Current interest rates on certificates of deposit (CDs) are among the highest we’ve seen in over a decade, thanks to several rate hikes by the Federal Reserve. However, the Fed finally lowered its target rate in September, so this could be your last chance to secure a competitive rate.
CD rates vary widely among financial institutions, so it’s important to make sure you’re getting the best possible rate when shopping for a CD. The following is a breakdown of current CD prices and where to find the best deals.
Historically, long-term CDs offered higher interest rates than short-term CDs. Typically, this is because banks would pay higher rates to encourage savers to keep their money on deposit for longer. However, in the current economic climate, the opposite is happening.
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Today, the highest CD rate, 4.27% APY, is offered by NexBank on its one-year CD term. However, there is a significant minimum opening deposit of $25,000.
The second highest rate is 4.25% APY, offered by Marcus by Goldman Sachs on its 1-year CD. A minimum deposit of $500 is required.
Here’s a look at some of the best CD prices available today 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 base interest rate and how often the interest is compounded (CD interest typically compounds daily or monthly).
Let’s say you invest $1,000 in a one-year CD with an APY of 1.81% and interest compounded monthly. At the end of this year, your balance would reach $1,018.25 – your initial deposit of $1,000, plus $18.25 in interest.
Now let’s say you choose a one-year CD offering 4% APY instead. In this case, your balance would increase to $1,040.74 over the same period, which includes $40.74 in interest.
The more you deposit into a CD, the more chance you have of winning. If we take our same example of a 1-year CD at 4% APY, but deposit $10,000, your total balance at CD maturity would be $10,407.42, meaning you would earn 407. $42 interest.
Learn more: What is a good CD rate?
When choosing a CD, the interest rate is usually a priority. However, price 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 a look at some of the common types of CDs you can consider beyond traditional CDs:
Enhanced CD: This type of CD allows you to charge a higher interest rate if your bank’s rates increase over the life of the account. However, you are generally only allowed to “increase” your rate once.
CD without penalty: Also known as a liquid CD, this type of CD gives you the option to withdraw your funds before maturity without paying a penalty.
giant CD: These CDs require a higher minimum deposit (usually $100,000 or more) and often offer a higher interest rate in return. However, in today’s CD pricing environment, the difference between traditional and jumbo CD pricing may not be much.
Negotiated CD: As the name suggests, these CDs are purchased through a brokerage rather than directly from a bank. Brokered CDs can sometimes offer higher rates or more flexible terms, but they also carry more risk and may not be FDIC insured.
