The Federal Reserve chose to maintain its benchmark rate at the latest meeting, marking the third consecutive time it has done so. This decision presents an opportunity to secure competitive CD rates for an extended period. However, it is advisable not to delay in taking advantage of these rates, as CD yields have been gradually decreasing in 2025 despite the absence of official Fed cuts since December 2024.
Currently, top certificates of deposit offer up to 4.40% APY, delivering superior returns compared to regular savings accounts while safeguarding your funds against potential future rate cuts. These fixed-rate accounts serve as a valuable shield against economic uncertainty that may arise. Once you lock in a CD rate, it remains unchanged until maturity, whether that is in a few months or several years.
Opening a CD is a straightforward process, with many online banks offering easy signup with minimal or no initial deposits required. Your funds are protected up to $250,000 by FDIC insurance, offering the same security as traditional banks with typically higher returns.
For those concerned about tying up their funds, constructing a CD ladder can offer a simple solution. This strategy involves spreading your savings across multiple CDs with different maturity dates, allowing regular access to portions of your funds while still benefiting from the current competitive rates.
Discover today’s highest APYs on FDIC-insured CDs across various terms, ranging from short three-month options to multi-year commitments that can help maximize your savings potential well into the future.
The best CD rates for Thursday, May 8, 2025, are available at FDIC-insured digital banks and online accounts, offering up to 4.40% APY with low or no minimum deposit requirements at institutions such as Bread Financial, Alliant Credit Union, and other reputable providers.
– Bread Financial Savings CDs: 4.40% 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 3.90% APY on 12-month terms with a $500 minimum deposit
– Alliant Credit Union CDs: 4.10% APY on 6-month terms with a $1,000 minimum deposit
– Discover Bank CDs: 4.00% APY on 12-month terms with no minimum deposit
– Raisin/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 requirement
– CIT Bank No-Penalty CD: 3.50% APY on an 11-month term with a $1,000 minimum deposit
While online-only banks and digital accounts may not be as recognizable as larger institutions, each is FDIC-insured or works with an FDIC-insured bank to provide protected
Traditional CD Rates Comparison by FDIC The Federal Deposit Insurance Corporation monitors monthly average interest rates on certificates of deposit and other savings accounts. Established by Congress, the FDIC is an independent government agency entrusted with upholding stability and public trust in the U.S. financial system, as well as providing insurance on consumer deposit accounts. Here’s a breakdown of how the FDIC national deposit rates for a $10,000 minimum deposit stack up between April and March 2025 across traditional low-interest deposit accounts:
– Savings: 0.41% (April 21, 2025) | 0.41% (March 17, 2025) [No change]
– Interest Checking: 0.07% (April 21, 2025) | 0.07% (March 17, 2025) [No change]
– Money Market: 0.62% (April 21, 2025) | 0.63% (March 17, 2025) [Down 1 basis point]
– 1-month CD: 0.24% (April 21, 2025) | 0.25% (March 17, 2025) [Down 1 basis point]
– 3-month CD: 1.42% (April 21, 2025) | 1.43% (March 17, 2025) [Down 1 basis point]
– 6-month CD: 1.60% (April 21, 2025) | 1.61% (March 17, 2025) [Down 1 basis point]
– 12-month CD: 1.77% (April 21, 2025) | 1.78% (March 17, 2025) [Down 1 basis point]
– 24-month CD: 1.49% (April 21, 2025) | 1.49% (March 17, 2025) [No change]
– 36-month CD: 1.35% (April 21, 2025) | 1.35% (March 17, 2025) [No change]
– 48-month CD: 1.27% (April 21, 2025) | 1.27% (March 17, 2025) [No change]
– 60-month CD: 1.34% (April 21, 2025) | 1.34% (March 17, 2025) [No change]
Looking back over the past year, there has been minimal movement on traditional savings accounts, while short- and long-term CDs have seen more significant fluctuations. The FDIC, dedicated to ensuring stability and trust in the financial system, also provides insurance on consumer deposit accounts.
For further information: Explore the best low-risk
On June 17 and June 18, 2025, there is speculation about a potential quarter-point rate cut in June following hints from the Fed about future rate cuts this year. The CME FedWatch Tool indicates a more than 70% chance that rates will remain unchanged. Economists are closely monitoring inflation and labor reports for clues on the timing of future rate cuts, with data showing a decrease in inflation from 9.1% in June 2022 to current rates ranging between 2.5% and 4% since May 2023.
Recent job data from the Bureau of Labor Services revealed that 177,000 jobs were added in April, surpassing projections but lower than the revised figures from March. The unemployment rate remained steady at 4.2%. Inflation data released on April 10 showed a decrease in the annual inflation rate to 2.4% in March, lower than expected and down from 2.8% in February. Prices fell 0.1% for the month, driven by decreased energy and travel costs.
Federal Reserve Chair Jerome Powell emphasized a cautious approach to rate cuts during a post-meeting press conference on May 7. He stated that the Fed is monitoring data closely to determine the appropriate monetary policy response, cautioning against preemptive actions based on incomplete information. The rate-setting panel led by Powell will announce its decision on rates at the conclusion of the meeting on Wednesday, June 18, 2025.
