CD rates vary by bank, term length, and market conditions—there is no single "the rate"

A CD rate is the interest percentage a bank pays you for locking your money away for a set time. The rate you see depends on three things: which bank you check, how long you agree to leave the money untouched, and what the Federal Reserve has done with its benchmark rate recently.

Right now, rates range from under 1% at some large national banks to over 5% at online banks and credit unions, depending on the term. A one-year CD at Bank of America might pay 4.35%, while the same term at Marcus by Goldman Sachs might pay 4.75%. A five-year CD at the same bank will almost always pay less than a one-year CD at that bank—that is how the market works.

The reason rates move is the Federal Reserve. When the Fed raises its benchmark rate, banks raise CD rates to compete for your money. When the Fed cuts rates, CD rates fall. Banks also compete with each other: if one bank raises its one-year rate to 5%, others follow or lose customers.

Key Takeaways

  • CD rates are set by individual banks and change weekly or even daily, so the rate you see today may not be the rate you lock in tomorrow.
  • Online banks and credit unions typically offer higher rates than large national banks because they have lower overhead costs.
  • Shorter terms (three months to one year) usually pay less than longer terms, but rates can invert when the Fed is expected to cut rates soon.
  • The Federal Reserve's benchmark rate is the main driver of all CD rates—when it moves, bank rates follow within days or weeks.
  • You can compare rates across banks using financial websites, but you must check the actual bank's website to confirm the rate before you commit money.

How to find the current rates at banks you trust

The fastest way is to visit the CD page of each bank's website directly. Look for a table showing term length in one column and the annual percentage yield (APY) in another. APY is the rate that matters—it includes compounding, so it is always slightly higher than the base interest rate.

If you want to compare many banks at once, Bankrate, DepositAccounts, and the FDIC's BankFind tool all show current rates from hundreds of banks. These sites update daily or several times per week. The rates shown are usually accurate within a few hours, but banks can change them without notice, so always confirm on the bank's own website before you deposit money.

Credit unions often pay higher rates than banks because they are member-owned and do not have to generate profit for shareholders. If you belong to a credit union, check their CD rates first. If you do not, some credit unions let you join if you live or work in their service area, or if you join a related organization.

Why rates differ between banks and terms

Banks set rates based on what they need to attract deposits and what they can earn by lending that money out. A bank that needs cash urgently will raise its CD rates. A bank that has plenty of deposits will lower them. This is why you see a two-percentage-point spread between the highest and lowest one-year rates on any given day.

Term length matters because longer commitments carry more risk for you—inflation could rise, or you might need the money. Banks compensate by paying more for longer terms. A five-year CD usually pays 0.5% to 1% more than a one-year CD at the same bank. However, when the Fed is expected to cut rates soon, this pattern can flip: banks may pay less for longer terms because they expect to lower all rates in a few months.

Deposit size can also affect the rate. Some banks offer a slightly higher rate for jumbo CDs—usually $100,000 or more. Most banks do not, so this is worth asking about if you have a large sum.

What happens to your rate if the Fed changes course

Once you lock in a CD rate, it does not change. If you buy a one-year CD at 4.75% and the Fed cuts rates to 3%, you still earn 4.75% for the full year. This is the safety of a CD: your rate is may provide.

The catch is that if rates rise after you buy, you are stuck earning less than new CDs pay. If you need the money before the term ends, most banks charge an early withdrawal penalty—usually three to six months of interest. Some banks charge a flat fee instead. Always read the penalty terms before you commit.

This is why many people buy a ladder of CDs: one that matures in one year, one in two years, one in three years, and so on. When the one-year CD matures, you can reinvest it at whatever rate the market offers then. This spreads your risk and gives you flexibility without locking all your money away for five years.

The difference between APY and interest rate

Banks quote CD rates two ways: the interest rate (also called the nominal rate) and the annual percentage yield, or APY. The APY is always higher because it includes the effect of compounding—interest earning interest.

If a CD pays 4.50% interest compounded daily, the APY might be 4.60%. The difference is small, but it adds up over time. Always compare APYs when you are choosing between banks, not the base rate. The APY is what you actually earn.

FDIC insurance and where your money is safe

The Federal Deposit Insurance Corporation (FDIC) insures CDs at banks up to $250,000 per depositor, per bank. If the bank fails, you get your money back, up to that limit. This means you can safely put $250,000 in a CD at Bank A and another $250,000 at Bank B and both are fully protected.

Credit unions are insured by the National Credit Union Administration (NCUA), which offers the same $250,000 protection. Online banks are FDIC-insured just like brick-and-mortar banks—the insurance does not depend on whether you can walk into a branch.

If you have more than $250,000 to invest in CDs, you can spread it across multiple banks or use a CD ladder at different institutions. Some people use a service like Connexus or DepositAccounts that lets you buy CDs at multiple banks through one platform, but you still own each CD at its individual bank and each is insured separately.

When to lock in a rate versus waiting

This is a judgment call, not a science. If the Fed has just raised rates and economists expect it to hold steady for several months, locking in now makes sense. If the Fed is expected to cut rates in the next few weeks, waiting might pay off.

The problem is that nobody knows for certain what the Fed will do. If you need the money in two years and a two-year CD pays 4.50%, locking that in today removes the risk that rates will fall to 3% next month. You give up the upside if rates rise to 5%, but you also avoid the downside. That trade-off is worth it to many people.

One practical approach: if rates are near their highest point in the past year, lock in. If they are near their lowest, wait if you can afford to. If they are in the middle, split the difference—buy a CD now and plan to buy another in a few months.

Frequently Asked Questions

What is today's CD rate?

CD rates change daily and vary by bank and term. As of now, one-year CDs at online banks range from roughly 4.5% to 5.1% APY, while national banks typically offer 4.0% to 4.5%. Check Bankrate or your bank's website for the exact current rate, since it may have changed since this article was written.

Why do online banks pay more than big banks?

Online banks have lower overhead—no branches, fewer employees, lower rent. They pass those savings to customers by paying higher rates on CDs and savings accounts. They are FDIC-insured just like traditional banks, so the safety is the same.

Can I get a CD rate locked in before I deposit the money?

Most banks do not hold a rate for you. The rate you see is the rate available when you fund the CD. Some banks offer a rate hold for a few days if you open the account online, but this varies. Call the bank or check their website to ask about their specific policy.

What if I need my money before the CD matures?

You can withdraw it, but you will pay an early withdrawal penalty. The penalty is usually three to six months of interest, though some banks charge a flat fee. Read the terms before you buy. Some banks offer no-penalty CDs that let you withdraw without penalty, but they pay lower rates to offset that flexibility.

Should I buy a long-term CD or a short-term CD?

Long-term CDs usually pay more, but they lock your money away longer. Short-term CDs give you flexibility to reinvest at higher rates if the market moves. A CD ladder—buying multiple CDs with different maturity dates—balances both: you get some of the higher long-term rate and some of the flexibility of short-term CDs.