Preserve Your Earning Power with Competitive CD Rates
The recent federal funds rate cuts by the Federal Reserve have led to a decline in deposit account rates. However, you can still secure a competitive return on a certificate of deposit (CD) and protect your earning power. In fact, the top CDs currently offer rates above 4%.
CD Rates Today: A Snapshot
CDs generally offer rates significantly higher than traditional savings accounts. As of December 2024, the best short-term CDs (six to 12 months) typically offer rates around 4.00% to 4.50% APY. The highest CD rate currently stands at 4.25% APY, offered by Marcus by Goldman Sachs on its 1-year CD, with a minimum opening deposit of $500 required.
A Brief History of CD Rates
The 2000s saw a decline in CD rates, particularly after the global financial crisis of 2008. By 2009, the average one-year CD paid around 1% APY, with five-year CDs at less than 2% APY. The trend continued into the 2010s, with rates falling to record lows. However, between 2015 and 2018, the Fed’s rate hikes led to a slight improvement in CD rates. The COVID-19 pandemic caused rates to plummet, but they rebounded as inflation rose. Today, CD rates remain high by historical standards.
Choosing the Right CD
When selecting a CD, consider the following factors:
- Term length: Decide how long you’re willing to lock away your funds. CDs come with fixed terms, and withdrawing your money before the term ends can result in penalties.
- Financial institution: Rates vary among financial institutions. Research CD rates from online banks, local banks, and credit unions to find the best offers.
- Account terms: Understand the terms of the CD, including the maturity date, withdrawal penalties, and minimum deposit requirements.
- Inflation: Consider how inflation may impact your returns, especially for longer terms.
Take Advantage of High CD Rates
Now may be your last chance to lock in today’s high CD rates. Compare the best CD rates available today and ensure you’re earning the best rate possible.
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