The Federal Reserve is commencing its two-day rate-setting session today, widely anticipated to maintain benchmark rates for the third consecutive time this year. This decision benefits astute savers by allowing them more time to capitalize on today’s exceptional certificates of deposit offering the highest yields in recent years. Certificates of deposit (CDs) provide a secure and passive method to grow savings that are not needed immediately, granting fixed rates and predictable earnings that can complement riskier investments or diversify your portfolio for retirement planning. CD terms vary from a few months to up to five years, enabling you to harness robust savings potential well into 2030 — even after today’s peak rates have diminished.
Alternatively, you can use this window to construct a CD ladder within your savings strategy, dispersing your deposit among multiple CDs with staggered terms to achieve consistent returns as each term matures. This approach allows you to balance short-term gains with long-term stability, extending your investment over time. However, it is advisable not to delay, as rates are unlikely to surpass current levels. Here’s where you can discover today’s top FDIC-insured CDs across a range of terms with minimal or no requirements, and sign up swiftly.
Best CD rates for Tuesday, May 6, 2025:
Today’s most lucrative returns can be found at FDIC-insured digital banks and online accounts offering up to 4.40% APY with low or no minimum deposits at institutions like Bread Financial, Alliant Credit Union, and other reputable providers as of Tuesday, May 6, 2025.
– Bread Financial Savings CDs — 4.40% APY on 6-month terms with a $1,500 minimum.
– Valley Bank Online CDs — Up to 4.30% APY on 3-month terms with a $25,000 minimum, and 3.90% APY on 12-month terms with a $500 minimum.
– Alliant Credit Union CDs — 4.10% APY on 6-month terms with a $1,000 minimum.
– Discover Bank CDs — 4.00% APY on 12-month terms with no minimum.
– Raisin/American First Credit Union CDs — 4.00% APY on 12-month terms with a $1 minimum.
– Barclays Bank Online CDs — 4.00% APY on 12-month terms with no minimum.
– CIT Bank No-Penalty CD — 3.50% APY on 11-month term with a $1,000 minimum.
While online-only banks and digital accounts may be less familiar than larger institutions, each is FDIC-insured or works with an FDIC-insured bank to provide protected deposit accounts for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) — akin to those at your local bank.
For more information on maximizing your finances before and after Fed rate
The Federal Deposit Insurance Corporation (FDIC) provides insurance on consumer deposit accounts. Here’s a comparison of FDIC national deposit rates on a $10,000 minimum deposit between April and March 2025 for traditional low-interest deposit accounts:
– Savings: 0.41% in April and March (no change)
– Interest checking: 0.07% in April and March (no change)
– Money market: 0.62% in April and 0.63% in March (down 1 basis point)
– 1-month CD: 0.24% in April and 0.25% in March (down 1 basis point)
– 3-month CD: 1.42% in April and 1.43% in March (down 1 basis point)
– 6-month CD: 1.60% in April and 1.61% in March (down 1 basis point)
– 12-month CD: 1.77% in April and 1.78% in March (down 1 basis point)
– 24-month CD: 1.49% in both April and March (no change)
– 36-month CD: 1.35% in both April and March (no change)
– 48-month CD: 1.27% in both April and March (no change)
– 60-month CD: 1.34% in both April and March (no change)
There has been minimal movement in average rates for traditional savings accounts over the past year, with more significant changes seen in short- and long-term CDs.
The FDIC is an independent government agency responsible for maintaining stability and public confidence in the U.S. financial system, offering insurance on consumer deposit accounts.
CD rates are closely tied to the key interest rate set by the Federal Reserve. As the Fed rate increases, so do the Annual Percentage Yields (APYs) on savings products like CDs, high-yield accounts, and money market accounts.
After multiple rate increases between March 2022 and July 2023, the Federal Reserve made cuts to its federal funds target interest rate, pausing these cuts on March 19, 2025, after holding it steady at a range of 4.25% to 4.50%. The Fed is focused on achieving maximum employment and managing inflation.
The Federal Reserve’s next policy meeting is scheduled for May 6–7, 2025, where it is expected to maintain the Fed rate between 4.25% and 4.50%.
The Federal Reserve will maintain interest rates at their current levels. Economists are closely monitoring inflation and labor reports to gauge the timing of potential future cuts to the Fed rate. Recent data shows a decrease in inflation from a peak of 9.1% in June 2022 to rates ranging between 2.5% and 4% since May 2023.
On May 2, the Bureau of Labor Services released fresh job data revealing that employers added 177,000 jobs in April, surpassing projections but slightly lower than the revised 185,000 roles added in March. The unemployment rate remained steady at 4.2%.
The consumer price index released on April 10 indicated an annual inflation rate of 2.4% in March, lower than expected and down from the 2.8% reported in February. Prices overall declined by 0.1% for the month, driven by lower energy costs such as a 6.3% drop in gasoline prices and reduced travel expenses.
The producer price index, released on April 11, showed a 0.4% decline in wholesale prices in March, the largest monthly drop since October 2023. Gasoline prices plummeted by 11.1%, contributing to an annual increase in PPI of 2.7%, signaling a moderation in inflation.
Federal Reserve Chair Jerome Powell, during prepared remarks in Chicago on April 16, acknowledged the challenges posed by President Trump’s tariffs on the Fed’s future policy decisions. Powell emphasized the need for greater clarity before considering any adjustments to the Fed’s policy stance.
The rate-setting panel led by Powell will announce its rate decision at the conclusion of its meeting on Wednesday, May 7, 2025, at 2 p.m. ET.
