Today’s interest rates on certificates of deposit (CDs) are amongst the very best we have seen in over a decade, thanks to several rate of interest increases by the Federal Reserve. However, the Fed ultimately lowered its rate of interest goal in September, so now could also be your last likelihood to keep your rate of interest competitive.
CD prices vary widely amongst financial institutions, so it is important to make sure that you are getting the very best possible rate when searching for CDs. Below is a breakdown of current CD rates and where to find the very best deals.
Historically, long-term CDs have offered higher interest rates than short-term CDs. Generally, it’s because banks would pay higher rates to encourage savers to keep their money on deposit longer. However, in today’s economic climate, the other is true.
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As of January 12, 2025, CD rates remain high by historical standards. However, the highest CD rates can be found for shorter terms of approximately one year or less.
Today’s highest CD rate is 4.25% APY, offered by Marcus through Goldman Sachs on a 1-year CD. A minimum deposit of $500 is required.
Here’s an overview of the best CD rates currently available from our verified partners:
The amount of interest you can earn on a CD depends on the annual percentage rate (APY). This is a measure of your total earnings after one year, taking into account the prime interest rate and how often interest accrues (CD interest typically accrues daily or monthly).
Let’s say you invest $1,000 in a one-year CD with a 1.81% APR and monthly interest. At the end of this year, your balance will grow to $1,018.25 – your initial deposit of $1,000 plus $18.25 in interest.
Now let’s assume you choose a 1-year CD that offers 4% APR instead. In this case, your balance would increase to $1,040.74 over the same period, which includes interest of $40.74.
The more you put into a CD, the more you can earn. If we take the same example of a one-year CD with a 4% APR but deposit $10,000, your total balance at maturity of the CD will be $10,407.42, which means you will earn $407.42 in interest.
When choosing a CD, we usually think about the interest rate first. However, the rate is not the only factor to consider. There are several types of CDs that offer different benefits, although you may have to accept a slightly lower interest rate in exchange for more flexibility. Here’s an overview of some common types of CDs you can consider beyond traditional CDs:
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Overclocked CD: : This type of CD allows you to claim a higher interest rate if your bank’s interest rates increase over the life of the account. However, you can usually only “raise” your bet once.
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CD without penalty: : A CD, also known as a liquid CD, allows you to withdraw funds before maturity without paying a penalty.
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Jumbo CDs: : These CDs require a higher minimum deposit (usually $100,000 or more) and often offer higher interest rates in return. However, in today’s CD rate environment, the difference between traditional and Jumbo CD rates may not be much.
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Brokered CD: : As the name suggests, CDs are purchased through an intermediary, circuitously from a bank. Brokered CDs can sometimes offer higher rates or more flexible terms, but in addition they carry greater risk and will not be FDIC insured.