Although there's talk that CD rates may come down later this year due to a possible reduction in the Federal Reserve's target rate, current rates are the highest they've been in over a decade.

Short-term CDs currently offer the most competitive rates, with terms of six months to one year reaching 5% APY. For longer-term CDs of two years or more, rates are a bit lower, but the top accounts hover around 4% APY.

Now could be the last chance for savers to lock in high-yield CDs. Read on for an overview of the banks currently offering the best CD rates and how these rates compare to the national average.

CD rates today

The best CD rates available today tend to be for terms of a year or less. The top rates on the market today are around 5% APY or even higher. CD rates for longer terms tend to be a bit lower, with the best accounts paying closer to 4% or less.

Here is a look at some of the best CD rates available today from our verified partners.

Compared to the national average, these CD rates from online banks pay about three times more interest for similar term lengths.

National average CD rates

Here’s a look at the average CD rate by term as of April 15, 2024 (the most recent data available from the FDIC):

The highest national average interest rate for CDs stands at 1.81% for a 1-year term. However, in general, today’s average CD rates represent some of the highest seen in nearly two decades, largely due to the Federal Reserve's efforts to combat inflation by keeping interest rates elevated.

Read more: What is a good CD rate?

Historical CD rates

The 2000s were marked by the dot-com bubble and later, the global financial crisis of 2008. Though the early 2000s saw relatively higher CD rates, they began to fall as the economy slowed and the Federal Reserve cut its target rate to stimulate growth. By 2009, in the aftermath of the financial crisis, the average one-year CD paid around 1% APY, with five-year CDs at less than 2% APY.

The trend of falling CD rates continued into the 2010s, especially after the Great Recession of 2007-2009. The Fed's policies to stimulate the economy (in particular, its decision to keep its benchmark interest rate near zero) led banks to offer very low rates on CDs. By 2013, average rates on 6-month CDs fell to about 0.1% APY, while 5-year CDs returned an average of 0.8% APY.

However, things changed between 2015 and 2018, when the Fed started gradually increasing rates again. At this point, there was a slight improvement in CD rates as the economy expanded, marking the end of nearly a decade of ultra-low rates. However, the onset of the COVID-19 pandemic in early 2020 led to emergency rate cuts by the Fed, causing CD rates to fall to new record lows.

The situation reversed following the pandemic as inflation began to spiral out of control. This prompted the Fed to hike rates 11 times since March 2022. In turn, this led to higher rates on loans and higher APYs on savings products, including CDs.

Take a look at how CD rates have changed since 2009:

Understanding today’s CD rates

Traditionally, longer-term CDs have offered higher interest rates compared to shorter-term CDs. This is because locking in money for a longer period typically carries more risk (namely, missing out on higher rates in the future), which banks compensate for with higher rates.

However, this pattern doesn’t necessarily hold today; the highest average CD rate is for a 12-month term. This indicates a flattening or inversion of the yield curve, which can happen in uncertain economic times or when investors expect future interest rates to decline.

Read more: Short- or long-term CD: Which is best for you?

CD rate news

In the current economic environment, CD rates are among the highest seen in recent years, thanks in part to efforts by the Federal Reserve to manage inflation by maintaining higher interest rates. This situation has led to better returns on CDs and other types of deposit accounts, including savings accounts. Although there has been speculation about future rate movements, including potential cuts if inflation continues to slow, current CD rates have been trending slightly upward month over month.

If the Fed decreases its rate, CD rates are expected to follow suit, impacting both national average and high-yield CDs.

So for those interested in locking in higher rates, now might be a good time before interest rates fall again. Online banks and credit unions continue to offer competitive rates, especially compared to traditional brick-and-mortar institutions.

How to choose the best CD rates

When opening a CD, choosing one with a high APY is just one piece of the puzzle. There are other factors that can impact whether a particular CD is best for your needs and your overall return. Consider the following when choosing a CD:

• Your goals: Decide how long you're willing to lock away your funds. CDs come with fixed terms, and withdrawing your money before the term ends can result in penalties. Common terms range from a few months up to several years; the right term length for you depends on when you anticipate needing access to your money.

• Type of financial institution: Rates can vary significantly among financial institutions. Don't just check with your current bank; research CD rates from online banks, local banks, and credit unions. Online banks, in particular, often offer higher interest rates than traditional brick-and-mortar banks because they have lower overhead costs. However, make sure any bank you consider is FDIC-insured (or NCUA-insured for credit unions).

• Account terms: Beyond the interest rate, understand the terms of the CD, including the maturity date and withdrawal penalties. Also, check if there's a minimum deposit requirement and if so, that fits your budget.

• Inflation: While CDs can offer safe, fixed returns, they might not always keep pace with inflation, especially for longer terms. Consider this when deciding on the term and amount to invest.