Certificates of deposit (CDs) are a good choice for those in search of a low-risk earnings-generating savings product for cash you don’t need immediately. Based on Curinos data, CD rates have been relatively stable over the past week as the Federal Reserve paused its rate hike policy.
Three-month CD rates
Rates on three-month CDs have remained the same from a week ago. The national average rate was 1.18% as of December 1, 2023, the latest data available, the same as the previous week and up four 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
When you opt for leading six-month CDs, you get a winning combination: solid interest rates and a commitment that’s only short-term.
The national average APY for six-month CDs is 1.62%, the same as last week and up from 1.56% one month ago.
The current top national rate for a 6-month CD is 5.59%, according to the data available from Curinos’ database. But you may be able to find better deals by shopping around.
You’d earn almost $690 in interest if you put $25,000 in a six-month CD with a rate of 5.59%.
One-year CD rates
If you’re willing to lock away your savings for 12 months, you can score even better rates. One-year CDs can give you returns as high as, or even higher than, longer-term options.
Rates on 12-month CDs are moving up. The national average APY is 1.86%, up one basis point from last week and three basis points from a month before.
The current national high for a 12-month CD is 5.70%, which would earn around $1,420 in interest with a $25,000 deposit.
Two-year CD rates
Interest rates on CDs with longer terms, such as those spanning two years, have remained stable.
The nationwide average APY stands at 1.65%, the same as a week prior yet up one basis points from one month ago.
Right now, the highest national rate for a 24-month CD is 5.51%, which would earn nearly $2,840 on $25,000 in savings.
Three-year CD rates
The national average APY for a three-year CD stands at 1.57%, which is the same as last week and up from 1.56% a month ago.
The highest rate was 5.50%, which would net almost $4,353 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)
Generally, the earnings you make from your CDs are considered taxable income by the IRS. If you earn $10 or more, the financial institution should send you (and the IRS) a yearly 1099-INT form reporting your interest earnings. Even if you don’t receive a form, you’re still required to report the income.
For earnings of at least $1,500, you’ll need to itemize your interest income sources on Schedule B of the 1040 form. The silver lining is that there are some exceptions, but they mainly apply to government-issued investment vehicles.
The tax amount you pay depends on your specific marginal tax bracket.
Interest income from treasury bills, notes, and bonds, like I bonds, is exempt from state and local income taxes.
CD rates change on a regular basis, but the higher the better. As of December 1, 2023, the national average interest rate for a 12-month CD sat at 1.86 % 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.