For more information on the upcoming Federal Reserve meeting and how it may impact your finances, consider comparing certificate of deposit (CD) options. When selecting a CD, evaluate factors such as term length, rate of return, minimum deposit requirements, type of financial institution, and penalties or fees for early withdrawals.
For instance, a Certificate of Deposit (CD) typically offers up to 90 days of interest for terms of up to 24 months. Generally, the longer the term, the higher the penalty fee associated with early withdrawals. Delve deeper: When is it advisable to break a CD? Insights on early withdrawals and reaching a break-even point.
Advantages of a Certificate of Deposit:
1. Guaranteed returns: By depositing a set amount, you secure a fixed interest rate over your chosen term, accessible once the CD matures.
2. Higher rates compared to regular accounts: Many banks and financial institutions provide CDs with rates surpassing those of standard savings or money market accounts. Online banks often offer the most competitive rates.
3. Varied term options: CD terms range from three months to over five years, catering to diverse financial objectives. Shorter terms can outperform typical bank accounts, while longer durations offer rates comparable to top high-yield savings accounts.
Disadvantages of a Certificate of Deposit:
1. Penalty for early withdrawals: Accessing funds before the CD matures may result in fees equivalent to several months’ worth of interest.
2. Not the most lucrative investment option: While CDs offer a secure means of earning interest, potential long-term gains are higher with stocks, bonds, mutual funds, or other securities.
3. Inflexibility in adding funds: Once your CD is established, you cannot increase your balance until after maturity, limiting your financial maneuverability.
Delve deeper: Comparing High-Yield Savings Accounts to CDs during high-rate periods.
Alternatives to CDs:
– High-Yield Savings Account: A variable-rate account providing quick growth without penalties for withdrawals.
– Money Market Account: Offers competitive rates compared to standard savings accounts, with easy access to funds.
– Higher-risk investments: Stocks, index funds, and mutual funds present greater earning potential than CDs, alongside increased risk.
Explore more in our FAQ section on CDs, safety, and wealth growth, guiding you to select the best option for your financial objectives. Ensure your bank has your current contact details to receive alerts about your CD maturity. Additionally, create your own reminder before the maturity date to stay informed.
While a savings account allows for flexible movement of your money without penalty, a Certificate of Deposit (CD) requires you to lock in your deposit over a specified period of time, returning your principal plus interest after the account matures. This lock-in period, along with penalties that discourage early withdrawal, allows a bank to better plan how long it has to make money off your deposit, and they are typically willing to pay a little more for that reliability.
Is my money safe with an online-only bank like Lending Club or SoFi? Yes, online-only banks and digital accounts are as safe as their traditional counterparts. They are either FDIC-insured chartered banks or partner with more recognizable banks to offer deposit accounts that are protected by the government for up to $250,000. The FDIC insures the safety of your money, even if the fintech were to fail or go out of business. Look for terms like “member FDIC,” “FDIC insured,” or “NCUA insured” when comparing your options. Learn more about how online banks compare to traditional banks when it comes to rates, fees, and management of your money.
What is compound interest? Compound interest is often described as earning interest on your interest. It’s a powerful way to boost your savings over time by earning interest on both your initial deposit and any interest you earn along the way. It means that every dollar you save is working harder and growing faster toward your financial goals.
An account’s Annual Percentage Yield (APY) is the total amount of interest you’ll earn on your deposit over one year, including compound interest, expressed as a percentage. Learn more about how you can turn time into money in our guide to how compound interest works.
What is a jumbo CD? A jumbo CD is a certificate of deposit that requires a minimum of $100,000 to open the account. Like regular CDs, jumbo CDs come with a fixed interest rate and term. In the past, jumbo CDs offered a way for people and businesses to safely invest money at higher rates than available with a traditional CD. However, with the Federal Reserve holding interest rates at 23-year highs, it’s not always true that jumbo CDs have a higher interest rate than traditional CDs. Learn more about jumbo CDs and why it’s wise to shop around before locking your money into one.
What is a no-penalty CD? A no-penalty CD—also called a liquid CD—is like a traditional CD through which you lock in a deposit for a guaranteed rate of return over a stated period of time, but with the flexibility of withdrawing your money without penalty before the CD matures. This flexibility comes with trade-offs, however, including lower rates of return than a traditional CD. With rates at historic highs, a high-yield savings account may offer comparable or even higher rates than a no-penalty CD with the same flexibility. Learn more about what to watch for with no-penalty CDs.
CDs can be purchased via your investment account, whether new or “used” from other investors. Discover more about brokered CDs and what to take into consideration before investing in one. Wondering about the distinction between saving and investing? The key difference lies in the accessibility of your funds and the associated risks. Saving entails keeping your money in secure accounts with minimal risk to your principal, while investing involves acquiring assets like stocks, bonds, or mutual funds that offer the potential for higher returns. Explore our comprehensive guide on saving and investing to determine the most suitable strategy for your nest egg. Please note that annual percentage yields mentioned were accurate as of Tuesday, May 6, 2025, at 7 a.m. ET. APYs and promotional rates for certain products may vary by region and are subject to change.
Sources:
– National Rates and Rate Caps, FDIC. Retrieved April 22, 2025.
– Consumer Price Index Summary, U.S. Bureau of Labor Statistics. Retrieved April 11, 2025.
– Producer Price Index News Release Summary, U.S. Bureau of Labor Statistics. Retrieved April 14, 2025.
– Employment Situation Summary, U.S. Bureau of Labor Statistics. Retrieved May 5, 2025.
– CME FedWatch Tool, CME Group. Retrieved May 6, 2025.
