Top CD rates today: Dec. 15, 2023 — Rates remain high after Fed decision

The Federal Reserve’s decision this week to leave rates untouched means rates on high-yielding certificates of deposit (CDs) may be at their peak. Those looking to devote some funds to a fixed-rate CD would do well to seize on the moment now — especially because the Fed has penciled in lower rates by the end of 2024.

“With the Fed noting potential rate cuts in 2024, opening a CD now can help you lock in a strong rate to earn guaranteed returns on savings you don’t need immediate access to,” says James Morgan, vice president of savings and deposits at Capital One.

CD rates often vary widely from bank to bank, so it’s important to shop around for a CD that earns a high annual percentage yield (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 top high-yield CD today earns a 5.75 percent APY and a term of nine months.

• Highest APYs are currently found on shorter-term CDs with terms up to 18 months.

• Competitive CDs are earning more than three times the national average yields.

Today’s CD rates by term

Featured CD of the day

A one-year CD from Limelight Bank earns a competitive APY of 5.5 percent and requires a minimum deposit of $1,000. The early withdrawal penalty for this CD is equal to 90 days’ worth of interest. In all, Limelight offers four CD terms that range from six months to three years. Limelight is the online division of Capital Community Bank. CDs are the only type of deposit accounts it offers.

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.