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High-Yield CD Rates: A Limited-Time Opportunity

With the Federal Reserve’s recent rate cut, now is the time to take advantage of high-yield CD rates before they drop. CD rates vary widely across financial institutions, making it crucial to find the best rate possible.

Historical Context: A Shift in CD Rates

Traditionally, longer-term CDs offered higher interest rates to encourage savers to keep their money on deposit longer. However, in today’s economic climate, shorter-term CDs are offering more competitive rates.

Top CD Rates Today

As of January 12, 2025, CD rates remain high by historical standards. The highest CD rate, 4.25% APY, is offered by Marcus by Goldman Sachs on its 1-year CD, with a minimum deposit of $500 required.

Understanding APY and Compound Interest

The annual percentage rate (APY) determines the total earnings on your CD after one year, considering the base interest rate and compounding frequency. A higher APY translates to more interest earned over time.

The Power of Compound Interest

For example, a $1,000 deposit in a 1-year CD with 1.81% APY would grow to $1,018.25 after one year. In contrast, a 1-year CD with 4% APY would yield $40.74 more in interest, resulting in a balance of $1,040.74.

Types of CDs: Flexibility and Benefits

While interest rate is a key consideration, it’s not the only factor. Different types of CDs offer unique benefits, often at the cost of a slightly lower interest rate:

• Bump-up CD: Allows you to request a higher interest rate if your bank’s rates increase during the term.
• No-penalty CD: Enables you to withdraw funds before maturity without penalty.
• Jumbo CD: Requires a higher minimum deposit, often offering higher interest rates in return.
• Brokered CD: Purchased through a brokerage, these CDs may offer higher rates or more flexible terms, but carry more risk and might not be FDIC-insured.

Explore Other Savings Options

If you’re searching for top savings interest rates, money market account rates, or CD rates, we’ve got you covered. Learn more about these options and find the best fit for your financial goals.