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The best interest rates on CDs—certificates of deposit—today range as high as 3.20%, depending on the CD’s term. Plus, the average yields are climbing. Check out the top rates and typical yields being offered across 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 12-month CD—one of the most popular CD terms—is 2.76%, according to data from Bankrate.com. If you discover a one-year CD with a rate in that neighborhood, you’re getting a good deal. One week ago, the best rate was 2.70%.
The average APY, or annual percentage yield, on a one-year CD is now 1.29%, up from 1.14% a week ago. APY provides a more accurate depiction of the annual 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 in the account.
If you prefer a CD with a shorter term than one year, today’s best rate on a six-month CD is 2.25%. The average rate was the same last week. The current average APY for a six-month CD is 0.85%.
On nine-month CDs, the highest interest rate is now 1.98%; last week at this time, it was also 1.98%. Nine-month CDs today are being offered at an average APY of 0.62%, up from 0.51% 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 2.57%; you’ll do well if you can find a rate close to that. One week ago, the top rate also was 2.57%.
The highest rate on an 18-month CD is currently 2.71%—the same as a week ago. The average APY is 1.95%, up from 1.77% a week ago.
If you can hold out for two years, 24-month CDs today are being offered at interest rates as high as 3.05% APY. The top rate last week at this time was 2.96%. Two-year CDs now have an average APY of 1.52%, an increase from 1.37% 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.
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 away for years.
Within the last week, the highest rate on a three-year CD has been 2.71%, so you’ll want to shop around for that rate or something near it. The average APY on a three-year CD is now 1.63%, up from 1.55% a week ago.
On a five-year CD, the highest rate today is 3.20%, the same as one week ago. APYs are averaging 1.85%, compared to 1.77% 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
You “purchase” a CD from a financial institution by opening the account with a lump-sum deposit, which becomes the CD’s principal. CDs and share certificates (the credit union equivalent of bank CDs) often require that you make a minimum deposit. Minimum requirements vary by institution and range from a dollar to tens of thousands of dollars. Some institutions don’t require a minimum at all.
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 accruing.
Remember, avoid the temptation of tapping into your CD before the term ends. Early withdrawal penalties can be so severe that they take back your interest and then start eating into your principal.
The Beauty of a CD Ladder
Want to earn higher yield, but wary of keeping your money chained up for years? A CD ladder can help you earn good returns and make your investment feel more liquid.
You build a ladder by investing your money in multiple CDs with terms of different lengths. You might buy a one-year CD, a two-year CD, a three-year CD, a four-year CD and a five-year CD. As each of the shorter-term CDs matures, you replace it with a new five-year CD.
Follow this course, and in a few years you’ll have one better-yielding five-year CD maturing each year. If you’re ever having a bad year, you could take some of the cash from the expiring CD and use it to pay bills instead of pouring it all into a fresh CD.
You’ve got to comparison shop to track down the best CD rates. Banks and credit unions compete by offering alluring yields to win your business, so shopping around is a must before you purchase any bank CD or credit union share certificate.