Current CD rates depend on the bank, the deposit amount, and how long you lock your money away
CD rates change constantly—sometimes daily—because they follow the Federal Reserve's interest rate decisions and what banks need to attract deposits. A one-year CD at one bank might pay 4.50%, while another pays 4.75% for the same term. A five-year CD at the same bank often pays less than a one-year CD, which sounds backwards but happens when banks expect rates to fall. There is no single "the CD rate"—you have to check the banks you are considering.
The rate you see advertised is what the bank promises to pay you for the entire term. If you open a two-year CD at 4.60%, you will earn 4.60% per year for those two years, even if rates drop to 2% next month. That lock-in is the trade-off: you get a may provide rate, but you cannot touch the money without a penalty.
Right now, rates are higher than they have been in years because the Federal Reserve raised its benchmark rate starting in 2022. That means banks are competing harder for deposits and offering better rates to attract them. This window will not last forever—when the Fed cuts rates, bank CD rates will follow.
Key Takeaways
- CD rates vary by bank, term length, and deposit size, so comparing three to five banks takes 15 minutes and can save you hundreds of dollars over the life of the CD.
- Shorter terms (three months to one year) usually pay less than longer terms, but sometimes invert when banks expect rates to fall soon.
- The rate you lock in stays the same for the entire term, which protects you if rates drop but costs you if rates rise.
- Banks publish their rates online, and you can open most CDs without visiting a branch or paying an account fee.
- The Federal Reserve's decisions drive all CD rates up or down over time, so the rates available today will not be available in six months.
How to find the rates banks are actually offering
Go to the CD rate page of each bank's website and look for the table that lists term length, annual percentage yield (APY), and minimum deposit. APY is the number that matters—it includes both the interest rate and how often the bank compounds it, so comparing APY across banks is fair. Do not compare the "interest rate" number alone, because compounding frequency varies.
You do not need to call anyone. Every major bank and most credit unions publish their CD rates online. If a bank does not show rates on its website, that is a sign it is not competitive—move on. You are looking for the APY column and the term you care about (six months, one year, three years, five years, and so on).
Write down the APY and minimum deposit for each bank and term. The difference between 4.50% and 4.75% sounds small, but on a $10,000 CD for one year, that is $25 more in your pocket. Over five years, the gap grows much larger because of compounding.
Why rates differ between banks and term lengths
Banks set CD rates based on what they need to pay to attract deposits and what they can earn by lending that money out. If a bank has plenty of deposits, it lowers its CD rates. If deposits are scarce, it raises them to compete. Online banks usually pay more than brick-and-mortar banks because they have lower overhead and can pass savings to depositors.
Term length matters because banks use deposits for different purposes. A bank might need short-term money to cover immediate lending, so it pays more for three-month CDs. Or it might need long-term funding for mortgages, so it pays more for five-year CDs. Sometimes the pattern flips—when banks expect the Fed to cut rates soon, they pay less for longer terms because they do not want to be locked into high rates.
Deposit size can also affect the rate. Some banks offer higher APY on jumbo CDs (usually $100,000 or more), while others charge a penalty for small deposits. Check the minimum deposit column to see if the rate you want requires more money than you have available.
What happens to CD rates when the Federal Reserve moves
The Federal Reserve sets a target range for the federal funds rate—the rate banks charge each other to borrow overnight. When the Fed raises this rate, banks can earn more on their own investments, so they do not need to pay as much for deposits. CD rates fall. When the Fed cuts rates, banks need deposits more urgently, so they raise CD rates to compete.
The Fed does not control CD rates directly. It controls the federal funds rate, and banks respond by adjusting what they offer depositors. The lag is usually one to two weeks—after the Fed announces a decision, banks update their CD rates within days.
This is why locking in a rate matters. If you open a two-year CD at 4.75% and the Fed cuts rates three months later, your CD still pays 4.75%. You made the right move. But if rates rise, you are stuck at 4.75% while new CDs pay 5.25%. You cannot change your rate mid-term without withdrawing early and paying a penalty.
