Top CD rates today: June 21, 2024 | Take advantage of top rates

Many savers who expect the Federal Reserve to lower interest rates this year are locking in a fixed yield now on a certificate of deposit (CD). Opening a CD now ensures you’ll reap the benefit of a high annual percentage yield (APY) for the entire length of the CD’s term.

Right now, the leading APY across CD terms is 5.36 percent, which is available on a one-year CD from CIBC Bank. A minimum deposit of $1,000 is required. You’ll find that many shorter terms are earning higher yields than longer ones in the current rate environment.

Bankrate’s table below shows the highest yields offered on widely available CDs, by term. It also lists national average CD rates and how much you’d earn for each term with a $5,000 investment.

Today's best CD rates by term

Note: Annual percentage yields (APYs) shown are as of June 21, 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.

Is a CD a safe place to keep your money?

If you’re considering opening a CD with a bank, be sure it’s covered by the Federal Deposit Insurance Corp. (FDIC). Likewise, if it’s from a credit union, make sure it's covered by National Credit Union Administration (NCUA) insurance. This deposit insurance guarantees your money is safe were the financial institution to fail, as long as the money is within the limits and guidelines.

What the current rate environment means for CDs

In 2022 and 2023, the Federal Reserve raised its benchmark interest rate a total of 11 times, bringing its current target range to a 23-year high of 5.25-5.50 percent. However, the Fed has left rates unchanged for seven straight meetings, due to inflation not slowing as quickly as it has in the past.

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.

Is it still a good time to open a CD? “Even though CD yields have pulled back a bit, you’re still able to lock in yields that are well in excess of inflation and do so for multiple years,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The declines will likely accelerate as we get closer to the Fed beginning to cut interest rates, so there is no sense in waiting.”

CD FAQs

• Is investing in a CD right for me?

  Whether you should invest in a CD depends on your own personal financial situation and goals. A CD offered at a federally insured bank or credit union can be a safe place to park your funds while earning a guaranteed APY. Many savers turn to CDs to lock in a high interest rate if they believe rates will start to decline soon.

  A CD can help you earn interest on money you're saving for a planned purchase. For instance, if you want to buy a house in five years, putting money in a five-year CD can give you a fixed APY on those funds during that term. Likewise, if you plan to take your dream vacation in a couple of years, a two-year CD could be a good place to grow those funds. Avoid an early withdrawal penalty by only committing money to a CD that you won't need access to before the CD matures.

• How is CD interest taxed?

  The IRS treats interest you earn from a CD as taxable income, whether you receive that money in cash or choose to reinvest it. For CDs with terms longer than one year, interest earned must be reported each year on your taxes, even if you don't cash in the CD until it matures.

  An IRA CD is an individual retirement account for which your money is in a CD. Contributions to a traditional IRA may be tax deductible, and they're taxed when you withdraw the funds. Conversely, contributions to a Roth IRA cannot be deducted from your annual income, and they're not taxed when you withdraw the money. You should consult a tax adviser regarding these two IRA CD options before making a choice.

• How does a CD differ from a savings account?

  Many banks and credit unions offer savings accounts and CDs, and both accounts earn some interest. There are a couple of key differences, however: A savings account generally allows you to withdraw funds any time, while a CD typically charges a penalty if you take out the money before the term ends. This makes a savings account a better place for funds you might need for emergencies.

  Another difference between the two is a savings account usually earns a variable APY that the bank can raise or lower at will, while a fixed-rate CD earns the same APY until it matures. As such, savers often choose to lock some funds in a CD when rates are likely to start falling, while many are apt to stick with a savings account if they believe rates will rise soon.

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.