Current CD rates vary by bank, term length, and deposit size, but most banks are paying between 4.5% and 5.3% annual percentage yield (APY) on one-year CDs as of early 2025
The rate you see depends on which bank you check and how long you lock your money away. A six-month CD typically pays less than a one-year CD at the same bank. A five-year CD may pay more or less than a one-year CD, depending on whether the Federal Reserve is expected to raise or lower rates. Online banks generally pay higher rates than brick-and-mortar branches because they have lower overhead costs.
Rates change weekly or even daily. The bank sets the rate when you open the CD, and that rate is locked in for the full term — so a 5.0% CD opened today will still pay 5.0% even if rates drop to 3.0% next month. This is why timing matters, but also why you should not wait for a "perfect" rate that may never come.
Key Takeaways
- CD rates are highest at online banks and credit unions, which typically pay 0.5% to 1.0% more than traditional banks for the same term.
- Shorter terms (three to six months) pay less; longer terms (three to five years) may pay more or less depending on rate direction, so compare before committing.
- The rate locks in when you open the CD and does not change, even if market rates fall, so you are protected against rate drops but locked out of rate rises.
- Jumbo CDs (usually $100,000 or more) sometimes pay slightly higher rates, but the difference is often small enough that splitting money across regular CDs at multiple banks makes more sense.
How to find the highest rates for your term
Start by checking three to five online banks and your own bank side by side. Common places to look are Ally Bank, Marcus by Goldman Sachs, American Express Personal Savings, Discover Bank, and Charles Schwab Bank. Each updates rates on their website, and most show the APY clearly without requiring you to log in.
Write down the rate, the term (three months, one year, five years), and any minimum deposit. A bank paying 5.2% on a one-year CD but requiring $25,000 minimum is not the same offer as one paying 5.0% with $500 minimum — the second one may be the better choice if you have less to deposit. Also check whether the bank charges a penalty for withdrawing early; most do, and the penalty can erase months of interest if you need the money before maturity.
Credit unions often pay rates as high as online banks, sometimes higher. If you belong to one, log in or call and ask what they are paying on a one-year CD. You may need to be a member for a certain number of days before opening a CD, so ask that too.
Why rates differ between banks and terms
Banks set CD rates based on what the Federal Reserve is doing and what they expect to happen next. When the Fed raises its benchmark rate, banks raise CD rates to attract deposits. When the Fed cuts rates or signals it will cut soon, banks lower CD rates because they do not need to pay as much to keep your money.
Term length matters because banks use your deposit for different purposes depending on how long they have it. A six-month CD gives the bank less time to lend your money out, so it pays less. A five-year CD locks in your money for longer, which lets the bank plan further ahead — but if rates are expected to fall, the bank may not pay much more for a five-year term because they know rates will be lower when the CD matures.
Deposit size can affect the rate too. Some banks offer a slightly higher rate on jumbo CDs ($100,000 or more), but the bump is usually 0.1% to 0.3% — small enough that you might earn more by splitting $100,000 across two banks at their regular rates, because you would have two separate Federal Deposit Insurance Corporation (FDIC) protections instead of one.
Comparing CD rates across different time horizons
The shape of CD rates tells you what the market expects. If a one-year CD pays 5.0% and a five-year CD pays 5.2%, the market expects rates to stay flat or fall — the bank is paying only slightly more for locking your money away for four extra years. If a one-year CD pays 5.2% and a five-year CD pays 4.8%, the market expects rates to fall sharply — the bank is paying less for a longer term because they know they will be able to offer lower rates when you reinvest.
This matters for your strategy. If you think rates will fall, a longer-term CD locks in today's higher rate. If you think rates will rise, a shorter-term CD lets you reinvest at a higher rate when it matures. But most people cannot predict rate direction reliably, so a middle-ground approach — splitting money across a six-month CD and a two-year CD — lets you capture some of today's rate while keeping some flexibility.
| CD Term | Typical Rate Range (as of early 2025) | Best for |
|---|---|---|
| 3 months | 4.0% to 4.8% | Money you might need soon; lowest commitment |
| 6 months | 4.5% to 5.0% | Short-term savings; slightly higher rate than 3-month |
| 1 year | 4.5% to 5.3% | Most common; good balance of rate and flexibility |
| 2 years | 4.3% to 5.1% | Medium-term goals; rate may be lower than 1-year |
| 5 years | 4.0% to 5.2% | Long-term savings; rate varies widely based on rate outlook |
What happens when your CD matures
When the term ends, the bank deposits your principal plus all the interest into your account. You then have a short window (usually 7 to 10 days) to decide what to do next. You can open a new CD at the bank's current rate, move the money to a savings account, or withdraw it entirely.
If you do nothing during that window, most banks automatically renew the CD at the current rate for the same term. This is convenient if rates have not changed much, but it can work against you if rates have fallen sharply — you will be locked in at a lower rate for another full term. Set a calendar reminder for a few days before maturity so you can shop rates and decide whether to stay or move your money.
Early withdrawal penalties and when they matter
Most CDs charge a penalty if you withdraw money before the maturity date. The penalty is usually a certain number of months of interest — for example, three months of interest on a one-year CD. If you opened a $10,000 CD at 5.0% APY and withdrew after six months, you would owe a penalty of roughly $125 (three months of the $500 annual interest), leaving you with $10,375 instead of $10,250.
This penalty is why you should only put money into a CD if you are confident you will not need it before maturity. If there is any chance you will need the money, a high-yield savings account pays nearly as much (often 4.5% to 5.0%) with no penalty for withdrawal. The rate difference is small enough that the flexibility is worth it for emergency funds.
Frequently Asked Questions
Do I have to use my own bank for a CD?
No. You can open a CD at any bank or credit union that offers them, even if you have never banked there before. Online banks make this easy because you can open an account entirely online. You will need to provide your Social Security number and proof of address, and you can fund the CD by transferring money from another bank account.
What if rates drop right after I open a CD?
Your rate is locked in, so you keep earning the higher rate for the full term. This is one of the main benefits of a CD — you are protected against rate drops. The trade-off is that if rates rise, you cannot access the higher rate until your CD matures.
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 terms or different amounts. Each CD is insured separately by the FDIC up to $250,000, so if you have $500,000, you could open two $250,000 CDs at the same bank and both would be fully protected.
Are CD rates the same everywhere?
No. Online banks and credit unions typically pay 0.5% to 1.0% more than traditional banks. Even among online banks, rates vary — one bank might pay 5.2% on a one-year CD while another pays 4.9%. Checking three to five banks takes 15 minutes and can earn you hundreds of dollars in extra interest over the CD term.
What is the difference between APY and interest rate?
APY (annual percentage yield) includes the effect of compounding — interest earned on your interest. The interest rate is the base percentage the bank pays. For CDs, the APY is what matters because it shows exactly how much you will earn in a year. Banks are required to display APY prominently, so use that number when comparing.