The Sooner You Lock in Your APY, the More You Could Earn. Today’s CD Rates, Feb. 12, 2025

High CD Rates: A Smart Way to Grow Your Savings

Today, certificates of deposit (CDs) are offering some of the highest returns in recent memory, with top rates reaching up to 4.65% annual percentage yield (APY). This is more than double the national average, making CDs an attractive option for anyone looking to grow their savings securely. CDs are a type of savings account that requires you to keep your money locked in the account for a specific term (e.g., six months, one year, or five years). In exchange, you receive a fixed interest rate, which is higher than what you’d typically earn from a standard savings account.

For example, if you deposit $5,000 into a CD with a 4.65% APY, you could earn $114.93 in interest over six months or $222.50 over a year. The longer the term, the more interest you can earn, though the trade-off is less flexibility in accessing your money before the term ends. With interest rates expected to drop later this year, locking in a high APY now can help shield your savings from future rate reductions and maximize your returns.

How the Fed’s Policies Impact CD Rates

The Federal Reserve, or the Fed, plays a significant role in shaping interest rates across the U.S. economy. The Fed adjusts the federal funds rate to manage inflation and economic growth, which in turn influences the rates banks offer on deposits like CDs.

After cutting rates in 2024, the Fed paused rate changes in early 2025 as inflation showed signs of rising again. However, experts predict that the Fed may lower rates later this year, which could impact CD APYs. While the Fed doesn’t directly set CD rates, banks typically adjust their rates in response to federal policy. This means that securing a high APY now could be a wise move to protect your earnings from potential future declines.

Keith Spencer, a certified financial planner and founder of Spencer Financial Planning, advises savers to focus on the highest APY available but also to choose a term that aligns with their financial needs. “Going with the highest APY makes a lot of sense,” he says, “though you’ll want to ensure the maturity date fits your situation.”

Key Factors to Consider When Comparing CDs

Choosing the right CD involves more than just looking for the highest APY. Here are some important factors to weigh:

1. Term Length and Early Withdrawal Penalties: CDs require you to keep your money locked in the account for the full term to avoid early withdrawal fees. If you think you’ll need access to your funds before the term ends, consider a no-penalty CD, though these may offer slightly lower APYs.

2. Minimum Deposit Requirements: Some CDs require a minimum deposit to open, which can range from $500 to $1,000 or more. Make sure you have enough savings to meet this requirement.

3. Fees: Many online banks offer CDs with no maintenance fees, but it’s always a good idea to review the fine print to ensure there are no hidden charges.

4. Safety and Security: Ensure the bank or credit union is insured by the FDIC (for banks) or NCUA (for credit unions), which protects your deposits up to $250,000 if the institution fails.

5. Customer Ratings: Research the bank’s reputation by reading reviews on platforms like Trustpilot to ensure it’s reliable and provides good customer service.

By carefully evaluating these factors, you can find a CD that not only offers a competitive APY but also meets your personal financial goals and needs.

The Benefits of Opening a CD Today

With interest rates at historic highs, now is an excellent time to consider opening a CD. Not only do CDs offer a fixed, guaranteed return on your savings, but they also provide a low-risk way to grow your money compared to investing in the stock market.

Another key benefit of CDs is their predictability. Unlike savings accounts, which can change their interest rates at any time, CDs lock in your APY for the entire term. This makes them a great option for savers who want to avoid the uncertainty of fluctuating rates.

Additionally, CDs can help you stay disciplined with your savings by keeping your money out of reach for a set period. This can be especially useful for long-term savings goals, such as building an emergency fund, saving for a down payment on a house, or preparing for a big purchase.

Today’s Top CD Rates and Trends

CNET tracks CD rates from more than 50 banks, credit unions, and financial institutions to help you find the best options. Here are some of the highest APYs available today:

• 6 months: 4.65% APY at CommunityWide Federal Credit Union ($114.93 in interest on a $5,000 deposit)
• 1 year: 4.45% APY at CommunityWide Federal Credit Union ($222.50 in interest)
• 3 years: 4.15% APY at America First Credit Union ($648.69 in interest)
• 5 years: 4.25% APY at America First Credit Union ($1,156.73 in interest)

While these rates are highly competitive, it’s important to keep an eye on how CD rates change over time. For example, the average APY for a 1-year CD rose slightly this week, while the 6-month CD saw a small decrease. Staying informed about these trends can help you make the best decision for your savings.

Conclusion: Why CDs Are a Great Choice for Savers

With interest rates at their highest levels in years, CDs offer an attractive way to earn a guaranteed return on your savings. By locking in a high APY now, you can protect your earnings from potential future rate cuts and grow your money in a secure, low-risk environment.

Before opening a CD, take the time to compare rates, terms, and fees to find the best fit for your needs. Whether you’re saving for a specific goal or simply want to maximize your returns, a CD can be a valuable addition to your financial strategy. With careful planning and the right choice, you can make the most of today’s high CD rates and watch your savings grow faster than ever before.