Top CD rates today: August 27, 2024 | Time to lock in a high rate
Key takeaways
Today's highest CD rate across terms is 5.25% APY, offered on a three-month term.
APYs continue to decline as banks anticipate an upcoming Federal Reserve rate cut.
However, some competitive CDs are earning at least three times the national average rates.
Not all certificates of deposit (CDs) are created alike, especially when it comes to rates of return. A CD that earns a competitive annual percentage yield (APY) can earn you hundreds, if not thousands, more in interest than one that merely earns the national average APY. As such, it’s worth shopping around for the best rate before committing your funds to a CD.
Top rates on CDs remain unchanged today, after we saw declines yesterday in the leading APYs for one-year, three-year and four year-terms. The current leading rates might be the highest you'll find in the foreseeable future, with the high likelihood of a Federal Reserve rate cut in September. Rates on CDs and savings accounts tend to drop when the Fed lowers its benchmark rate.
Bankrate monitors the top and average rates every weekday, and you’ll find today’s top CD rates in the table below.
Today's top CD rates by term
CD term | Institution offering top APY | Highest APY | National average APY | Estimated earnings on $5,000 with top APY |
---|---|---|---|---|
5.25% | 1.27% | $64 | ||
America First Credit Union | 5.15% | 1.76% | $127 | |
America First Credit Union | 5.15% | N/A | $192 | |
5.10% | 1.81% | $255 | ||
5.00% | 1.85% | $380 | ||
4.75% | 1.52% | $486 | ||
4.35% | 1.42% | $681 | ||
4.20% | 1.46% | $894 | ||
Schools First Federal Credit Union | 4.35% | 1.43% | $1,186 |
Note: Annual percentage yields (APYs) shown are as of August 27, 2024. APYs for some products may vary by region.
N/A: Not available; Bankrate doesn’t track national averages for the 9-month CD term due to limited available data. Estimated earnings are based on the highest APYs and assume interest is compounded annually.
Where to find the highest-paying CDs
As seen in our table above, all of the top-paying CDs are available from banks and credit unions that operate mostly or entirely online. Online-only financial institutions are known for offering higher yields than big brick-and-mortar banks. Common reasons for this are:
Relatively new online-only banks may pay highly competitive yields as a way to attract customers. (Conversely, established brick-and-mortar banks that don’t have a strong need for new deposits generally don’t offer high APYs.)
Financial institutions operating entirely online don’t bear the cost of maintaining branches, and some may pass along the savings to customers through higher yields.
Whether or not they maintain branches, credit unions are commonly a source of high yields. This is because they’re not-for-profit institutions, so profits are distributed to members through dividends.
What the current rate environment means for CDs
Recent federal funds rate changes: To combat high inflation, the Federal Reserve raised its benchmark interest rate 11 times in 2022 and 2023, before leaving rates unchanged for eight straight meetings. Before the string of rate hikes began in March 2022, the target range was at 0-0.25 percent, and it currently stands at a 23-year high of 5.25-5.50 percent.
What this means for deposit accounts such as CDs: Yields on competitive savings accounts and CDs tend to move in lockstep with the Fed’s interest rate moves. As such, many banks increase their yields when the Fed raises rates, and they lower yields when the federal funds rate drops. While the Fed has held rates steady since July 2023, top CD APYs ended up peaking in late 2023 and have since been decreasing gradually, as illustrated below.
How inflation factors in
The Fed has held its key benchmark rate steady since July 2023, due to inflation not slowing as quickly as it has in the past. Fed officials’ goal is to bring the annual inflation rate down to 2 percent. While the consumer price index (CPI), a measure of inflation, has decreased significantly from its decades-high annual rate of 9 percent in June 2022, it’s currently at 2.9 percent.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” Fed Chair Jerome Powell said in remarks following the Fed’s latest decision not to change rates on July 31.
The current rate of inflation is a significant factor that affects what the Fed decides to do with rates. An increase in the federal funds rate can be good for savers — translating to higher APYs on many CD and savings accounts — while it can be bad for borrowers as interest rates tend to increase on loans.
Is now still a good time to open a new CD?
