Top CD rates today: Dec. 13, 2023 — What today’s Fed decision means for rates

The Federal Reserve decided at its December meeting to forgo a rate hike, effectively keeping the federal funds rate in a range between 5.25-5.5 percent. However, the Fed has raised rates 11 times since March 2022, and yields on certificates of deposit (CDs) have also risen as a result.

Committing some funds to a fixed-rate CD now, while rates are high, will benefit you in the event the going rates for new CDs start to drop. This is because most CDs guarantee the same annual percentage yield (APY) throughout their entire term.

What’s new today for CDs: Popular Direct, which offers most of the top-earning CDs, has lowered a few of its rates slightly. Its four-year CD’s APY decreased from 4.65 percent to 4.6 percent, while its five-year CD’s APY decreased from 4.7 percent to 4.65 percent. Popular Direct also lowered its 18-month rate from 5.5 percent APY to 5.35 percent APY. Limelight Bank also offers that same top yield on an 18-month CD, but with a lower minimum opening deposit of $1,000 (Popular Direct requires $10,000).

CD rates often vary greatly from bank to bank, so it’s important to shop around for 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 highest-earning CD today has a term of nine months and earns 5.75 percent APY.

• Top CDs of some terms are earning APYs of more than 5 percent, while national average rates are just a fraction of that.

• Rates on top CDs have been increasing since the Fed started raising rates in March 2022.

Today’s CD rates by term

What does today’s Fed decision mean for CD rates?

The Fed has chosen today to hold rates steady. No further rate increases suggest CD rates are at their peak right now. This is because many banks react to rate hikes by raising their APYs on deposit accounts. If the Fed decreases rates over time, CD rates will likely start to fall in turn.

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.