Top CD rates today: Dec. 12, 2023 — How this week’s Fed decision could impact rates

The Federal Open Market Committee (FOMC) meets today and Wednesday, and expectations are high that the Federal Reserve will hold rates steady. Yields on certificates of deposit (CDs) are unlikely to increase further if the Fed is done raising interest rates. As such, locking in your funds with a high-yield CD now means you’d continue to earn its high rate even if the going rates for new CDs start to drop.

Over the past couple of weeks, we’ve seen some banks lowering their CD rates slightly, such as Bread Savings and Limelight Bank, both of which formerly held the top spots for some terms of CDs. Overall, annual percentage yields (APYs) remain elevated, however, so it’s still a good time for savers to take advantage of CDs.

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

• Today's top-earning CD has a term of nine months and earns 5.75 percent APY.

• Other top rates include 5.67 percent APY on a one-year CD and 5.55 percent APY on a six-month CD.

• Many high-earning CDs offer APYs that are triple the national averages.

Today’s CD rates by term

Will the Fed raise interest rates in December?

There’s a high chance the Fed will hold rates steady when it meets this week, with the vast majority of market watchers assuming this will be the case.

The FOMC is moving forward carefully, “as the risks of under- and over-tightening are becoming more balanced,” Fed Chair Jerome Powell said on Dec. 1. The full effects of having raised the federal-funds rate to a 22-year high have not likely been felt yet, Powell noted.

How does the Federal Reserve impact CD rates?

Competitive banks tend to respond to Fed rate hikes by raising the rates on their CDs and savings accounts — and likewise, they often lower their yields after the Fed drops rates. CD rates have risen steadily since the Federal Reserve began hiking rates in March 2022. The Fed’s key borrowing benchmark sits at 5.25-5.5 percent.

The Fed has hiked rates a total of 11 times in the past two years, while deciding to leave rates untouched at its June, September and November meetings this year.

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.
  
  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.