For those considering investing in a certificate of deposit (CD), key factors to compare include the term length, rate of return, minimum deposit requirement, and the type of bank or financial institution offering the CD. Shorter terms are suitable for short-term financial goals, while longer terms can secure higher interest rates. Look for the highest Annual Percentage Yield (APY) available and consider the initial deposit required in relation to your budget.
Digital banks typically offer the best interest rates of the day, with only a few exceptions among traditional brick-and-mortar banks or credit unions. If you prefer not to use an online-only bank, consider opening a high-yield savings account or a money market account that offers a competitive rate without withdrawal penalties.
Early withdrawal penalties for CDs are usually calculated in terms of the interest you would forfeit, such as 90 days of interest for CDs with terms up to 24 months. The longer the term of the CD, the higher the penalty fee tends to be.
Consider breaking a CD only when it is financially beneficial to do so. Early withdrawals can have implications on your returns and break-even point. CDs guarantee returns as you earn a fixed interest rate over the specified term, providing higher rates than traditional accounts like savings or money market accounts. You also have the flexibility to choose CD terms ranging from three months to five years or more based on your financial objectives.
However, CDs come with drawbacks, such as penalties for early withdrawals and limitations on adding more funds once the CD is locked. In comparison to other investment options like stocks or mutual funds, CDs may not offer the highest returns over the long term.
If you are considering alternatives to CDs, explore options like high-yield savings accounts and money market accounts that provide safe and steady returns with the added flexibility of making withdrawals without penalties. Higher-risk investments like stocks and mutual funds can potentially yield higher returns but come with greater risks.
To learn more about managing your finances effectively, consider researching FAQs about CDs, financial safety, and strategies for growing your wealth. Keep track of your CD maturity date, as most banks will notify you through mail, email, or an online account alert.
Your CD is nearing maturity. Please ensure your contact information is current to receive important notifications. Additionally, set a reminder for yourself a few weeks before the maturity date. Find more information in our guide on options after your CD matures.
How do banks profit from CDs? Banks earn money by charging higher interest rates on loans than what they pay on customer deposits. This difference, known as a spread, is how banks generate revenue. Unlike regular savings accounts that allow flexibility in moving money without penalties, CDs require a locked-in deposit for a specified period, returning the principal plus interest after maturity. The lock-in period and penalties for early withdrawal help banks plan better for making money off your deposit. As a result, they are willing to pay slightly more for this reliability.
Is my money safe with online-only banks like Lending Club or SoFi? Yes, online-only banks and digital accounts are as safe as traditional banks. They are either FDIC-insured chartered banks or partner with established banks to provide deposit accounts secured by the government for up to $250,000. Look for terms like “member FDIC,” “FDIC insured,” or “NCUA insured” when comparing options. Learn more about how online banks compare to traditional banks in terms of rates, fees, and managing your money.
What is compound interest? Compound interest is the concept of earning interest on both your initial deposit and any interest earned over time. It helps grow your savings more rapidly by reinvesting your earnings. The Annual Percentage Yield (APY) represents the total interest you’ll earn on your deposit over one year, including compound interest, expressed as a percentage. Discover how compound interest works in our guide.
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 standard CDs, jumbo CDs have fixed interest rates and terms. While jumbo CDs traditionally offered higher rates compared to regular CDs, with current interest rates at 23-year highs, this is not always the case. Explore more about jumbo CDs and why it’s important to research before committing your funds.
What is a no-penalty CD? Also known as a liquid CD, a no-penalty CD is similar to a traditional CD, but allows for penalty-free withdrawals before maturity. This flexibility may result in lower returns compared to a standard CD. With interest rates currently high, a high-yield savings account might offer similar or higher rates than a no-penalty CD with comparable flexibility. Learn more about considerations for no-penalty CDs.
What is a CD ladder? A CD ladder is a savings strategy involving spreading your money across multiple CDs to take advantage of high rates without fully committing your investment.
Utilize CD laddering to secure today’s top rates by spreading your investment across multiple CDs with varying term lengths, allowing you to access a portion of your funds at scheduled intervals. Explore the benefits of this strategy before the current high rates disappear.
A brokered CD, purchased through a brokerage firm rather than a traditional bank or credit union, offers a flexible way to invest in certificates of deposit. These CDs provide the opportunity to choose term lengths with fixed interest rates and can be acquired through your investment account, either new or from existing investors. Learn more about brokered CDs and the important factors to consider before making an investment decision.
Distinguish between saving and investing based on the accessibility of funds and associated risks. Saving involves securely storing your money in accounts with minimal risk, while investing entails purchasing assets such as stocks, bonds, or mutual funds to potentially achieve higher returns. Discover the nuances of saving versus investing to determine the most suitable approach for growing your savings.
Please note that the annual percentage yields mentioned were accurate as of Thursday, May 8, 2025, at 7 a.m. ET. Rates and promotional offers may vary by region and are subject to change. For more information, refer to the listed sources:
– FDIC National Rates and Rate Caps (Accessed April 22, 2025)
– Consumer Price Index Summary by the U.S. Bureau of Labor and Statistics (Accessed April 11, 2025)
– Producer Price Index News Release Summary by the U.S. Bureau of Labor and Statistics (Accessed April 14, 2025)
– Employment Situation Summary by the U.S. Bureau of Labor and Statistics (Accessed May 5, 2025)
