Today’s best interest rates on CDs—certificates of deposit—range as high as 3.95%, depending on the CD’s term. Plus, the average yields are climbing. Check out the top rates being offered on CDs of various durations.
Related: Compare the Best CD Rates
Highest CD Rates Today: 1-Year, 6-Month, 9-Month Terms
The highest interest rate currently being offered on a one-year CD—one of the most popular CD terms—is 3.90%, according to data from Bankrate.com. If you find a one-year CD with a rate in that neighborhood, you’ve found a good deal. One week ago, the best rate was a lower 3.85%.
The average APY, or annual percentage yield, on a one-year CD is now 1.70%, up from 1.62% a week ago. APY provides a more accurate depiction 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.
If you’re interested in a shorter-term CD, today’s best six-month CD rate is 3.30%. That compares with 3.25% a week ago. The current average APY for a six-month CD is 1.14%, compared to 1.09% last week at this time.
Nine-month CDs today are being offered at an average APY of 1.44%, up from 1.33% a week ago.
Highest CD Rates Today: 15-Month, 18-Month and 2-Year Terms
On a 15-month CD, today’s best interest rate is 3.81%; you’ll do well if you can find a rate close to that. One week ago, the top rate was 3.50%.
The highest rate on an 18-month CD is currently 3.95%—up from 3.90% a week ago. The average APY is 2.35%, up from 2.26% a week ago.
If you can hold out for two years, 24-month CDs today are being offered at interest rates as high as 3.34% APY. The top rate last week at this time was a similar 3.34%. Two-year CDs now have an average APY of 1.90%, an increase from 1.79% last week.
A CD is a type of savings account with a fixed interest rate and a time lock. Investors are discouraged from touching their deposit until a CD’s term is up. Your patience is rewarded with interest that’s usually better than what you’d earn from a regular savings account.
If you withdraw money from a CD before “maturity”—when it hits the end of its term—and you can be slapped with stiff penalties. For example, you can lose up to six months’ worth of interest if you make an early withdrawal from a one-year CD.
Highest CD Rates Today: 3-Year and 5-Year Terms
CDs with longer terms often 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 3.44%, 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 also 3.44%. The average APY on a three-year CD is now 2.00%, up from 1.92% a week ago.
On a five-year CD, the highest rate today is 3.50%, the same as one week ago. APYs are averaging 2.17%, compared to 2.10% 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.
How CDs Work
CDs may seem a little exotic as bank accounts go, but how they work is actually pretty simple. You open the account with an amount of money, leave your deposit alone for a period of months or years, and let the compound interest work its magic.
Many CDs and their cousins, the share certificates offered by credit unions, require you to deposit hundreds, thousands or even tens of thousands of dollars to open your account. Other financial institutions have no minimum deposit requirement, meaning you could open the account with as little as a penny.
But banks and credit unions typically won’t allow you to add to your deposit once the term begins and the clock starts ticking. And they’re serious about not letting you crack open your CD or share certificate too soon. The early withdrawal penalties can be so tough they’ll eat into your principal, not just take back some of your interest.
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.
More From Advisor
- CD Rates Today: October 14, 2022—Rates Mostly Move North
- CD Rates Today: October 13, 2022—Top Rates Range From 3.30% To 3.90%
- What Are Brokered CDs?
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
