Top CD rates today: November 4, 2024 | How another Fed rate cut could impact APYs

All eyes are on the Federal Reserve this week as Fed experts and market prognosticators expect officials to cut interest rates by 25 basis points, or a quarter of a percentage point. Such a move would be the second rate cut in 2024, following a 50-basis-point cut in September. Officials have signaled multiple Fed rate cuts in 2024 and 2025, as inflation drifts down toward the Fed's 2 percent target rate.

While a lower federal funds rate usually spurs decreases in rates on deposit accounts, the good news for savers right now is that yields are still outpacing inflation on competitive savings accounts and certificates of deposit (CDs). An additional advantage of a CD is that it locks in your rate throughout its term, which benefits you if rates continue to decline on new deposit accounts.

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

Today's top CD rates by term

Note: Annual percentage yields (APYs) shown are as of November 4, 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.

How the current rate environment impacts CDs

Recent federal funds rate changes: The Federal Reserve lowered its benchmark interest rate by 50 basis points, or half a percentage point, on Sept. 18, which brought down the Federal Funds rate target range to 4.75-5 percent. Prior to this rate cut, the Fed had gradually raised rates 11 times in 2022 and 2023, and rates stood at a 23-year high leading up to the latest 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 Sept. 18 rate cut of 50 basis points could spur decreases in CD APYs, in addition to decreases that have already taken place in 2024 as banks anticipated Fed rate cuts.

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.

How inflation factors in

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 on Sept. 18. The rate cut comes 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 2.4 percent.

“Inflation is now much closer to our objective, and we have gained greater confidence that inflation is moving sustainably toward 2 percent,” Fed Chair Jerome Powell said in remarks following the Fed’s latest decision to lower rates on Sept. 18.

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 2.4 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.

Is now still a good time to open a new CD?

This year, top CD rates have been declining gradually due to strong signals from the Fed that it would cut interest rates. Now that the Fed has cut rates by 50 basis points, it remains to be seen how much lower CD APYs will decline, and how soon. Currently, however, top APYs are earning yields well above the rate of inflation.

“Investing in a CD now means potentially being able to lock in high rates prior to a drop in interest rates,” says Kurt Whitesell, a certified financial planner and CFP Board ambassador.

CD FAQs

• What are the pros and cons of investing in a CD?

  Available in various terms and types, CDs often earn higher APYs than traditional savings accounts. Many provide a guaranteed APY, so you know how much you'll earn throughout the term. When CDs are issued by banks and credit unions that are federally insured, your money is protected should the financial institution ever fail.

  A drawback of CDs, however, is they often tie up your money for the duration of the term, charging an early withdrawal penalty if you need access to the funds sooner. While some CDs offer higher APYs than savings accounts, they generally earn lower returns than higher-risk investments. If a fixed-rate CD doesn’t keep pace with inflation, it reduces the purchasing power of your investment over time.

• How does a CD work?

  A CD is a type of savings account that often earns a guaranteed APY while holding your funds for a set term. Often, CDs earn higher yields than ordinary savings accounts, although if you withdraw your funds before the term ends, you’ll likely incur an early withdrawal penalty.

  When the CD matures, you can redeem it for your initial principal investment, plus the earned interest. If you don't take action before the grace period ends, the CD will typically renew automatically at the APY currently offered by the bank.

• Is a CD a safe investment?

  CDs opened at banks covered by the Federal Deposit Insurance Corp. (FDIC), and at credit unions covered by the National Credit Union Association (NCUA), are federally insured up to $250,000 per depositor, per insured financial institution, per ownership category. This insurance guarantees your money will be safe, even if the bank goes out of business.

  CDs typically offer guaranteed returns, which makes it easy to calculate your future earnings. However, while CDs are safe, they may yield lower returns compared with riskier investments such as stocks and bonds. Also, early withdrawal penalties can sometimes eat into your principal. Overall, CDs can be a solid option if your goal is to preserve your capital while earning a moderate return.

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.