Current CD Rates for the Week of April 15, 2024

To the delight of savers, CD interest rates have soared in the past couple of years, shooting past 5% or even 6% APY. But savers could see CD rates dip as the Federal Reserve considers interest rate cuts in 2024.

For now, CD rates remain attractive. In anticipation of lower rates in 2024, experts suggest taking advantage of today’s higher rates by opening a short-term or long-term CD. A short-term CD comes with a term that lasts around one year or less. Meanwhile, a long-term CD period generally lasts at least three years.

What Is a CD?

A certificate of deposit (CD) is a type of savings account that holds a set amount of cash for a certain period of time, such as six months or three years. Interest rates for CDs typically exceed those for regular savings accounts.

In exchange for keeping your money in a CD until it “matures,” you receive the original deposit plus any interest you earned. So, you might open a one-year CD with a $10,000 initial deposit and then receive the $10,000 plus interest when you cash in the CD at the end of the one-year period.

Although a CD normally pays a higher interest rate than a traditional savings account, it may come with a major disadvantage. If you need to withdraw money from your CD before it matures, you might be hit with a financial penalty, such as the loss of earned interest.

Types of CDs

A variety of CDs are available, such as:

• Traditional CD: A traditional CD is a standard CD with a fixed interest rate and fixed maturity period.
• Jumbo CD: A jumbo CD acts like a traditional CD, except that it usually pays a higher interest rate than a traditional CD and requires a bigger initial deposit.
• No-penalty CD: A no-penalty CD does not charge a penalty for withdrawing cash before the end of the CD’s term.
• Step-up CD: A step-up CD sets a schedule for interest rate increases during the life of the CD.
• Bump-up CD: A bump-up CD allows you to boost the interest rate if rates rise during the CD’s term.
• High-yield CD: A high-yield CD offers some of the best fixed interest rates among savings accounts.
• Add-on CD: Unlike a typical CD, an add-on CD enables you to add money to a CD after making the initial deposit.
• Bank CD: A bank CD is purchased from a bank.
• Brokered CD: A brokered CD is generally purchased from an investment brokerage firm.
• IRA CD: An IRA CD is an individual retirement account made up of CDs.

Why Should You Open a CD?

In general, a CD can be a good option for earning a fixed interest rate that’s normally higher than you’d get with a savings account. It’s considered one of the safest ways for Americans to save money, primarily because deposits are federally insured up to a certain dollar amount.

Pros

• CDs often provide higher interest rates than regular savings accounts do
• During the life of a CD, the interest rate normally remains fixed. By contrast, the rate for a typical savings account can vary
• Unlike money invested in stocks, money deposited in a CD is insured up to a certain dollar amount

 

Cons

• A CD generally locks up your money for a certain period of time, such as six months or three years. If you withdraw money before that period ends, you normally lose some of your money in the form of a financial penalty
• In some cases, the interest rate for a CD might not keep pace with the inflation rate
• Returns for a CD might be lower than returns for investments like stocks and bonds

How to Choose the Best CD for You

Not all CDs and financial institutions are alike. Here are seven tips choosing the best CD for you:

1. Look at the terms. The length of time that your money will remain in a CD before it matures can range from months to years. Figure out which term you’re most comfortable with. A short-term CD will lock up your money for less time than a longer-term CD does.
2. Review the interest rates. To maximize the returns on your money, look for a CD with the highest annual percentage yield (APY).
3. Figure out the fees. To keep the value of your CD from being watered down, be sure you understand what fees you’ll be charged.
4. Explore the types of CDs. Various kinds of CDs are available. Pick the type that most closely matches your needs. For instance, you might pick a no-penalty CD if you suspect you might need penalty-free access to cash before the CD term ends.
5. Check out the bonuses. Some financial institutions might offer incentives for signing up, such as a $200 sign-up bonus for opening a CD.
6. Investigate the insurance. Most CDs are insured by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). To safeguard your money, open a CD only at a financial institution with FDIC or NCUA insurance.
7. Consider the customer service. If you’re leaning toward setting up a CD at a financial institution you haven’t done business with, make sure you dive into its track record for customer service.

Vault’s Viewpoint: CD Rate Trends for 2024

As the Federal Reserve raised interest rates in 2022 and 2023, financial institutions raised interest rates on CDs. Although CD rates may tick down in 2024 as the Fed ponders rate cuts, the interest rate environment for CD holders should remain attractive.

The Fed’s rate-setting committee envisions carrying out three rate cuts in 2024 of three-fourths of a point each. The committee’s actions regarding the Fed’s benchmark interest rate typically influence interest rates for CDs.

Here’s a sampling of CD rate forecasts for this year:

• Top rates for one-year CDs exceeded 5% at the end of last year, but Bankrate predicts 2024 will close with an average APY of 4% for a one-year CD.
• DepositAccounts.com expects CDs with a 5% APY to vanish in 2024.
• CD rates are likely to stay at elevated levels for much of 2024, according to Buy Side from WSJ.

Given the possibility that CD rates could decline in 2024, experts recommend locking in high rates now with a short-term CD or longer-term CD.

Methodology

Bankrate displays two sets of rate averages that are produced from two surveys conducted by Bankrate: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).

The rates on this page represent Bankrate’s overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.