Top CD rates today: August 16, 2024 | What to know about CD rate trends now
![featured image](https://www.bankrate.com/2023/11/10111149/Daily-CD-Rates-Mon.jpg)
The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .
Key takeaways
- The highest APY across CD terms holds steady at 5.25%, which is available on a three-month CD.
- In addition to choosing a CD based on APY, consider the minimum deposit requirement.
- Competitive APYs for most terms are currently several times greater than national averages.
Like a savings account, a certificate of deposit (CD) is an account where you can stash some of your savings, usually risk free, and earn a nominal amount of interest. A CD differs in that it offers a fixed interest rate for the duration of its term; if you enroll in a CD before interest rates fall, your CD’s rate remains the same for its term. What’s more, a CD rate can be higher than the rate on a standard savings account, although a CD usually requires that you commit your cash for the entire term, with early withdrawals resulting in a penalty.
As we enter the second half of August, the leading annual percentage yield (APY) across CD terms is 5.25 percent. For comparison, the highest APY on July 16 was 5.50 percent. Since mid-July, we've seen 11 decreases in top rates as banks anticipate a possible Federal Reserve rate cut in September. On the bright side, CD rates remain competitive, overall, and some CDs are offering better rates than those earned by various high-yield savings accounts. An advantage of a fixed-rate CD in a falling rate environment is you'll continue to earn the guaranteed APY, even as going rates on new CDs continue to decline.
Check out Bankrate’s table below for the highest APY on CD terms from three months to five years, as well as how much $5,000 would earn for each term.
Today's best CD rates by term
CD term | Institution offering top APY | Highest APY | National average APY | Estimated earnings on $5,000 with top APY |
---|---|---|---|---|
3-month | America First Credit Union | 5.25% | 1.28% | $64 |
6-month | America First Credit Union | 5.15% | 1.76% | $127 |
9-month | Synchrony Bank | 5.15% | N/A | $192 |
1-year | First Internet Bank of Indiana | 5.15% | 1.82% | $258 |
18-month | LendingClub | 5.00% | 1.92% | $380 |
2-year | Bask Bank | 4.75% | 1.55% | $486 |
3-year | First Internet Bank of Indiana | 4.45% | 1.44% | $698 |
4-year | First Internet Bank of Indiana | 4.29% | 1.49% | $915 |
5-year | Schools First Federal Credit Union | 4.35% | 1.45% | $1,186 |
Note: Annual percentage yields (APYs) shown are as of August 16, 2024. APYs for some products may vary by region.
N/A: Not available; Bankrate doesn’t track national averages for the 9-month CD term due to limited available data. Estimated earnings are based on the highest APYs and assume interest is compounded annually.
Why should I put money in a CD?
A CD may be right for you if you already have an adequate emergency fund in a liquid savings account, because a CD requires that you lock in your funds for the entire term, be it as short as three months or as long as five years, even more. Putting money that’s not needed for emergencies into a CD can benefit you because you’ll often find higher rates on competitive CDs than those offered on high-yield savings accounts.
In reporting which CDs offer the highest APYs, Bankrate focuses mainly on CDs that are widely available. As such, banks or credit unions are usually ruled out that only offer their products to residents of a small geographic area. Also typically excluded are CDs that require customers to have additional accounts with a bank in order to qualify for the high rate.
What the current rate environment means for CDs
Recent federal funds rate changes: To combat high inflation, the Federal Reserve raised its benchmark interest rate 11 times in 2022 and 2023, before leaving rates unchanged for eight straight meetings. Before the string of rate hikes began in March 2022, the target range was at 0-0.25 percent, and it currently stands at a 23-year high of 5.25-5.50 percent.
What this means for deposit accounts such as CDs: Yields on competitive savings accounts and CDs tend to move in lockstep with the Fed’s interest rate moves. As such, many banks increase their yields when the Fed raises rates, and they lower yields when the federal funds rate drops. While the Fed has held rates steady since July 2023, top CD APYs ended up peaking in late 2023 and have since been decreasing gradually, as illustrated below.
How inflation factors in
The Fed has held its key benchmark rate steady since July 2023, due to inflation not slowing as quickly as it has in the past. Fed officials’ goal is to bring the annual inflation rate down to 2 percent. While the consumer price index (CPI), a measure of inflation, has decreased significantly from its decades-high annual rate of 9 percent in June 2022, it’s currently at 2.9 percent.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” Fed Chair Jerome Powell said in remarks following the Fed’s latest decision not to change rates on July 31.The current rate of inflation is a significant factor that affects what the Fed decides to do with rates. An increase in the federal funds rate can be good for savers — translating to higher APYs on many CD and savings accounts — while it can be bad for borrowers as interest rates tend to increase on loans.
Is now still a good time to open a new CD?
As of late, top CD rates are declining due, in part, to strong signals from the Fed that it plans to cut interest rates in September, if not sooner, and fears arising from recent market downturns. It's best to take advantage of still-high CD rates now while you still can.
"Now is the time to lock in attractive returns on CDs as the Federal Reserve is poised to begin cutting interest rates,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The top-yielding CDs currently earn in excess of the inflation rate and savers have the ability to lock in that inflation-beating return for multiple years. If you have money you won’t need to touch for a period of time, now is a great time to consider a CD."
CD FAQs
Research 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.