Home Mutual Funds Earn Up to 5.75% for 6 Months, or 5.56% for a Year

Earn Up to 5.75% for 6 Months, or 5.56% for a Year

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*Indicates the highest APY offered in each term. To view our lists of the top-paying CDs across terms for bank, credit union, and jumbo certificates, click on the column headers above.

Where Are CD Rates Headed This Year?

The Federal Reserve announced at its Jan. 31 meeting that it is maintaining rates at their current level, the fourth meeting in a row it’s done so. To combat decades-high inflation, the Fed aggressively hiked interest rates between March 2022 and July 2023, raising the federal funds rate to its highest level in 22 years.

This in turn created historically favorable conditions for CD shoppers, as well as for anyone holding cash in a high-yield savings or money market account. Rates on CDs continued rising to a peak this fall, reaching their highest levels in two decades.

But with inflation cooling and the Fed in a holding pattern since July, many banks and credit unions have begun lowering their CD rates. And that’s likely to continue after the latest Fed announcement. That’s because the central bank’s statement abandoned previous language about future rate hikes still being possible. It now appears clear the Fed’s rate-hike campaign is finished.

This means we’ve entered a new phase, where the Fed committee is focused on deciding the right timing to pull the trigger on a first rate cut. But Fed Chair Jerome Powell stated that, though the economy has seen promising progress, inflation is still too high, and the committee therefore won’t discuss implementing a rate cut until it feels assured inflation’s downward trajectory is both sufficient and sustainable.

Economic data released since the Fed’s meeting aren’t helping on that front. First, January’s employment report showed that new jobs and wage growth were much higher than expected. Then last week, the latest Consumer Price Index (CPI) data showed that inflation is proving more stubborn than hoped for. Both of these may prompt the Fed to keep rates high for longer than previously thought.

“This ‘super-bad’ inflation report for January, along with resilient first-quarter U.S. economic growth, has got to be concerning for the Fed and calls into question market forecasts for aggressive and early rate cuts this year,” Scott Anderson, chief U.S. economist at BMO Capital Markets, wrote in a commentary.

The Fed’s next rate decision will be announced on March 20. During his Jan. 31 press conference, Chair Powell indicated he doesn’t predict a rate cut will come as soon as the first quarter, saying, “I don’t think it’s likely the committee will reach a level of confidence by the time of the March meeting.”

In fact, last week’s inflation report caused financial markets to push their forecasts for a first Fed rate cut further into the future, according to CME Group’s FedWatch Tool. Last Monday, the majority expectation was for a first rate cut in May. Now it’s not until the Fed’s June meeting that a majority of traders are betting on a decrease.

What this means for CD rates is that they’re likely to keep drifting lower, until it appears clear the Fed is ready to make a cut. But as soon as that seems to be in the cards, banks and credit unions will likely begin lowering rates more substantially.

Note that the “top rates” quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often 5, 10, or even 15 times higher.

How We Find the Best CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD’s minimum initial deposit must not exceed $25,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.

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