When you’re on the hunt for a Certificate of Deposit (CD), shopping around to find the best rates can make a big difference, as CD rates can vary greatly between different financial institutions. Let me give you a rundown of today’s CD rates and guide you to some of the top offers out there.
Traditionally, CDs with longer terms would boast higher interest rates compared to those with shorter terms. The rationale was simple: banks aimed to incentivize depositors to leave their money with them for a longer time. However, in the current economic landscape, this trend has flipped on its head.
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As of today, Marcus by Goldman Sachs is leading with a 4.50% APY on their 14-month CD, which requires a minimum opening deposit of $500. LendingClub matches this rate with a 4.50% APY for their 10-month CD, though you’ll need a minimum of $2,500 to get started.
Let me walk you through some of the standout CD rates you’ll find today from partners we trust:
The interest you can earn from a CD is linked to its annual percentage rate (APY). The APY reflects your overall earnings after a year, factoring in the baseline interest rate and how interest compounds over time (usually on a daily or monthly basis in the case of CDs).
For instance, if you invest $1,000 in a one-year CD with a 1.81% APY, and interest compounds monthly, your balance at year’s end would rise to $1,018.25. That’s your initial $1,000 plus $18.25 in interest.
Now, imagine opting for a one-year CD with a 4% APY instead. By the end of the year, your balance would grow to $1,040.74, which includes $40.74 in interest.
The more you put into a CD, the more you could earn. Take the previous example with the 4% APY: if you were to deposit $10,000 instead of $1,000, your balance at maturity would reach $10,407.42, meaning you’d pocket $407.42 in interest.
Find out more: What makes a CD rate good?
When choosing a CD, while the interest rate is an important factor, it’s not the only one you should weigh. There are various types of CDs, each with unique advantages, that might require you to accept slightly lower rates for added flexibility. Here’s a look at some alternative CD options beyond the traditional:
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Bump-up CD: This kind of CD provides an opportunity to lock in a higher interest rate if the bank’s rates climb during your term. Typically, you can only make this adjustment once.
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No-penalty CD: Also known as a liquid CD, this version allows you to withdraw your funds before the term ends without incurring penalties.
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Jumbo CD: These CDs usually demand a hefty minimum deposit of $100,000 or more and, in return, often offer higher interest rates. However, given today’s CD rates, the difference between traditional and jumbo CDs might not be substantial.
- Brokered CD: True to its name, these CDs are acquired through a brokerage instead of directly from a bank. Brokered CDs can sometimes provide better rates or more flexible terms, but they come with increased risk and might lack FDIC insurance.
As you explore CD options, keep these variations in mind to find the best fit for your financial goals and priorities.
