Yesterday’s rate pause by the Federal Reserve—widely expected for over a month—has not stopped banks and credit unions from nudging CD rates higher. Just one week after we began counting nationwide CDs that offer a rate of 5.65% APY or higher, the number in that elite tier has climbed from 15 to 21.
Topping that list is the highest nationally available CD rate of 5.80% APY, and it comes in a flexible package. Offered by Credit Human, you can score that rate for whatever CD term you choose between 12 and 17 months. You also have the option to earn 5.80% APY on a 1-year certificate from The Federal Savings Bank.
Key Takeaways
- The industry-leading rate in our daily ranking of the best CDs continues to be 5.80% APY, available on terms ranging from 12 to 17 months.
- The number of nationally available CDs paying 5.65% or better climbed again today, raising the count to 21. That’s up from 15 a week ago.
- Anyone with a jumbo-sized deposit can earn the highest nationwide rate of all—5.85% APY available for a 170-day term.
- The Fed announced yesterday that it is holding rates steady for now, after most recently raising rates in July. But a possible Fed hike in November or December is still on the table.
If you want to extend one of today’s record rates further into the future, you can score 5.23% APY with the best 3-year CD. But for the first time since the Fed began raising rates in early 2022, last week brought the option to earn 5.00% on a CD in the 4-year term. Previously, the leading rate for 4- and 5-year CDs had only reached the upper 4.00% range.
Have a jumbo-sized deposit? You have the opportunity to earn even more. The top jumbo rate is currently 5.85% APY—available on a 170-day certificate if you have at least a $100,000 deposit.
Note that jumbo CDs don’t always pay a higher return than standard certificates. Sometimes you can do just as well or better with a standard CD, as you can see in five of the terms above. So always be sure to shop both certificate types before making a final decision.
How High Will CD Rates Go This Year?
The Federal Reserve has been aggressively combating decades-high inflation since March of last year, raising the federal funds rate with fast-and-furious hikes in 2022 and then more moderate increases in 2023. The Fed has implemented 11 increases in 13 meetings—its most recent hike on July 26—for a cumulative increase of 5.25%. This has created record rate conditions for CD shoppers, as well as for anyone holding cash in a high-yield savings or money market account.
Yesterday, the Fed announced a rate hold, maintaining the central bank’s benchmark rate at its highest level since 2001. But in his post-announcement press conference, Fed Chair Jerome Powell made it clear that holding rates is simply about pausing to see how much impact previous hikes will still have and allowing more economic data to come in for the Fed’s consideration. He indicated the September hold should not be interpreted as a signal that the Fed’s rate-hike campaign is necessarily over.
“We’re prepared to raise rates further if appropriate,” Powell said.
Yesterday’s meeting also included a quarterly release of the Fed’s “Summary of Economic Projections,” which includes a “dot plot” graph indicating where each Fed member believes the fed funds rate will be at the end of coming years. The current dot plot shows that almost two-thirds of the Fed’s policymaking committee members (12 out of 19) believe one additional rate increase will be implemented this year. The remaining seven members envision the benchmark rate holding steady through 2023.
As for 2024, the dot plot shows that 13 of the 19 committee members anticipate one or more rate cuts, with a median expected decrease of 0.50%. But that’s a change from June’s dot plot, which anticipated a more significant drop-off for 2024 rates. This indicates Fed members currently believe rates will have to stay elevated longer than previously anticipated.
For now, we know another potential 2023 increase from the Fed would certainly nudge CD rates a bit higher than their already record levels. But until then, markets and CD shoppers will be left to guess whether today’s hold is temporary or permanent. Once the end of the Fed’s campaign finally appears to be in sight, that will be the sign that CD rates have reached a peak.
Note that the “top rates” quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often five, 10, or even 15 times higher.
Rate Collection Methodology Disclosure
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD’s minimum initial deposit must not exceed $25,000.
Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.
Investopedia / Alice Morgan & Sabrina Jiang