Top CD rates today: July 9, 2024 | Secure a rate above 5% now

Like a savings account, a certificate of deposit (CD) is an account where you can stash some of your savings, usually risk free, and earn a nominal amount of interest. A CD differs in that it offers a fixed interest rate for the duration of its term; if you enroll in a CD before interest rates fall, your CD’s rate remains the same for its term. What’s more, a CD rate can be higher than the rate on a standard savings account, although a CD usually requires that you commit your cash for the entire term, with early withdrawals resulting in a penalty.

Banks are preparing for possible Federal Reserve rate cuts later this year. Popular Direct, for example, recently reduced its 3-month CD rate from 5.30 percent APY to 5.25 percent APY. Another bank we monitor, CIBC Bank, lowered its one-year CD rate from 5.36 percent APY to 5.21 percent APY.

Right now, the top APY across CD terms among banks we monitor is 5.35 percent, which is offered on a 6-month CD from Bask Bank. A minimum deposit of $1,000 is required. Many shorter terms are earning higher yields than longer ones in the current rate environment.

Check out Bankrate’s table below for the highest APY on CD terms from three months to five years, as well as how much $5,000 would earn for each term.

Today's CD rates by term

Note: Annual percentage yields (APYs) shown are as of July 9, 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.

Why should I put money in a CD?

A CD may be right for you if you already have an adequate emergency fund in a liquid savings account, because a CD requires that you lock in your funds for the entire term, be it as short as three months or as long as five years, or even more. Putting money that’s not needed for emergencies into a CD can benefit you because you’ll often find higher rates on competitive CDs than those offered on high-yield savings accounts.

In reporting which CDs offer the highest APYs, Bankrate focuses mainly on CDs that are widely available. As such, banks or credit unions are usually ruled out that only offer their products to residents of a small geographic area. Also typically excluded are CDs that require customers to have additional accounts with a bank in order to qualify for the high rate.

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.