.03%. Two-year CDs now have an average APY of 1.69%. That’s the same as last week at this time.

Today’s 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 up for years.

Today’s highest rate on a three-year CD is 4.85%, so you’ll want to shop around for that rate or something near it. Last week at this time, the best rate on a three-year CD was 5.00%.

Today’s 5-Year CD Rates

On a five-year CD, the highest rate today is 4.60%, the same as one week ago. APYs are averaging 1.60%, 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.

Today’s Jumbo CD Rates

The best rate on today’s jumbo CDs is 5.68% for a 6-month term. The average APY for this category of CD is currently 1.69%, compared to 1.69% last week.

Most jumbo CDs require a minimum deposit of $100,000—and some even require $250,000. However, there’s no universally agreed-upon definition regarding what qualifies as a “jumbo” CD. Some banks and credit unions slap the label “jumbo” on CDs you can open with $50,000, $25,000 or even less.

Other Top CD Rates By Term

Related: CD Interest Rates Forecast: How Good Will They Get?

Are CDs a Good Deal?

CDs typically pay higher interest than other savings vehicles, even the best high-yield savings accounts and money market accounts. And while they may not offer the kind of enviable returns that are possible with stocks, CDs beat the more attention-getting investments in one regard: They’re one of the safest places to put your money.

Investors lost millions in the 2022 crypto crash, and putting your money into the stock market, real estate or gold and other commodities can be risky, too. But when you buy a certificate of deposit or credit union share certificate from a federally insured financial institution, you can sleep easily with the knowledge that your investment is protected.

The FDIC provides you with up to $250,000 in coverage in the event the bank issuing your CD ever fails. For share certificates purchased from federal credit unions and most state-chartered credit unions, the NCUA insures your money up to the same limit.

Traditional brick-and-mortar banks have far greater operating expenses than banks that only exist online. That’s why online banks are usually able to offer more attractive APYs on CDs—they have lower overhead costs, so they can afford to pay higher interest rates to customers.

Related: CD Interest Rates Forecast: How Good Will They Get?

Do CDs Cost Anything?

CDs usually come with zero fees, meaning your money won’t be nibbled at by the monthly maintenance fees that are typical with many savings, checking and money market accounts.

The big cost is—obviously—the deposit, particularly if there’s a minimum deposit you must meet. But as long as you don’t withdraw money from your CD before it matures, you’ll get to keep all of the interest you earn. That makes CDs a great fee-free way to grow your money.

Methodology

Curinos determines the average rates for certificates of deposit (CDs) by focusing on specific CDs and excluding others. Certain types, such as 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 are not considered in the calculation.