Interest rates for CDs can significantly differ between various financial institutions, making it essential to find the best rate while exploring your options. Below is an overview of current CD rates and where you can discover the most attractive offers.
Traditionally, long-term CDs offered more favorable interest rates compared to short-term ones. This was primarily because banks aimed to incentivize savers to retain their deposits for longer durations. However, in the current economic landscape, this trend has been reversed.
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Currently, the leading CD rate stands at 4.35% APY, available through LendingClub for its 10-month CD. A minimum initial deposit of $2,500 is necessary.
Here’s a glimpse of some of the most competitive CD rates offered today from our verified partners:
The interest you can accumulate from a CD is contingent on the annual percentage yield (APY). This figure reflects your total earnings after one year, taking into account the base interest rate and the frequency of interest compounding (which typically occurs daily or monthly for CDs).
For instance, if you invest $1,000 in a one-year CD featuring a 1.81% APY, with monthly compounding, your balance at the year’s end would amount to $1,018.25 — which includes your original deposit of $1,000 and $18.25 in interest.
Alternatively, if you were to select a one-year CD with a 4% APY, your balance at maturity would rise to $1,040.74, incorporating $40.74 in earned interest over the same interval.
The greater your deposit in a CD, the more you can potentially earn. Using our previous example of a one-year CD at 4% APY, if you were to deposit $10,000 instead, your total balance at maturity would climb to $10,407.42, yielding $407.42 in interest.
Discover more: What constitutes a good CD rate?
While the interest rate is often the primary concern when selecting a CD, it’s not the sole consideration. Numerous types of CDs provide different advantages, though you might need to accept a slightly lower interest rate for added flexibility. Below are some common types of CDs you might explore beyond traditional options:
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Bump-up CD: This variety of CD allows you to request a higher interest rate if your bank’s rates increase during the term of the account. Typically, you can “bump up” your rate only once.
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No-penalty CD: Also referred to as a liquid CD, this type permits you to withdraw funds prior to maturity without incurring a penalty.
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Jumbo CD: These CDs require a higher minimum deposit (typically $100,000 or more) and often provide higher interest rates in return. Nevertheless, in the current CD rate environment, the differences between traditional and jumbo CD rates may be minimal.
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Brokered CD: As the name implies, these CDs are obtained through a brokerage rather than directly from a bank. Brokered CDs may sometimes present higher rates or more flexible terms, yet they also entail greater risks and may not be FDIC-insured.
