October 17, 2024 – Forbes Advisor – Technologist

As of today, the best interest rates on CDs—certificates of deposit—pay up to 5.37%, 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 a type of savings account that pays a fixed interest rate for a fixed amount of time. When you open a CD account, you agree not to touch your deposit until the CD’s term ends. That could be in six months, one year or five years, depending on the term you’ve chosen. If you follow through, you’ll be rewarded with an amount of interest that’s typically greater than what you’d earn from a standard savings account.

If you withdraw money from your CD account before it “matures” (when it reaches the end of its term), you’ll likely face stiff penalties that may negate some or all of the interest you’d earn. For instance, you could sacrifice up to six months’ worth of interest if you withdraw funds from a one-year CD before it matures.

If you’re looking to earn as much interest as possible, consider opening a longer-term CD. These CDs generally offer the highest interest rates, but they require you to stash your cash for several years.

Early withdrawal penalties typically scale according to the length of the CD term. That means you could lose an entire year’s worth of interest if you withdraw funds from a five-year CD before its maturity. That’s why it’s critical to research any potential penalties prior to making your investment.

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 1.32%, but the highest rate is 5.30%. Last week, three-month CDs were earning 1.32% on average.

Today’s 6-Month CD Rates

If you’re interested in a shorter-term CD, today’s best six-month CD rate is 5.25%. That’s unchanged from a week ago. The current average APY for a six-month CD is 1.86%, steady with last week at this time.

APY provides a more accurate picture 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 one-year CD with a rate in that vicinity, you’re getting 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 1.87%, down from 1.88% 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 4.76%. The top rate last week at this time was a similar 4.76%. Two-year CDs now have an average APY of 1.64%. 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 4.65%, 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 4.31%. APYs are averaging 1.57%, down from 1.58% at 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 5.25% for a 6-month term. The average APY for this category of CD is currently 1.90%, compared to 1.80% 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?

Opening a CD account requires a lump-sum deposit, which you can also think of as an investment. Many CDs and share certificates (the credit union equivalent of CDs) have minimum deposit requirements that must be met. That amount can range from a few hundred to several thousand dollars, depending on the institution.

Once your account is open, your principal begins occurring the fixed interest rate for the entirety of the term. Banks and credit unions generally send you paper or electronic statements displaying how much interest you’ve earned.’

Since the goal is to let your money grow, try not to even think about accessing it if you can help it. But if you do need to crack your CD open, be prepared to pay early withdrawal penalties in the form of interest earned. In rare cases, you may also lose a percentage of your principal to early withdrawal penalties.

Do CDs Cost Anything?

There are no one-time or recurring costs associated with CDs, but you may pay a penalty fee in the form of reduced interest if you withdraw from your CD before it matures. You are required to deposit a minimum amount of cash when you open a CD, but get all of that money back—plus interest—at the end of the CD’s term.

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.