The Best CD Rates Are Still Very High

Certificate of deposit (CD) rates have softened since climbing to a record high of 6.50% in October, and today brought another decline: The leading 3-month CD rate fell from 5.51% to 5.42% APY. But the top yield in every other term held its ground, including our 5-week reigning rate champion, Andrews Federal Credit Union. It continues to offer 5.75% APY on a 6-month term.

If you want to stretch your rate guarantee further into the future, you can earn up to 5.50% for a year, 5.35% for 18 months, or 5.27% APY as long as two years. You can even score a rate of 5.00% APY on 30 to 36 months. Beyond that, the 4-year and 5-year CD terms offer top rates in the mid-4% range.

It's true that rates have been gradually sliding since November. Our daily ranking of the best nationwide CDs now includes just 11 offers of 5.50% APY or better—down from a count of 30 on Feb. 1.

But don't lose sight of how high CD rates still are relative to the past 20 years, even if they've come down from their ultimate peak. Also keep in mind that snagging the highest APY isn't the only way to win with today's CDs. Since CD rates could fall much further in 2024, locking in a rate that's guaranteed for a year or more down the road can be a smart move.

Top Bank, Credit Union, and Jumbo CD Rates Today

As always, beware that the best jumbo CD rates don't always pay more than standard certificates. Often, you can do just as well—or better—with a standard CD. That's the case right now in five of the eight terms below, so it's always wise to shop both certificate types before making a final decision.

Where Are CD Rates Headed This Year?

The Federal Reserve announced at its Jan. 31 meeting that it is maintaining rates at their current level, the fourth meeting in a row it's done so. To combat decades-high inflation, the Fed aggressively hiked interest rates between March 2022 and July 2023, raising the federal funds rate to its highest level in 22 years.

This in turn created historically favorable conditions for CD shoppers, as well as for anyone holding cash in a high-yield savings or money market account. Rates on CDs continued rising to a peak this fall, reaching their highest levels in two decades.

But inflation has been cooling, putting the Fed in a holding pattern since July. The central bank also signaled after its January meeting that it was almost certainly finished with its rate-hike campaign. This means we've entered a new phase, where the Fed committee is focused on deciding the right timing to pull the trigger on a first rate cut.

But Fed Chair Jerome Powell stated that, though the economy has seen promising progress, inflation is still too high, and the committee therefore won't discuss implementing a rate cut until it feels assured inflation's downward trajectory is both sufficient and sustainable.

Economic data released since the Fed's meeting aren't helping on that front. Last week, the Fed's preferred inflation metric showed an acceleration from the previous month. And while financial markets still overwhelmingly expect we'll see at least one rate cut from the central bank this year, a Fed board member speaking Friday conveyed his less certain outlook about making a rate cut in 2024, responding "We'll see."

As a result, financial markets have pushed their forecasts for a first Fed rate cut further into the future, according to CME Group's FedWatch Tool. In early February, the majority expectation was for a first Fed rate cut in May. Now it's not until the June 12 meeting that a majority of traders are betting on a decrease.

What this means for CD rates is that they're likely to drift slightly lower, or even plateau, until it appears the Fed is ready to make its first cut. If at some point that seems to be in the cards, banks and credit unions will likely begin lowering rates more substantially.

How We Find the Best CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD's minimum initial deposit must not exceed $25,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.