CD rates and minimums vary by bank and term length, not by a fixed national number

There is no single answer to "how much are CDs" because the interest rate you earn and the money you need to open one both depend on which bank you choose, how long you lock your money away, and what the Federal Reserve has done with interest rates recently. A CD at one bank might pay 4.50% for a one-year term while another pays 4.75% for the same length. Minimum deposits range from $500 at some online banks to $25,000 at others, and a few have no minimum at all.

The rate environment also shifts. When the Federal Reserve raises its benchmark rate, banks typically raise CD rates within weeks. When rates fall, CD rates fall with them. This means the rate you see today will not be the rate available in three months, and certainly not in a year.

Key Takeaways

  • CD rates currently range from roughly 4% to 5.5% depending on the bank and term, but you must check your specific bank's current offerings because rates change frequently.
  • Minimum deposits vary from $0 to $25,000 or more, so an online bank with no minimum may cost you nothing to start, while a traditional bank may require thousands.
  • Longer-term CDs (12 months or more) typically pay higher rates than shorter ones, but locking money away for five years means you cannot access it without a penalty.
  • The early withdrawal penalty is usually a few months of interest, so a CD that pays 5% but charges three months' interest as a penalty costs you real money if you need the cash before maturity.

How to find the current rates at banks you already use

Log into your bank's website or app and look for "CDs" or "Certificates of Deposit" in the savings or investment section. Most banks display a rate table showing different term lengths (three months, six months, one year, two years, five years) with the interest rate next to each one. Write down or screenshot the rates and the minimum deposit for each term.

If your bank does not offer CDs or the rates look low, check one or two online banks. Online banks typically pay higher rates because they have lower overhead costs. Common names include Marcus by Goldman Sachs, Ally Bank, American Express Bank, and Discover Bank. Each one publishes its current rates on the home page or in a rates table you can view without logging in.

When you compare, note both the annual percentage yield (APY) and the term length. A 5.2% APY for 12 months is not the same as 5.2% for 60 months — the longer term usually pays more, but you give up access to your money for five years instead of one.

What the minimum deposit really means

The minimum deposit is the smallest amount of money you must put into the CD when you open it. If a bank requires a $1,000 minimum and you only have $500, you cannot open that CD at that bank. Some banks have no minimum, meaning you can open a CD with $1 if you want to, though that defeats the purpose.

The minimum does not change based on how long you lock the money away. A bank that requires $2,500 to open a one-year CD also requires $2,500 to open a five-year CD. However, different banks have different minimums, so if one bank's minimum is too high, another bank's may not be.

Early withdrawal penalties and what they cost

If you need your money before the CD matures, the bank will charge you a penalty. The penalty is usually expressed as a number of months of interest. A CD that pays 5% APY with a three-month penalty means you lose three months' worth of that 5% if you withdraw early.

On a $10,000 CD at 5% APY, three months of interest equals roughly $125. If you withdraw after six months, you get your $10,000 back plus three months of interest (about $125), then the bank subtracts the three-month penalty (about $125), leaving you with $10,000 and no interest earned. You spent six months with your money locked up and earned nothing.

Some banks charge a flat dollar amount instead of months of interest. Always read the CD's terms before you open it so you know what the penalty is. If you think you might need the money, a shorter-term CD (three or six months) means a shorter lock-up period and a smaller penalty if something changes.

How CD rates compare to savings accounts and money market accounts

A high-yield savings account at an online bank currently pays between 4% and 5% APY with no lock-up period. You can withdraw your money anytime without a penalty. A money market account works similarly but may require a higher minimum deposit and sometimes limits how many withdrawals you can make per month.

A CD typically pays slightly more than a savings account for the same bank because you are agreeing to lock the money away. If an online bank's savings account pays 4.75% and its one-year CD pays 5.10%, the extra 0.35% is your reward for not touching the money for a year. Whether that extra 0.35% is worth losing access to your cash depends on your situation.

If you might need the money within a year, a savings account makes more sense. If you know you will not touch it, a CD locks in a slightly higher rate and removes the temptation to spend it.

What happens when your CD matures

When the CD reaches its maturity date, the bank deposits your principal plus all the interest you earned into your account. You can then withdraw the money, move it to another CD, or leave it in a regular savings account.

Some banks automatically renew your CD into a new CD of the same length at the new current rate if you do not tell them otherwise. If rates have fallen, you may end up locked in at a lower rate without realizing it. Read your CD's terms to see if auto-renewal is the default, and if it is, mark your calendar for the maturity date so you can decide whether to renew or move your money elsewhere.

Frequently Asked Questions

Do I have to pay taxes on CD interest?

Yes. The interest you earn on a CD is taxable income in the year you earn it, even if you do not withdraw the money. Your bank will send you a 1099-INT form in January showing how much interest you earned. You report this on your tax return.

Can I open multiple CDs at the same bank?

Yes. You can open as many CDs as you want at the same bank, with different term lengths or different amounts. Some people create a "CD ladder" by opening CDs that mature at different times so they have money becoming available regularly without locking everything away for years.

What if the bank fails while my money is in a CD?

The Federal Deposit Insurance Corporation (FDIC) protects deposits up to $250,000 per depositor per bank. If your CD is under $250,000 and the bank fails, you get your full balance back, including accrued interest. Credit unions offer similar protection through the National Credit Union Administration (NCUA).

Is a CD a good place to put an emergency fund?

A CD is not ideal for an emergency fund because you cannot access the money without paying a penalty. A high-yield savings account is better for emergencies because you can withdraw anytime. Use a CD for money you know you will not need for at least three to six months.

How often do CD rates change?

Banks can change their CD rates whenever they choose, though most follow the Federal Reserve's moves. Rates can shift daily or stay the same for weeks. If you see a rate you like, you can lock it in by opening the CD that day, but you cannot predict what rates will be next month.