Top CD rates today: December 18, 2024 | Fed cuts rates (and what that means for CDs)

The Federal Reserve cut its benchmark rate for the third consecutive meeting today, lowering rates by a quarter of a percentage point, or 25 basis points. This brings down the federal funds rate to 4.25-4.5 percent. While Fed rate cuts typically result in lower yields on certificates of deposit (CDs), savers can still lock in historically high rates.

Most top CD rates are holding steady on Fed Day, although the highest annual percentage yield (APY) on a nine-month term has dipped from 4.55 percent to 4.50 percent. Across terms, the leading APY remains 4.65 percent, which can be found on terms of six and nine months. You’ll find slightly lower APYs on terms between one year and five years, ranging from 4.20 percent to 4.52 percent APY.

Bankrate monitors the top and average rates every weekday, and you’ll find today’s top CD rates in the table below.

Today's top 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	Popular Direct	4.65%	1.27%	$57
6-month	Limelight Bank	4.65%	1.68%	$115
9-month	America First Credit Union	4.50%	N/A	$168
1-year	TAB Bank	4.52%	1.74%	$226
18-month	Popular Direct	4.30%	1.82%	$326
2-year	Popular Direct	4.25%	1.50%	$434
3-year	Popular Direct	4.25%	1.41%	$665
4-year	America First Credit Union	4.20%	1.45%	$894
5-year	America First Credit Union	4.25%	1.41%	$1,157

Note: Annual percentage yields (APYs) shown are as of December 18, 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 to take advantage of current CD rates

Yields on competitive CDs have been decreasing this year, although many shorter-term CDs are offering yields comparable to high-yield savings accounts. In a falling-rate environment, a fixed-rate CD’s advantage over a variable-rate savings account is the CD guarantees you’ll earn the same APY until it matures.

Many shorter-term CDs are currently earning higher APYs than longer ones, yet one way to get the best of both worlds is through a CD ladder. This involves opening multiple CDs of varying term lengths. This way, some of your money will earn the top short-term rates, while the remainder will benefit from a guaranteed rate for a longer timeframe.

"Consider CD laddering if you want to thread the needle between locking up the money for too long and also taking advantage of higher interest rates right now," says Anna N’Jie-Konte, CFP, CEO of Poder Wealth Advisors.

What is the impact of inflation on monetary policy?

After holding its key benchmark rate steady since July 2023 to combat high inflation, officials cut the federal funds rate by half a percentage point, or 50 basis points, in September and by another quarter percentage point (25 basis points) in November. These moves come at a time when the consumer price index (CPI), a measure of inflation, has decreased significantly from its decades-high annual rate of 9.1 percent in June 2022. It’s currently at 2.7 percent.

"We are committed to maintaining our economy’s strength by supporting maximum employment and returning inflation to our 2 percent goal," Fed Chair Jerome Powell said in remarks following the Federal Open Market Committee meeting in November.

The current rate of inflation is a significant factor that affects what the Fed decides to do with rates. A decrease in the federal funds rate, say close to or below the current inflation rate of 2.7 percent, can be bad for savers. Namely, it can translate to lower APYs on many CDs and savings accounts. Meanwhile, a fed rate cut can be good for borrowers as interest rates tend to decrease on loans.

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.