As of late, top CD rates are declining due, in part, to strong signals from the Fed that it plans to cut interest rates in September, if not sooner, and fears arising from recent market downturns. It's best to take advantage of still-high CD rates now while you still can.
"Now is the time to lock in attractive returns on CDs as the Federal Reserve is poised to begin cutting interest rates,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The top-yielding CDs currently earn in excess of the inflation rate and savers have the ability to lock in that inflation-beating return for multiple years. If you have money you won’t need to touch for a period of time, now is a great time to consider a CD."
CD FAQs
What are the pros and cons of investing in a CD?
Available in various terms and types, CDs often earn higher APYs than traditional savings accounts. Many provide a guaranteed APY, so you know how much you'll earn throughout the term. When CDs are issued by banks and credit unions that are federally insured, your money is protected should the financial institution ever fail.
A drawback of CDs, however, is they often tie up your money for the duration of the term, charging an early withdrawal penalty if you need access to the funds sooner. While some CDs offer higher APYs than savings accounts, they generally earn lower returns than higher-risk investments. If a fixed-rate CD doesn't keep pace with inflation, it reduces the purchasing power of your investment over time.
Available in various terms and types, CDs often earn higher APYs than traditional savings accounts. Many provide a guaranteed APY, so you know how much you'll earn throughout the term. When CDs are issued by banks and credit unions that are federally insured, your money is protected should the financial institution ever fail.
A drawback of CDs, however, is they often tie up your money for the duration of the term, charging an early withdrawal penalty if you need access to the funds sooner. While some CDs offer higher APYs than savings accounts, they generally earn lower returns than higher-risk investments. If a fixed-rate CD doesn't keep pace with inflation, it reduces the purchasing power of your investment over time.
How does a CD work?
A CD is a type of savings account that often earns a guaranteed APY while holding your funds for a set term. Often, CDs earn higher yields than ordinary savings accounts, although if you withdraw your funds before the term ends, you'll likely incur an early withdrawal penalty.
When the CD matures, you can redeem it for your initial principal investment, plus the earned interest. If you don't take action before the grace period ends, the CD will typically renew automatically at the APY currently offered by the bank.
A CD is a type of savings account that often earns a guaranteed APY while holding your funds for a set term. Often, CDs earn higher yields than ordinary savings accounts, although if you withdraw your funds before the term ends, you'll likely incur an early withdrawal penalty.
When the CD matures, you can redeem it for your initial principal investment, plus the earned interest. If you don't take action before the grace period ends, the CD will typically renew automatically at the APY currently offered by the bank.
Is a CD a safe investment?
CDs opened at banks covered by the Federal Deposit Insurance Corp. (FDIC), and at credit unions covered by the National Credit Union Association (NCUA), are federally insured up to $250,000 per depositor, per insured financial institution, per ownership category. This insurance guarantees your money will be safe, even if the bank goes out of business.
CDs typically offer guaranteed returns, which makes it easy to calculate your future earnings. However, while CDs are safe, they may yield lower returns compared with riskier investments such as stocks and bonds. Also, early withdrawal penalties can sometimes eat into your principal. Overall, CDs can be a solid option if your goal is to preserve your capital while earning a moderate return.
CDs opened at banks covered by the Federal Deposit Insurance Corp. (FDIC), and at credit unions covered by the National Credit Union Association (NCUA), are federally insured up to $250,000 per depositor, per insured financial institution, per ownership category. This insurance guarantees your money will be safe, even if the bank goes out of business.
CDs typically offer guaranteed returns, which makes it easy to calculate your future earnings. However, while CDs are safe, they may yield lower returns compared with riskier investments such as stocks and bonds. Also, early withdrawal penalties can sometimes eat into your principal. Overall, CDs can be a solid option if your goal is to preserve your capital while earning a moderate return.
Research methodology
Bankrate calculates and reports the national average APYs for various CD terms. Factored into national average rates are the competitive APYs commonly offered by online banks, along with the very low rates often found at large brick-and-mortar banks.
In June 2023, Bankrate updated its methodology that determines the national average CD rates. For the process, more than 500 banks and credit unions are now surveyed each week to generate the national averages. Among these institutions are those that are broadly available and offer high yields, as well as some of the nation’s largest banks.