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For cash you can set aside for a while—whether it’s for a future purchase, part of a windfall, or a savings goal that’s still down the road—a CD can give that money a clear job: earning a solid return for a set period of time.
The trade-off is access. Certificates of deposit are best for money you can leave untouched until maturity, and in exchange, you get an APY the bank or credit union can’t change. But not all CDs pay a competitive rate, so it’s worth looking beyond the CDs your usual bank is offering.
Today’s high inflation rates can quietly eat into cash that earns little interest. Choosing a stronger rate on money you’re already keeping safe can help your savings lose less ground.
Choosing a CD isn’t just about picking a term. The interest rate matters just as much, especially when some of today’s top-paying CDs offer roughly two to three times the average APY.
The payoff becomes clear when you put the rates side by side. Here’s what $10,000 could earn across several CD terms at some of today’s top rates versus the national average.1
The difference can be significant even over relatively short periods. On a $10,000 deposit, choosing a top 1-year CD instead of one paying the national average would mean about $251 more in your pocket. At two years, the gap grows to about $571.
The longer the term, the larger the dollar difference can become. The top-paying 3-year CD would earn about $910 more than the national average, while the best 5-year CD pays almost $1,600 more.
That doesn't mean the longest CD is automatically the best choice. A longer term can produce more total interest because your money is locked up for more time, but the right CD depends on when you expect to need the money back. For cash you may want sooner, a shorter CD can still let you lock in a strong APY without making such a long a commitment.
Some of the best CD rates come from promotional terms that do not fit the usual 6-month, 1-year, or 5-year labels. Checking our daily ranking of the best nationwide CDs can help you compare standard CDs with odd-term options, like 5-month or 17-month CDs, that may offer especially competitive rates.
One of the biggest advantages of a CD is that the rate is fixed. When you open a CD, the bank or credit union agrees to pay you that APY for the full term, whether that’s six months, one year, five years, or another period.
That means your CD rate won’t drop if market rates fall after you open the account. Unlike a high-yield savings account, whose APY can change at any time, a fixed-rate CD locks in the rate you’ll earn through maturity.
That guarantee is also why CDs work best for money you can leave alone. The bank or credit union is committing to your rate, and you’re committing to keep the money deposited until the CD matures.
Most CDs charge an early withdrawal penalty if you take money out before maturity. The penalty is often equal to a certain number of months of interest, so withdrawing early can reduce your total earnings and, in some cases, even cut into your original deposit. That's why it's critical to check the penalty before opening a CD, since policies vary widely by institution.
The Federal Reserve announced another interest-rate hold on Wednesday, continuing the steady-handed approach it has taken all year. But that doesn't mean rates are guaranteed to stay where they are.
In the Fed’s latest projections, nearly half of the committee members expect at least one rate hike before the end of 2026. The reason is inflation: At 4.2%, it remains well above the Fed’s 2% target, keeping pressure on the central bankers to consider further action.
For savers, that means CD rates could move higher in the coming months. But a possible rate hike is not the same as a guaranteed one. Even if the Fed does raise rates later this year, the move will likely be modest.
Waiting also changes your timeline. If you delay opening a CD by three or six months, your maturity date moves three or six months later, too. That matters if you’re trying to line up the money with a future expense or simply want your cash available by a certain date.
So the decision isn’t just about whether CD rates could be a little higher later. It’s whether waiting for a possible increase is worth passing up a top rate you can lock in now. For money you know you can set aside, today’s top CDs are already offering something valuable: a predictable return above 4% that won’t fall if rates happen to move lower instead.
If you’re torn between locking in today’s rates and waiting to see if APYs rise, consider splitting your money across more than one CD bucket. You could open one certificate now and another later, or spread your cash across CDs with different terms so the money becomes available on a staggered schedule.