“Discover Higher Earnings with Competitive CD Rates!”
In the midst of persistent inflation and recent market volatility, it’s crucial to find a bright spot for your finances. Certificates of deposit (CDs) continue to offer stability with guaranteed yields of up to 4.50% APY across various term options. With fixed rates that remain unchanged throughout the term, CDs safeguard your earnings from economic fluctuations while maximizing your money’s potential compared to a standard savings account. Whether you opt for a short three-month term or commit to several years, you’ll know precisely what your returns will be.
Opening a CD is a straightforward process, with most online banks offering digital applications that can be completed in just minutes. Many institutions have no minimum deposit requirements, ensuring that savers of all levels can access these competitive returns while benefiting from FDIC protection of up to $250,000 per bank.
CDs encourage you to keep your invested funds untouched by imposing early withdrawal penalties. However, if you prefer flexibility, consider building a CD ladder that diversifies your funds across multiple maturity dates. This strategy allows you to access your money regularly as each term matures while taking advantage of today’s top rates.
Whether you are seeking to bolster an emergency fund or balance out riskier investments, here are the leading providers offering high-yield CDs with low or no minimum deposit requirements:
– Bread Financial Savings CDs: 4.50% APY on 6-month terms with a $1,500 minimum deposit
– Valley Bank Online CDs: Up to 4.30% APY on 3-month terms with a $25,000 minimum deposit, and 4.00% APY on 12-month terms with a $500 minimum deposit
– Alliant Credit Union CDs: 4.25% APY on 12-month terms with a $1,000 minimum deposit
– Discover Bank CDs: 4.10% APY on 24-month terms, and 4.00% APY on 12-month terms
– American First Credit Union CDs: 4.00% APY on 12-month terms with a $1 minimum deposit
– Barclays Bank Online CDs: 4.00% APY on 12-month terms with no minimum deposit required
– CIT Bank CDs: 3.50% APY on 11-month no-penalty CD
While online-only banks and digital accounts may not be as recognizable as major institutions, each is FDIC-insured or partners with an FDIC-insured bank, offering deposit accounts protected for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) — similar to your local bank’s offerings.
Boost Your Savings with Traditional CD Rates
The Federal Deposit Insurance Corporation (FDIC) monitors monthly average interest rates on certificates of deposit and other savings accounts to ensure stability and public confidence in the U.S. financial system. Established by Congress, the FDIC is an independent government agency that provides insurance on consumer deposit accounts.
Check out the FDIC national deposit rates for a $10,000 minimum deposit in March compared to February 2025 on traditional low-interest deposit accounts:
– Savings: 0.41% in March and February (No change)
– Interest checking: 0.07% in March and February (No change)
– Money market: 0.63% in March, 0.64% in February (Down 1 basis point)
– 1-month CD: 0.25% in March, 0.22% in February (Up 3 basis points)
– 3-month CD: 1.43% in March, 1.45% in February (Down 2 basis points)
– 6-month CD: 1.61% in March, 1.63% in February (Down 2 basis points)
– 12-month CD: 1.78% in March, 1.80% in February (Down 2 basis points)
– 24-month CD: 1.49% in March, 1.45% in February (Up 4 basis points)
– 36-month CD: 1.35% in March, 1.31% in February (Up 4 basis points)
– 48-month CD: 1.27% in March, 1.23% in February (Up 4 basis points)
– 60-month CD: 1.34% in March, 1.31% in February (Up 3 basis points)
Stay informed about the latest savings options and investment opportunities. CD rates are often influenced by the Federal Reserve’s key interest rate, impacting deposit accounts, loans, mortgages, credit cards, and other financial products. As the Fed rate increases, so do APYs on products like CDs, high-yield accounts, and money market accounts.
Following a series of rate cuts in response to high inflation post-pandemic, the Federal Reserve decided to maintain the federal funds target interest rate at 4.25% to 4.50% during its March 19, 2025 meeting. This pause marks the Fed’s second break from rate changes to focus on stabilizing the inflation rate at around 2%.
Looking ahead, the Fed’s economic projections anticipate two quarter-point cuts in 2025 to address potential challenges in economic growth and inflation. Stay tuned for updates from the Fed’s next policy meeting on May 6–7, 2025.
The Federal Reserve is set to make a decision at its upcoming policy meeting scheduled for May 6 and May 7, 2025. Economists are closely monitoring inflation and labor data, speculating about potential future adjustments to the Fed rate. Inflation has shown a shift from its peak of 9.1% in June 2022 to a range of 2.5% to 4% since May 2023. Recent job reports from the Bureau of Labor Services indicated a rise in unemployment to 4.1% in February, with employers adding 151,000 jobs to payrolls. However, this figure is slightly below expectations but exceeds the revised numbers from January. Notably, these figures do not reflect the impact of various policy decisions and economic factors in the works.
In March, the consumer price index revealed a decrease in the annual inflation rate to 2.8% in February, allaying concerns about economic stability. Additionally, the producer price index reported a decline in wholesale inflation for goods and services. Federal Reserve Chair Jerome Powell highlighted the Fed’s economic outlook, emphasizing slower growth and rising inflation during a post-meeting press conference on March 19.
