Top CD rates today: Jan. 16, 2024 — 5 terms still earn 5% APY or more

As we cross into the latter half of January, top yields on certificates of deposit (CDs) remain high, although the best rates for some terms are down slightly since December. The highest annual percentage yield (APY) on any widely available CD remains 5.51 percent, which is offered on a one-year term. APYs of 5 percent and higher are still available on terms between six months and two years.

Although yields are down slightly in recent weeks, you can still lock in a high rate on a CD. By securing a high APY now on, say, a five-year CD currently yielding 4.6% APY, you’re ensuring that you’ll continue to earn that 4.6% APY over the next five years — even if rates drop during that period.

Bankrate monitors the top CD rates regularly, and you’ll find today’s in the table below. The table also shows national average CD rates and the amount you can earn in CDs of various terms.

Key takeaways

• Today’s highest yielding CD earns 5.51 percent APY and has a one-year term.

• Top APYs for several CD terms have declined slightly in recent weeks since peaking late in 2023.

• The best rates are more than triple the national average yields, so it pays to shop around.

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 that 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.

CD rates in 2022 through 2024

National average CD yields rose steadily in 2023, as the Federal Reserve continued to hike interest rates at the fastest pace since the 1980s. In all, Fed officials increased rates 11 times between 2022 and 2023, bringing the federal funds rate to its current target range of 5.25-5.5 percent. Along with these rate hikes, average CD APYs rose to the highest they’d been in many years, with APYs on some competitive CDs climbing as high as 7 percent.

This year is expected to be a banner one for CD savers. Greg McBride, CFA, Bankrate’s chief financial analyst, predicts two Fed rate cuts in 2024, yet he says CD yields will continue to top inflation. “Savers have another good year in which their returns will shine, with inflation expected to decline further,” he says.

McBride also stresses the importance of shopping around for the highest APY. “Top-yielding offers are still going to deliver a notable advantage [over lower-yielding ones],” he adds.

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.