August 2, 2024 – Forbes Advisor – Technologist

As of today, the best interest rates on CDs—certificates of deposit—pay up to 5.39%, based on certificate term lengths. Here’s an overview of how CD rates are changing, followed by a guide to the current top CD rates across different terms.

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 1.30%, but the highest rate is 5.39%. Last week, three-month CDs were earning 1.30% on average.

Today’s 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 5.37%. The top rate was the same last week. The current average APY for a six-month CD is 1.83%, up from 1.82% last week at this time.

APY provides a more accurate view of the annual 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 in the account.

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 12-month CD with a rate in that vicinity, 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 1.99%, up from 1.98% 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 4.89%. The top rate last week at this time was a similar 4.89%. Two-year CDs now have an average APY of 1.72%. That’s the same as last week at this time.

Today’s 3-Year CD Rates

CDs with longer terms often have some of the most attractive interest rates and APYs—if you’re willing to keep your money locked away for years.

Within the last week, the highest rate on a three-year CD has been 4.72%, so you’ll want to shop around for that rate or something near it.

Today’s 5-Year CD Rates

On a five-year CD, the highest rate today is 4.65%. APYs are averaging 1.62%, 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 5.37% for a 6-month term. The average APY for this category of CD is currently 1.86%, compared to 1.73% 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?

How Do CDs Work?

You “purchase” a CD from a financial institution by opening an 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 deposit requirements, sometimes 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 accumulating. You may accrue interest daily, monthly or quarterly.

Remember, you must 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..

Do CDs Cost Anything?

You must fork over funds to open a CD account, but you get all of that money back—plus interest—when the CD reaches maturity. You won’t have to worry about any one-time or recurring fees, but you may sacrifice some of all of the interest you’ve earned if you withdraw from a CD before its term is over.

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.