Yesterday’s rate freeze by the Federal Reserve – widely expected for more than a month – did not stop banks and credit unions from raising CD rates. A week after we began counting CDs nationwide that offer 5.65% API or higher, the number in that elite category has risen from 15 to 21.
The highest on that list is the nationwide 5.80% API CD, and it comes in a flexible package. Presented by Credit personYou can score that amount for a CD term of your choice between 12 and 17 months. You have the option to earn 5.80% API with 1 year certificate Federal Savings Bank.
Key receivers
- The industry-leading rate on the Daily Best CDs rating remains 5.80% API, with maturities ranging from 12 to 17 months.
- Nationally, the number of CDs paying 5.65% or better rose again today, to 21. This is up from 15 a week ago.
- Anyone with a jumbo-sized deposit can get the highest rate nationwide – 5.85% APY available for a 170-day period.
- The Fed announced yesterday that it has kept rates on hold for now after its most recent hike in July. But a possible Fed hike in November or December is still on the table.
If you want to extend one of today’s records into the future, you can score 5.23% APY on the best 3-year CD. But for the first time, the Federation If it starts raising rates in early 2022, last week it brought up the option to earn 5.00% in CDs over a 4-year period. In the past, the yield rate for 4- and 5-year CDs only reached the high 4.00% range.
Do you have a jumbo-sized deposit? You have the opportunity to earn more. The maximum Jumbo rate is currently 5.85% API—available on a 170-day certificate if you have a minimum deposit of $100,000.
Note that jumbo CDs do not all the time Pay higher than standard certificates. Sometimes you can do just as well or better with a regular CD, as shown in the five words above. So always make sure to buy both certificates before making a final decision.
Note that jumbo CDs do not all the time Pay higher than standard certificates. Sometimes you can do just as well or better with a regular CD, as shown in the five words above. So always make sure to buy both certificates before making a final decision.
How much will CD prices rise this year?
The Federal Reserve has been aggressively fighting inflation since March of last year, raising the federal funds rate fast and furiously in 2022, followed by a moderate increase in 2023. The Fed has made 11 hikes in 13 meetings, with the most recent hike on July 26 – for a cumulative increase of 5.25%. This has created record rate conditions for CD buyers, as well as anyone with cash in a high-yield savings or money market account.
Yesterday, the Fed announced it would hold rates, keeping the central bank’s benchmark rate at its highest level since 2001. But Fed Chairman Jerome Powell said in a press conference after the announcement that the rate hike was a pause to see how much of an impact previous hikes would still have and to allow more economic data for the Fed to consider. He noted that the September holding should not necessarily be interpreted as a sign that the Fed’s rate hike campaign is over.
“If necessary, we are prepared to increase prices,” Powell said.
Yesterday’s meeting was the quarterly release of the Fed’s “Summary of Economic Forecasts,” which includes a “dot plot” graph of where each Fed member believes the money supply will be at the end of the coming years. The current scorecard shows that almost two-thirds of the Fed’s policymaking committee members (12 out of 19) will implement one more rate hike this year. The remaining seven members consider the benchmark rate to remain unchanged until 2023.
In the year By 2024, the dot plot shows that 13 of the 19 committee members expect one or more rates. It cutsThe average expected decline is 0.50%. But that’s a change from the June dot plot, which expects a more significant fall in rates for 2024. This means Fed members now believe rates may be higher than previously expected.
For now, we know that another potential 2023 hike from the Fed will push CD rates slightly above their already-record levels. But until then, markets and CD buyers will be left to speculate whether today’s holdup is temporary or permanent. Once the end of the Fed campaign is seen, this will be a sign that CD prices have reached a peak.
Note that the “peak rates” quoted here are the highest rates nationwide that Investopedia has identified in its daily rate survey of hundreds of banks and credit unions. This is very different from the national average, where all banks that offer CDs with that term, including many large banks, charge a small fee in interest. So, while national averages are always very low, the highest price you can get by trading is often five, 10 or 15 times higher.
Note that the “peak rates” quoted here are the highest rates nationwide that Investopedia has identified in its daily rate survey of hundreds of banks and credit unions. This is very different from the national average, where all banks that offer CDs with that term, including many large banks, charge a small fee in interest. So, while national averages are always very low, the highest price you can get by trading is often five, 10 or 15 times higher.
Disclosure of collection method
Each business day, Investopedia tracks rate data from more than 200 banks and credit unions nationwide that offer CDs to their customers and determines the highest-paying certificates for each major period. To qualify for our listings, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD’s minimum initial deposit must not exceed $25,000.
Banks must be present in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (such as living in a certain area or working in a certain occupation), credit unions don’t have a donation requirement of $40 or more. For more on how we choose the best rates, read our full methodology.
Investopedia / Alice Morgan and Sabrina Jiang
