CD rates today, January 14, 2025 (lock in up to 4.27% API)

Bynewspules
Spread the love

The Federal Reserve has lowered the federal funds rate twice this year. As a result, the value of the deposit account is decreasing.

The good news: You can lock in a competitive return on a certificate of deposit (CD) today and protect your earning power. In fact, the best CDs still cost more than 4 percent. Read on for a snapshot of CD rates today and where to find the best deals.

CDs today typically offer much higher rates than traditional savings accounts. As of January, the best short-term CDs (six to 12 months) generally cost 4.00% to 4.50% APY.

Today, the highest CD rate is 4.27% APY, which is over the 1-year CD term at NexBank. However, there is a maximum minimum opening deposit of $25,000.

The next highest rate is 4.25% API, offered by two banks: Marcus by Goldman Sachs (1-year CD) and Synchrony Bank (13-month CD).

The following is a look at some of the best CD prices available today from our verified partners.

Check out our picks for the best CD accounts and rates>>

In the year The 2000s saw the dot-com bubble and later, the 2008 global financial crisis. Although the early 2000s saw relatively high CD rates, as the economy slowed and the Federal Reserve began to cut rates to stimulate growth. In the year In 2009, after the financial crisis, the average one-year CD paid about 1% APY, while five-year CDs paid less than 2% APY.

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

However, things changed between 2015 and 2018, when the Fed began gradually raising rates again. At this point, there has been some improvement in CD rates as the economy expands, ending nearly a decade of ultra-low rates. However, the onset of the Covid-19 pandemic in early 2020 led to the Fed lowering its emergency rate, sending the CD rate to a new record low.

The situation changed following the pandemic when inflation started to spiral out of control. This prompted the Fed to raise rates 11 times between March 2022 and July 2023. This has led to higher rates on loans and higher APIs on savings products, including CDs.

Fast forward to September 2024 – the Fed finally decides to lower the federal funds rate after confirming that inflation is under control. Today, we are starting to see CD prices come off their highs. Still, CD rates remain high at historic levels.

Here’s how CD rates have changed since 2009:

Typically, long-term CDs offer higher interest rates compared to short-term CDs. This is because locking up money for a longer period of time carries more risk (that is, a higher rate of loss in the future), which banks pay at a higher rate.

However, this pattern does not necessarily hold today; The highest average CD rate is for a 12-month period. This refers to the flattening or inversion of the yield curve, which can occur during uncertain economic times or when investors expect future interest rates to decline.

Read more: Short-Term or Long-Term CD: Which is Better?

Choosing the highest API when opening a CD is only one part of the puzzle. There are other factors that influence 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 are willing to lock up your money. CDs come with fixed terms, and withdrawing your money before the end of the term can result in penalties. Common terms range from a few months to several years. The right term depends on when you need access to your money.

  • Type of Financial Institution: Rates can vary significantly across financial institutions. Don’t just check with your current bank; Research CD rates from online banks, local banks and credit unions. Online banks typically offer higher interest rates than traditional brick-and-mortar banks because they have lower credit limits. However, make sure that any online 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 is a minimum deposit requirement and if so, does this suit your budget.

  • Inflation: While CDs can provide reliable, steady returns, they may not always keep up with inflation, especially over the long term. Consider this when deciding the investment period and amount.