The Federal Reserve lowered the federal funds rate twice this yr. In consequence, deposit account rates are on the decline.

The excellent news: You may lock in a competitive return on a certificate of deposit (CD) today and preserve your earning power. In truth, the perfect CDs still pay rates above 4%. Read on for a snapshot of CD rates today and where to search out the perfect offers.

CDs today typically offer rates significantly higher than traditional savings accounts. As of January, the perfect short-term CDs (six to 12 months) generally offer rates around 4.00% to 4.50% APY.

Today, the best CD rate 4.35% APY, offered by Synchrony on its 13-month CD. There is no such thing as a minimum opening deposit required.

The next is a take a look at a few of the perfect CD rates available today from our verified partners.

See our picks for the perfect CD accounts and rates>>

The 2000s were marked by the dot-com bubble and later, the worldwide financial crisis of 2008. Though the early 2000s saw relatively higher CD rates, they began to fall because the economy slowed and the Federal Reserve cut its goal rate to stimulate growth. By 2009, within the aftermath of the financial crisis, the common one-year CD paid around 1% APY, with five-year CDs at lower than 2% APY.

The trend of falling CD rates continued into the 2010s, especially after the Great Recession of 2007-2009. The Fed’s policies to stimulate the economy (particularly, its decision to maintain its benchmark rate of interest near zero) led banks to supply very low rates on CDs. By 2013, average rates on 6-month CDs fell to about 0.1% APY, while 5-year CDs returned a mean of 0.8% APY.

Nonetheless, things modified between 2015 and 2018, when the Fed began regularly increasing rates again. At this point, there was a slight improvement in CD rates because the economy expanded, marking the tip of nearly a decade of ultra-low rates. Nonetheless, the onset of the COVID-19 pandemic in early 2020 led to emergency rate cuts by the Fed, causing CD rates to fall to latest record lows.

The situation reversed following the pandemic as inflation began to spiral uncontrolled. This prompted the Fed to hike rates 11 times between March 2022 and July 2023. In turn, this led to higher rates on loans and better APYs on savings products, including CDs.

Fast forward to September 2024 — the Fed finally decided to chop the federal funds rate after it determined that inflation was essentially under control. Today, we’re starting to see CD rates come down from their peak. Even so, CD rates remain high by historical standards.

Take a take a look at how CD rates have modified since 2009:

Traditionally, longer-term CDs have offered higher rates of interest in comparison with shorter-term CDs. It is because locking in money for an extended period typically carries more risk (namely, missing out on higher rates in the long run), which banks compensate for with higher rates.

Nonetheless, this pattern doesn’t necessarily hold today; the best average CD rate is for a 12-month term. This means a flattening or inversion of the yield curve, which might occur in uncertain economic times or when investors expect future rates of interest to say no.

Read more: Short- or long-term CD: Which is best for you?

When opening a CD, selecting one with a high APY is only one piece of the puzzle. There are other aspects that may impact whether a specific CD is best on your needs and your overall return. Consider the next when selecting a CD:

• Your goals: Resolve how long you are willing to lock away your funds. CDs include fixed terms, and withdrawing your money before the term ends may end up in penalties. Common terms range from just a few months as much as several years. The proper term for you relies on if you anticipate needing access to your money.

• Sort of financial institution: Rates can vary significantly amongst financial institutions. Don’t just check together with your current bank; research CD rates from online banks, local banks, and credit unions. Online banks, particularly, often offer higher rates of interest than traditional brick-and-mortar banks because they’ve lower overhead costs. Nonetheless, ensure that any online bank you concentrate on is FDIC-insured (or NCUA-insured for credit unions).

• Account terms: Beyond the rate of interest, understand the terms of the CD, including the maturity date and withdrawal penalties. Also, check if there is a minimum deposit requirement and in that case, that matches your budget.

• Inflation: While CDs can offer secure, fixed returns, they won’t at all times keep pace with inflation, especially for longer terms. Consider this when deciding on the term and amount to speculate.