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 more declines among the top CD rates. Our daily ranking of the best nationwide CDs now includes 15 offers of 5.50% APY or better—down from a count of 30 at the start of February.

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. You can still secure at rate of 5% or better in every term up to 3 years, or in the mid-4% range for CDs lasting 4 or 5 years.

Across CD terms, today's nationwide rate leader continues to be Andrews Federal Credit Union. Its 5.75% APY offer on a 6-month certificate has been the highest nationally available return for more than a month.

But we saw the top nationwide rate fall today in the 1-year, 3-year, and 4-year terms. The new 1-year rate leader is with a 5.50% rate, down from yesterday's top rate of 5.56% APY. Among 3-year certificates, the leading rate dropped from 5.10% to 5.00% APY, which is offered by for 30 months. Lastly, is the new 4-year rate leader, offering 4.60% vs. the previous top rate of 4.73% APY.

Just keep in mind that scoring the highest APY isn't the only way to win with today's CDs. Since it's likely that rates will start falling in 2024, locking in a rate that's guaranteed more than a year down the road is also a smart move.

It's also a good idea to jump on one of the top rates now, before the Federal Reserve acts to lower the federal funds rate—as that will put further downward pressure on CD rates. While we don't know when the Fed will start reducing its benchmark rate, the central bank's Dec. 13 dot plot showed a median prediction among committee members of three rate cuts—totaling 0.75%—sometime during calendar year 2024.

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 with inflation cooling and the Fed in a holding pattern since July, many banks and credit unions have begun lowering their CD rates. And that's likely to continue after the latest Fed announcement. That's because the central bank's statement abandoned previous language about future rate hikes still being possible. It now appears clear the Fed's rate-hike campaign is finished.

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. First, January's employment report showed that new jobs and wage growth were much higher than expected. Then the most recent Consumer Price Index (CPI) data showed that inflation is proving more stubborn than hoped for. Both of these may prompt the Fed to keep rates high for longer than previously thought.

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. Before the latest inflation report, 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 keep drifting lower, until it appears clear the Fed is ready to make its first cut. But as soon as 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.