Highest 2-year CD yield down slightly: Top CD rates for Dec. 21, 2023

Today’s top widely available rate on a certificate of deposit (CD) is 5.66 percent annual percentage yield (APY) for a term of one year. While APYs on some terms are down ever so slightly over the past several weeks, yields remain high.

What’s new for top CD rates today: The highest two-year CD rate declined slightly when Sallie Mae Bank lowered its yield from 5.25 percent APY to 4.9 percent APY. This puts TAB Bank in the top spot with a two-year term that earns 5 percent APY.

CD rates often vary widely from bank to bank, so it’s important to seek out a CD that earns a high APY. The guide below lists average rates and competitive ones for various terms, as well as how to find a CD with the best rate. A CD calculator also comes in handy in determining how much interest the account will earn by the time its term ends.

Key takeaways

• The overall top rate for widely available CDs is a one-year term that earns 5.66 percent APY.

• Putting $5,000 into a CD that earns the top 5.66 percent APY will leave you with $284 in interest when the CD matures in a year.

• Online-only banks are typically where you'll find top rates, which are more than triple the national averages.

Today’s CD rates by term

What is a CD’s early withdrawal penalty?

In exchange for paying a high yield that’s guaranteed for the entire term, most CDs charge an early withdrawal penalty. As such, taking the money out of your CD before its term ends can cost you some interest and sometimes even part of your principal, depending on how early into the term you access the money.

Is there a CD that doesn’t charge an early withdrawal penalty?

Like standard CDs, no-penalty CDs typically earn a fixed APY over a set period of time — although unlike regular CDs, no-penalty CDs don’t charge an early withdrawal penalty if you take out the funds before the term ends. The trade-off for this perk is you’ll often earn a lower APY than you would with a CD that has an early withdrawal penalty. Banks that offer no-penalty CDs include Marcus by Goldman Sachs and Ally Bank.

What’s happened with average CD rates in 2023?

National average CD yields have risen steadily in 2023, as the Federal Reserve has hiked interest rates four times this year. (In all, national averages began increasing after the Fed started hiking rates in March 2022. It raised rates seven times last year.)

How to find the best CD rates

You’ll often find the best CD rates from online-only banks, such as Synchrony Bank, which don’t have the overhead costs of running branches — and which also may offer competitive rates to draw customers away from traditional brick-and-mortar banks. Credit unions, such as Alliant Credit Union, also commonly offer high rates because their profits go back to members. Yields can vary significantly among banks, so it pays to shop around for the best CD rates.

CD FAQs

• How do CDs work?

  A CD is a deposit account that earns a fixed rate of return in exchange for locking in your funds for the entire term. CD terms often range from three months to five years, although it’s possible to find ones with terms shorter or longer than that. A CD can be a good place to stash money for savings goals, such as a down payment on a house or a new car. When choosing the best CD term, consider when you’ll need access to the money.

• Who should get a CD?

  Because a CD typically comes with an early withdrawal penalty, it’s best to only put money into a CD that you won’t need in the meantime for living expenses or emergencies. Money you may need sooner is best kept in a liquid account, such as a high-yield savings account, which provides access to your funds anytime.

• Why are CDs from credit unions called “share certificates”?

  Both CDs and share certificates are deposit accounts where your money typically grows at a fixed rate for a set amount of time. The main difference between the two is in the name: CDs are offered from banks, whereas share certificates are offered from credit unions. What’s more, CD earnings are referred to as interest, while share certificate earnings are called dividends. And because credit unions are not-for-profit, their profits are distributed among members (essentially shareholders in the credit union) in the form of dividends. Dividends act the same as yields on CDs, however some credit unions may offer higher rates or lower fees as a result of sharing profits.
  
  CDs and share certificates are insured through banks and credit unions, respectively, that are federally insured. For example, banks are insured by the Federal Deposit Insurance Corp. (FDIC), whereas credit unions are insured through the National Credit Union Administration (NCUA). Under such federally insured banks and credit unions, CDs and share certificates are each insured for up to $250,000 per depositor, per insured bank, for each account ownership category.

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.