Current Trends in CD Rates
In the realm of Certificates of Deposit (CDs), the landscape of interest rates is ever-evolving. It’s important for savvy investors to stay informed of the latest shifts and updates. Here are key takeaways from the recent market movements:
- The leading nationally available 1-year CD rate has recently decreased from 5.60% to 5.40% APY. On the other hand, the top 4-year rate has shown an increase, climbing to 4.86% from 4.70%.
- Currently, the top nationwide CD rate stands at 5.65% APY, offered by MutualOne Bank for a 3-month term.
- Newtek Bank is the runner-up, providing a competitive rate of 5.55% APY for a 6-month term.
- If you’re looking for longer-term options, rates as high as 5.40% are available for 12-15 months, up to 5.30% for 2 years, and between 4.70% and 5.00% for 3 to 5 years.
- While the best CD rates have been gradually decreasing in anticipation of future Fed rate cuts, recent inflation indicators suggest that rate adjustments may be delayed.
Lock In 5.30% to 5.65% APY for 3 to 23 Months
In the current market, the highest nationwide CD rate remains at 5.65% APY, with MutualOne Bank reinstating this rate for a 3-month term after it was previously withdrawn from the market. For those seeking a slightly longer duration, Newtek Bank offers a competitive rate of 5.55% APY for 6 months.
For extended locks, you can secure up to 5.40% with the leading 1-year and 18-month CD rates. Additionally, there are 13 CDs offering 5.40% APY or higher, spanning terms of 3 to 15 months. For a more extended lock, consider Credit Human’s offer of 5.30% for a flexible term of 18-23 months.
Longer Terms Will Secure Your Rate to 2027—Or Beyond
Choosing a CD term exceeding two years could be a strategic move, given the potential for declining U.S. interest rates in the coming years. Opting for a top 3-year CD at 5.00% will ensure a stable return until 2027. Alternatively, locking in mid-to-high 4% rates for 4 or 5 years ahead could also be a prudent choice.
Unlocking the Future of CD Rates
Today’s high CD rates offer a solid hedge against persistent inflation, outpacing the current inflation rate of 3.5%. By capitalizing on these lucrative CD rates now, investors can remain comfortably ahead of inflation by 1 to 2 percentage points.
CD Rates Are Still Near Record Highs
Despite a slight decline from the historic peak of 6.50% in October, CD rates remain notably higher compared to the past two decades. Securing a yield in the 4% to 5% range for a year or more is still a lucrative opportunity as rates have plateaued.
Jumbo Deposits Can Provide More CD Options
Jumbo CDs offer enhanced earning potential, with State Bank of Texas and My eBanc leading the pack with competitive rates up to 5.50% and 5.49% APY, respectively. It’s worth noting that the best jumbo CD rates may not always outperform standard certificates, so it’s prudent to explore both options before making a decision.
Where Are CD Rates Headed in 2024?
Driven by inflation concerns, the Federal Reserve’s recent rate hikes have led to favorable conditions for CD investors. Although CD rates have shown positive trends, the Fed’s cautious approach suggests a steady rate environment in the near future.
It’s unlikely that a rate hike will be the next policy move, signaling stability in CD rates for the foreseeable future. While uncertainties loom, monitoring the Fed’s actions and economic indicators could provide insights into the future trajectory of CD rates.
How We Find the Best CD Rates
At Investopedia, our team diligently tracks rate data from over 200 banks and credit unions nationwide daily to identify the top-paying CDs across various terms. To qualify for our rankings, institutions must be federally insured, and the CD’s initial deposit should not exceed $25,000. We aim to provide investors with accurate and up-to-date information on the best CD rates available in the market.