Looking ahead, the Powell-led panel will announce its rate decision on Wednesday, May 7, 2025, at 2 p.m. ET. For individuals interested in financial planning, understanding the impact of Federal Reserve decisions is crucial. Consider factors such as term length, rate of return, minimum deposit requirements, and the type of financial institution when comparing certificate of deposit options to align with your savings goals.
CDs offer a guaranteed interest rate without withdrawal penalties. However, if you need to access your money early, you may face penalties such as forfeiting a certain number of months of interest. The longer the CD term, the higher the penalty fee.
Benefits of CDs include guaranteed returns and higher interest rates compared to traditional accounts. CD terms range from three months to five years or more, catering to various financial goals. On the other hand, drawbacks of CDs include penalties for early withdrawals, potential missed investment returns compared to other securities, and the inability to add more money once the CD locks.
Alternatives to CDs for low-risk interest earning include high-yield savings accounts, money market accounts, and higher-risk investments like stocks and mutual funds. It’s essential to consider these options based on your financial goals and risk tolerance.
To stay informed about your CD maturity date, ensure your contact information is up to date with your bank to receive notifications. Additionally, set a reminder for yourself a few weeks before the maturity date to explore your options post-maturity. Explore our personal finance guides for more information on growing your wealth and maximizing your savings.
How do CDs help banks make money?
Banks earn money by charging higher interest rates on loans than what they pay on customer deposits. This difference, known as a spread, is essential for banks to generate profit. Unlike traditional savings accounts that allow flexible access to funds without penalties, a Certificate of Deposit (CD) requires locking in the deposit for a specific period. The principal amount and interest are returned after the CD matures. This lock-in period and associated penalties for early withdrawal allow banks to plan their revenue generation more effectively. Thus, banks are willing to offer slightly higher interest rates for this reliability.
Are online-only banks safe?
Yes, online-only banks like Lending Club or SoFi are as secure as traditional banks. They are either FDIC-insured chartered banks or work with established banks to provide deposit accounts protected up to $250,000 by the government. The FDIC ensures the safety of your funds even if the online bank experiences financial difficulties. Look for terms like “member FDIC,” “FDIC insured,” or “NCUA insured” when exploring banking options.
What is compound interest?
Compound interest refers to earning interest on both the initial deposit and any interest accrued over time. This compounding effect helps grow savings faster, as each dollar saved generates additional returns. The Annual Percentage Yield (APY) reflects the total interest earned over a year, including compound interest, expressed as a percentage. Understanding compound interest can help maximize your savings potential.
What is a jumbo CD?
A jumbo CD is a certificate of deposit that requires a minimum deposit of $100,000 to open. Similar to regular CDs, jumbo CDs offer fixed interest rates and terms. While traditionally providing higher rates than standard CDs, the current economic climate may not always guarantee higher returns on jumbo CDs. It’s essential to compare options carefully before committing funds to a jumbo CD.
What is a no-penalty CD?
A no-penalty CD, also known as a liquid CD, allows depositors to lock in a specific rate of return over a set period while offering the flexibility to withdraw funds before maturity without penalties. However, these CDs often come with lower interest rates compared to traditional CDs. Given the current interest rate environment, high-yield savings accounts might offer similar or better rates with greater flexibility. Consider the trade-offs when choosing a no-penalty CD.
What is a CD ladder?
A CD ladder is a savings strategy that involves dividing funds among multiple CDs to benefit from higher interest rates without locking the entire investment in a single long-term CD. This approach allows access to a portion of the investment at regular intervals. By creating a CD ladder, individuals can secure competitive rates while maintaining liquidity for future needs. Stay informed on how to construct a CD ladder to capitalize on prevailing interest rates effectively.
What is a brokered CD?A brokered CD is a type of certificate of deposit that you purchase through a brokerage firm rather than directly from a bank or credit union. Similar to traditional CDs, you select a term length that comes with a fixed interest rate. However, unlike regular CDs, brokered CDs can be bought through your investment account either new or from other investors in the secondary market. To learn more about brokered CDs and important considerations before investing in one, continue reading.
What distinguishes saving from investing?The fundamental contrast between saving and investing lies in the accessibility of your funds and the level of risk involved. Saving involves keeping your money in secure accounts with minimal risk of losing your initial investment. Conversely, investing entails purchasing assets such as stocks, bonds, or mutual funds that have the potential to generate higher returns. For further insights on saving and investing strategies tailored to your financial goals, explore our comprehensive guide.
Editor’s note: The annual percentage yields (APYs) displayed were accurate as of 7:30 a.m. ET on Monday, March 31, 2025. Please note that APYs and promotional rates for specific products may vary by region and are subject to change over time.
Sources:FDIC National Rates and Rate Caps (accessed on March 18, 2025)U.S. Bureau of Labor and Statistics Consumer Price Index Summary (accessed on March 13, 2025)U.S. Bureau of Labor and Statistics Producer Price Index News Release Summary (accessed on March 14, 2025)U.S. Bureau of Labor and Statistics Employment Situation Summary (accessed on March 10, 2025)
