Certificates of deposit (CDs) can be valuable options for savers looking to earn good returns on funds they don’t need presently. CD rates, especially on the high end, have ticked up slightly over the past week as banks continue to live in the high-interest rate world brought on by the Federal Reserve’s effort over the past year to stymie inflation.
Three-month CD rates
Rates on three-month CDs have increased by one basis point to 1.00% APY (as of August 3, 2023). The average APY is up eight basis points from a month prior.
The current national high for a three-month CD is 5.83%, which would earn more than $355 in interest with a $25,000 deposit.
Six-month CD rates
The top six-month CDs can offer the best of both worlds: strong interest rates and a short-term commitment.
The national average APY for six-month CDs is 1.42%, from 1.41% last week and five basis points from one month ago.
The current top national rate for a 6-month CD is 5.60%, according to the data available from Curinos. But you may be able to find better deals by shopping around.
You’d earn almost $700 in interest if you put $25,000 in a six-month CD with a rate of 5.60%.
One-year CD rates
If you’re up for setting aside your savings for a full year, you’ll be able to pick up even more impressive rates. One-year CDs can give you returns as high as, or even higher than, longer-term options.
Rates on 12-month CDs are rising. The national average APY is 1.68%, up two basis points from last week and six basis points from a month before.
The current national high for a 12-month CD is 5.60%, which would earn roughly $1,400 in interest with a $25,000 deposit.
Two-year CD rates
Yields on longer-term CDs, such as two-year terms, are also on the rise.
The national average APY is 1.56%, an increase of one basis point from last week and up three basis points from one month ago.
The current national high for a 24-month CD is 5.15% APY. Locking in a rate close to this high will maximize your returns on this longer-term investment.
If you invest $25,000 in a 24-month CD at the high rate of 5.15% you’d earn roughly $2,650 in interest.
Three-year CD rates
The national average APY for a three-year CD stands at 1.50%, which is flat to where it stood last week and up from 1.48% a month ago.
The highest rate was 5.20%, which would net almost $4,105 in interest if you invested $25,000.
Methodology
To establish average certificate of deposit (CD) rates, Curinos focused on CDs intended for personal use. CDs that fall into specific categories are excluded, including promotional offers, relationship-based rates, private, youth, senior, student/minor, affinity, bump-up, no-penalty, callable, variable, step-up, auto transfer, club, gifts, grandfathered, internet-only and IRA CDs. The average CD rates quoted above are based on a $25,000 deposit.
Frequently asked questions (FAQs)
In 2022, savers finally experienced some relief with the rise of CD yields.
That trend has largely continued throughout 2023, as the Federal Reserve has continued to raise interest rates to moderate inflation. However, the Fed paused its interest rate policy in its most recent meeting in order to see how the economy responds to such high rates.
You’ll need a few key details to open a CD: your name, address, Social Security number, government-issued ID and phone number. You can open a CD online or in person, but you’ll probably find better rates online. Once you get the green light, you can fund the CD with cash from a linked bank account or one that’s not affiliated with the bank at all.
CD rates change on a regular basis, but the higher the better. As of August 3, 2023, the national average interest rate for a 12-month CD sat at 1.68% APY, according to data from Curinos. But you can find plenty of banks advertising APYs well above this average, especially if you take a look at the top contenders in our ranking of the best CD rates.
A basis point is the term used to describe one hundredth of one percentage point. Therefore, if the yield on a CD increased from 1.50% to 1.60%, it increased by 10 basis points.
