Although the Federal Reserve is expected to hold rates next week, that’s not stopping some banks from raising their CD rates. Three new options have joined our top CDs today, paying at least 5.50% API, bringing the count in that club to 50. This is only from 15 in early August.
Three are newcomers. Luana Savings Bank With a 17 month option, Citizens State Bank With a 15-month discount, and Home Savings Bank With 6 month discount. Plus, it maintains its position as our national leader with an APY of 6.00%.
Key receivers
- Today, CDs nationwide that pay 5.50% APR or higher have risen by three, 50. That’s nine gains over the past week.
- The daily top rate for the nation’s best-performing CDs remained 6.00% API on the 1-year certificate — the first nationwide CD to reach that level since the Fed began raising interest rates last year.
- A new leader has raised the terms to 4-years and 5-years, causing top rates to rise slightly.
- The Fed is widely expected to hold rates when it meets next week. But the odds of a Fed hike later this year are currently at around 45%.
Nationally, it remains the leading 6.00% API in all terms. America 1 Credit Union, available for 12 months. Lucky CD shoppers in select markets can choose one of these additional 6.00% APY offers.
The new leader in the best 4-year and 5-year CDs ranks is First Harvest Credit Union, which lowered its top rates to 4.82% APY and 4.89% APY.
Want to extend at least 5.00% API speed as much as possible? Our top 3-year CDs ranking leader is currently paying 5.23%, while five other options pay between 5.00% and 5.11% APY.
If you have a jumbo deposit, you can get slightly higher than normal rates on some terms. The maximum Jumbo rate is currently 5.85% APY—requiring a minimum deposit of $100,000 on a 6-month certificate—with additional options in 1-year and 18-month terms paying 5.80% APY.
Despite the perception that a larger deposit entitles you to higher fees, that’s not always the case for jumbo certificate prices, which pay less than standard CDs. Although today’s best jumbo offers, which typically require a deposit of $100,000 or more, beat the best standard rates in five CD terms, you can do as well or better with a standard CD in the remaining three terms. So always make sure to buy each certificate before making a final decision.
Despite the perception that a larger deposit entitles you to higher fees, that’s not always the case for jumbo certificate prices, which pay less than standard CDs. Although today’s best jumbo offers, which typically require a deposit of $100,000 or more, beat the best standard rates in five CD terms, you can do as well or better with a standard CD in the remaining three terms. So always make sure to buy each certificate before making a final decision.
Will CD prices rise this year?
The Fed has been battling the highest rate of inflation in decades since March of last year, with fast and furious increases in the federal funds rate in 2022 and easing to moderate increases in 2023. On July 26, the Fed lowered its inflation target. For the 11th time in 12 meetings, taking the cumulative increase to 5.25%. This pushed the benchmark rate to its highest level since 2001. In turn, it created record rate conditions for CD consumers, as well as anyone with cash in a high-yield savings or money market account.
The Fed’s next meeting ends on September 20, and traders are pricing in a more than 90% chance that rates will remain steady, according to CME Group’s FedWatch tool. But the chances of the Fed hiking rates at the November meeting are currently based on 45% odds.
In a speech on August 25, Fed Chairman Jerome Powell said that more rate hikes are on the table if inflation does not fall sufficiently in the coming months. Other Fed board members echoed the sentiment that future rate hikes are still possible.
If the Fed raises rates in the future, it will certainly push CD prices up a bit. But the holdover expected in September has markets — and CD consumers — speculating about whether the pause is temporary or permanent. Once the end of the Fed campaign is seen with more confidence, that will signal that CD prices have peaked.
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