How to compare rates across different term lengths
A longer CD does not always pay more than a shorter one. Sometimes a one-year CD pays 4.75% while a five-year CD pays 4.50%. This happens when banks expect rates to fall, so they do not want to lock in high rates for five years. When rates are rising or stable, longer terms usually pay more.
To decide which term makes sense for you, think about when you will need the money. If you might need it in two years, a five-year CD is risky because you will pay a penalty to withdraw early (usually three to six months of interest). A two-year CD locks in the rate for exactly as long as you need.
You can also build a CD ladder: open multiple CDs with different maturity dates. For example, open five one-year CDs, each maturing in years one through five. When the first one matures, you can open a new five-year CD at whatever rate is available then. This spreads your risk and lets you take advantage of rate changes without locking all your money away for five years.
Comparing CD rates to savings accounts and money market accounts
A savings account or money market account usually pays less than a CD because you can withdraw money anytime without penalty. Banks pay for that flexibility by offering lower rates. Right now, high-yield savings accounts pay around 4.00% to 4.50%, while CDs pay 4.50% to 5.35% depending on the term. The difference is not huge, but it adds up over time.
The trade-off is liquidity. If you need the money in six months, a CD with a six-month term locks in a higher rate. But if you might need it sooner, a savings account keeps your options open. Some people split the difference: put money they definitely will not touch in a CD, and keep emergency money in a savings account.
Money market accounts sit in the middle—they usually pay more than savings accounts but less than CDs, and they let you write checks or make withdrawals (though often with limits). If you want some flexibility and a better rate than savings, a money market account is worth comparing.
What to watch out for when opening a CD
Read the early withdrawal penalty before you open the CD. Most banks charge three to six months of interest if you take money out before the term ends. On a $10,000 CD paying 4.75%, that is roughly $120 to $240. Some banks charge a flat fee instead. Know the number before you commit.
Check whether the bank compounds interest daily, monthly, or quarterly. Daily compounding pays slightly more than monthly, which pays more than quarterly. The APY already accounts for this, so you do not have to do math—just compare APY numbers. But if two banks offer the same APY, daily compounding is a tiny edge.
Make sure the bank is insured by the Federal Deposit Insurance Corporation (FDIC) or, if it is a credit union, by the National Credit Union Administration (NCUA). This protects your deposit up to $250,000 if the bank fails. Most banks and credit unions carry this insurance, but a few do not—check before you open an account.
Frequently Asked Questions
Do I have to keep money in a CD for the full term?
No, but you will pay a penalty if you withdraw early. The penalty is usually three to six months of interest. Some banks let you withdraw a small amount without penalty, but most do not. Read the terms before opening the CD so you know the cost if you need the money sooner than expected.
Can I move a CD to a different bank if I find a better rate?
Yes, but you will pay the early withdrawal penalty at your current bank. If the penalty is three months of interest and the new rate is much higher, it might still be worth it—do the math. You can also wait until the CD matures and open a new one at the better rate with no penalty.
What is the difference between APY and interest rate?
Interest rate is the percentage the bank pays. APY (annual percentage yield) is the interest rate plus the effect of compounding—how often the bank adds earned interest back into your account so you earn interest on interest. APY is always equal to or higher than the interest rate, and it is the number to compare across banks.
Will CD rates go up or down soon?
No one knows for certain, but the Federal Reserve's decisions drive the direction. If the Fed is cutting rates, CD rates will fall over time. If the Fed is raising rates, CD rates will rise. Watch Fed announcements and financial news to get a sense of the direction, but do not try to time the market perfectly—lock in a rate you are comfortable with and move on.
Is a CD a good place for emergency savings?
Not ideal, because you cannot access the money without paying a penalty. Emergency savings should stay in a savings account or money market account where you can withdraw without cost. Use CDs for money you know you will not need for at least six months to a year.