It’s still a good time to earn a great return on a certificate of deposit, just don’t wait to take action. After declining in 2024 as the Federal Reserve cut rates, average CD yields have stabilized in early 2025 thanks to the central bank hitting pause on more rate changes—for now.
Today’s best CD rates yield up to 4.65% annual percentage yield. If you choose to open an account today, you could lock in high rates for years, depending on the term that best meets your financial goals. Experts expect at least one of two more Fed rate cuts this year, so don’t wait to invest.
Today’s highest CD rate of 4.65% is offered by Bask Bank on its 3-month CD. Fortune monitors the top rates offered by leading U.S. financial institutions to help readers obtain the best possible return on their CD investments. Here are today’s highest CD rates:
Rates remain strong for both shorter and longer CD terms. Knowing the highest rates available today can help you make an informed decision about the right term length for your financial goals. Here are today’s best CD rates by term length:
If you’re unfamiliar with most of the names mentioned above, there’s a straightforward reason why: CDs typically don’t yield substantial income for major financial institutions by themselves.
Established banks like Chase, PNC, and U.S. Bank prioritize attracting customers through more profitable products like loans and credit cards, rather than CDs. Consequently, the APYs offered on CDs at these banks are often much lower compared to those available at smaller regional banks or online institutions and to get a good rate, you may be required to open other deposit accounts or deposit much higher minimums.
Investors need to know that the yields available in the CD market closely track Fed monetary policy decisions, specifically changes to the fed funds rate. It’s essential for CD investors to follow the ebb and flow of the central bank’s policy decisions to plan for changes in rates.
At its first meeting of 2025, held last week, the Federal Open Markets Committee (FOMC) left rates unchanged. That means average CD rates will stay more or less where they are for the time being. The next Fed meeting is scheduled for March 18-19.
Last year, the Fed reduced the fed funds rate three times, leaving it at 4.25%-4.50% as of December 2024. The surging inflation that had emerged from the pandemic economic dislocations was cooling off, and the central bank reduced rates to help the economy stay on track. CD rates came off their two-decade highs as the Fed cut rates.
The 20-year highs in CD APYs seen in 2022 and 2023 were a result of the central bank’s aggressive rate hike campaign coming out of the pandemic. Between March 2022 and July 2023, the FOMC raised interest rates 11 times, from zero to 5.25%-5.50%. Inflation had been hotter than at any time since the 1980s, thanks to economic disruptions from the pandemic.
Just remember, CD rates aren’t far off their recent highs, reflecting favorable market conditions. You still have the chance to secure advantageous rates on both short-term and long-term CDs. By depositing a larger lump sum into a CD, you can secure a nice return on your investment.
In the early 1980s, CD rates hit double digits thanks to surging inflation and high interest rates. Rates gradually . But by 2019, the APY for a 5-year CD hovered slightly above 3%.
Until the early 2020s, top rates generally remained below 1% APY. In recent times, we experienced a period of increasing rates, with the best offerings exceeding 5% APY for 1-year CDs.
Determining what a good CD rate looks like is subjective. It depends on how much money you have to invest, how long you can leave it locked up in a certificate, and what prevailing market rates are when you intend to open an account.
For instance, a 5% APY CD over five years might not be the right choice if you need liquidity sooner or if rates rise, leaving you with a lower return. Generally, rates above the national average are advantageous. Compare rates across banks for your desired term to find the best option.
Key factors to evaluate when comparing CDs include minimum balance requirements, available terms, offered interest rates (typically higher at online banks), penalties for early withdrawals, and any associated fees. Opting for a bank rather than a broker might help avoid unnecessary fees.
Consider these factors:
Term length: Ensure they match your savings goals.
APY: Higher rates are available for longer CD terms.
Minimum deposit: Ensure you can meet minimum deposit requirements.
Penalties: Understand early withdrawal costs, in case you need to withdraw money before a CD matures.
Deposit insurance: Always verify that your bank or credit union of choice has Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA) coverage.
Online banks and fintechs typically offer better rates than national banks. Large financial institutions primarily generate revenue through interest earned on loans, fees, and investments in securities.
In contrast, smaller banks and online fintech companies actively attract new customers by offering competitive APYs on deposit accounts. Moreover, online banks typically have lower overhead costs, allowing them to pass on better rates to their clientele.
CD ladders suit savers hesitant to lock funds for long terms. Splitting savings across CDs with varying maturities offers a blend of short-term access and higher long-term rates.
For example, if you begin by investing $3,000 in three staggered CDs (1-year, 2-year, and 3-year), then as each matures you reinvest the money in a 3-year CD. With this plan, you get access to your money (plus the interest you’ve earned) every year.
Various CD types cater to different needs, such as:
Brokered CDs are bought and sold via brokerage accounts rather than banks or credit unions. They are typically issued by banks and sold to brokerages, which offer them to customers at higher APYs compared to conventional CDs.
Callable CDs include a call feature allowing the issuing financial institution to end the CD before its maturity. Upon such a call, investors retain their principal along with any accrued interest up to that point.
Bump-up CDs allow you to request a higher APY if interest rates increase after you’ve opened your account. Generally, you can adjust the rate on your CD once or twice during its term.
No-penalty CDs do not impose penalties for withdrawing funds before maturity. They are less prevalent than other CD varieties and may also feature lower APYs compared to traditional CDs.
Jumbo CDs usually require a minimum initial deposit of at least $100,000 but generally provide higher APYs than standard CDs.
Variable-rate CDs offer changing APYs that are indexed to prevailing interest rates. They carry higher risk compared to traditional CDs because a decrease in interest rates before maturity can lead to a lower yield.
