Top CD rates today: December 16, 2024 | Top APY remains 4.65% ahead of Fed meeting

All eyes are on the Federal Reserve this week as investors widely expect officials to cut interest rates by 25 basis points, or a quarter of a percentage point, on Wednesday. Such a move would be the third rate cut in 2024, following cuts in November and September that totaled 75 basis points. A third cut would bring the total cut in rates to 100 basis points — a full percentage point.

What a Fed rate cut could mean for CD yields: A reduction in the federal funds rate often spurs lower annual percentage yields (APYs) on savings accounts and certificates of deposit (CDs). As such, opening a fixed-rate CD now could be a means of hedging against further drops in APYs.

What can savers expect for CD rates in 2025? With inflation ticking up slightly over the past two months, Fed policymakers may ultimately decide to take a more cautious, gradual approach to rate cuts in 2025 than they previously envisioned. A more stable fed-funds rate could keep competitive CD rates propped well above the current 2.7 percent rate of inflation.

“With only a few weeks left in 2024, we’re seeing CD rates stabilize after the recent Fed cuts,” says Taylor Kovar, CFP, founder and CEO of 11 Financial. “I don’t expect much change in rates before the year wraps up, as the Fed seems to be taking a more cautious approach moving forward. If the Fed continues to hold or make slight cuts, CD rates will likely follow suit and stay steady or drop a little.”

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

Note: Annual percentage yields (APYs) shown are as of December 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.

How much $10,000 could earn you in a one-year CD

If you’re comfortable locking $10,000 into a one-year CD right now, and the CD earns 4.50 percent APY, it would earn around $450 in interest by the time it matures. Bankrate’s CD calculator can help you determine how much a CD will be worth at the end of its term. Just input the CD’s APY, the term length and the amount of your opening deposit.

What the current rate environment means for CDs

Recent federal funds rate changes: The Federal Reserve lowered its benchmark interest rate twice in recent months, and the federal funds rate currently stands at a target range of 4.5-4.75 percent. Prior to these rate cuts, the Fed had gradually raised rates 11 times in 2022 and 2023, and rates stood at a 23-year high leading up to the September cut.

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. The Fed’s recent November rate cut could spur further decreases in CD APYs.

Prior to the September 2024 rate cut, the Fed had held rates steady since July 2023. Meanwhile, top CD APYs peaked in late 2023 and have since been decreasing gradually, as illustrated below.

CD glossary

Here are some terms you’ll likely come across when choosing a CD.

• Add-on CD: A CD that enables you to make additional deposits after your initial investment. This feature affords more flexibility than traditional CDs, which only allow one deposit at the beginning of the term.
• Annual percentage yield (APY): A percentage that indicates how much interest a CD earns in one year, which takes into account the effect of compounding.
• Brokered CD: A type of CD issued by a bank but sold through a brokerage firm or other financial institution.
• CD ladder: An investment strategy that involves purchasing multiple CDs with varying maturity dates to provide liquidity and take advantage of higher rates.
• Early withdrawal penalty: A fee charged if funds are withdrawn from a CD before the maturity date. Penalties often range anywhere from 90 days to 365 days’ worth of interest.
• Grace period: A specific time after the maturity date during which an account holder can make changes to the CD without penalties. A grace period typically ranges from five to 14 days.
• IRA CD: A CD that’s held within an individual retirement account.
• Minimum opening deposit: The lowest amount of money required to open a CD account, which can vary by institution. Some institutions don’t have a minimum deposit requirement.
• No-penalty CD: A type of CD that allows you to withdraw your money without facing a penalty while providing a fixed APY.
• Promotional CD: Also known as a bonus or special CD, it’s a CD with an above average APY. These may be offered by banks and credit unions as a way to obtain new customers.
• Jumbo CD: A CD that has a high minimum balance requirement, typically $100,000, sometimes as low as $95,000. This type of CD tends to offer a higher interest rate than regular CDs with the same term.
• Bump-up CD: Also known as a “raise-your-rate CD,” a bump-up CD provides savers with the option to increase the CD’s APY without having to change its term. Generally, only one rate increase is allowed during its term.

• 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.