Interest rates on CDs are currently high, and with the expectation of further rate increases, it may be advantageous to open a CD now to secure a higher rate, although there is a risk that rates could go higher or that you may need access to the funds before the CD term ends, in which case a high-yield savings account may be a better option.
CD rates continue to rise, with 38 CDs now offering 5.50% APY or higher, and the highest rate reaching 5.85% APY for jumbo deposits of $100,000 or more. However, it is uncertain if rates will go even higher as the Federal Reserve considers additional interest rate hikes.
Not all CDs are created equal, as today's top CDs offer rates nearly four times higher than the national average, allowing investors to maximize their returns and get the most for their savings.
Despite the current rise in interest rates, experts predict that CD rates will remain relatively stable in 2023, with the possibility of a slight increase, but a downward trend is expected for 2024.
Interest rates on CDs are currently high, making it a good time to deposit money into one for the higher returns and the predictability and protection they offer compared to regular savings accounts.
Despite a six-way tie for the leading rate on nationally available CDs at 5.75% APY, the number of options in the elite group has grown to 16, with the addition of a new 12-month CD from CFG Bank, while the probability of a Fed rate hike in November or December is estimated to be 30-40%.
Despite the Federal Reserve's decision to maintain interest rates, banks and credit unions are still increasing the rates offered on certificates of deposit (CDs), with the number of nationally available CDs offering rates of 5.65% or higher rising from 15 to 21 in just one week.
Short-term CDs with high interest rates are becoming popular among savers looking to grow their savings while maintaining flexibility, and some of the best 6-month CD rates in 2023 can be found at banks such as Merrick Bank (5.50% APY), Bank5 Connect (5.50% APY), and Bask Bank (5.25% APY).
The recent pause in rate hikes by the Fed suggests that savings rates have reached their peak and are unlikely to go much higher, making it a good time to lock in a CD term and diversify short- and long-term savings.
The top nationally available CD rate is 6.00% APY for a term of 12-17 months, and there are several other CDs paying 5.75% APY or better, while a regional offer in five states allows for a rate of 6.25% APY; the Federal Reserve's rate hold in September does not indicate that the rate-hike campaign is necessarily over, and there may be further increases in the future.
Financial Partners Credit Union is offering a new CD with a top rate of 6.50% for an eight-month term, the highest rate among all tracked CDs, but with a $5,000 maximum deposit.
CD interest rates are predicted to remain relatively steady in 2024, with experts expecting rates to be around the same levels as they are now, although certain banks may offer slightly higher rates to attract deposits.
CD rates may increase in November depending on the actions of the Federal Reserve, which is set to meet at the end of October and potentially raise interest rates, resulting in higher average CD interest rates.
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