The current certificate of deposit (CD) rates are offering up to 4.70% APY, but they are expected to continue falling, especially with the Federal Reserve anticipated to cut interest rates. By opening a CD now, you can lock in your earnings and protect them from future rate drops. Some of the highest CD rates include 4.70% for a six-month term, 4.47% for one year, 4.15% for three years, and 4.25% for five years. Experts recommend comparing rates before opening a CD account to find the best APY available.
The upcoming Federal Reserve meeting on December 17-18 will likely result in interest rate cuts, which can impact CD rates. The Fed’s decisions indirectly affect how banks set their APYs, with rate cuts leading to lower CD rates. The Fed raised rates multiple times from 2022 to 2023 to combat inflation, resulting in higher CD rates. However, rates have been decreasing since the beginning of this year. CD rates have fallen in recent months, with an average APY of 4.14% for six-month CDs at the start of the week.
Further rate cuts by the Federal Reserve are expected, which could cause CD rates to drop even more. Despite the uncertainty, it is still a good time to open a CD to secure a high and guaranteed return. CDs provide a predictable way to earn a fixed return while controlling access to your money. If the Fed continues to cut rates in 2025, locking in a CD rate now can be advantageous. High-yield savings accounts are also a good option for those who require access to their money without penalties.
When choosing a CD account, look beyond the competitive APY and consider factors such as withdrawal penalties, minimum deposit requirements, fees, federal deposit insurance, and customer ratings. Early withdrawal penalties can impact your earnings, so choose a term that aligns with your savings timeline. Some CDs have no-penalty options, but they may offer a lower APY. Consider online banks, which often have lower fees due to reduced overhead costs. Verify that the bank is FDIC or NCUA insured for protection in case of bank failure.
CNET evaluates CD rates based on APY information from issuer websites and tracks rates from over 50 banks, credit unions, and financial companies. The current highest CD rates include options from various institutions, with estimated earnings based on APYs and compounded interest. It is essential to stay informed about changing CD rates and consider opening a CD sooner rather than later to take advantage of current attractive rates.
