The Federal Reserve chose to keep benchmark rates steady on Wednesday following its second policy meeting of the year, allowing savers more time to secure certificates of deposit offering guaranteed returns of up to 4.50% APY through the weekend. This outperforms traditional savings accounts, which typically yield an average of 0.41%.Certificates of deposit, or CDs, provide consistent, fixed rates that remain unchanged until maturity, irrespective of Federal Reserve actions or market fluctuations. This reliability makes them a valuable savings tool to complement high-yield accounts or riskier investments. The most competitive rates are often found at online digital banks, many of which have low or no minimum deposit requirements and straightforward online signup processes. By providing your information, selecting your term, making a deposit, and allowing compound interest to grow your money until the CD matures, you can maximize your savings.Worried about tying up your funds for an extended period? Consider creating a CD ladder, which spreads your savings across various terms with different maturity dates. This strategy allows you to access your funds periodically while taking advantage of current high rates.Anticipating at least two future rate cuts later in the year, acting promptly to secure favorable rates is crucial. Discover the highest yields on FDIC-insured CDs available through the weekend, particularly for terms of 6 months or longer.Today’s top savings rates offer APYs of up to 4.40% during the Fed’s rate pause. For March 21, 2025, the best CD rates are up to 4.50% APY at FDIC-insured digital banks and online accounts with minimal or no deposit requirements, such as Bread Financial and Alliant Credit Union. Here are the leading CD yields from our partners:Bread Financial Savings CDs — 4.50% APY on a 6-month term with a $1,500 minimumValley Bank Online CDs — Up to 4.30% APY with a $25,000 minimumAlliant Credit Union CDs — 4.25% APY on a 12-month term with a $1,000 minimumDiscover Bank CDs — 4.10% APY on 24-month terms and 4.00% APY for 12-month termsAmerican First Credit Union CDs — 4.10% APY on a 12-month term with a $1 minimumBarclays Bank Online CDs — 4.00% APY on 12-month terms with no minimumsCIT Bank CDs — 3.50% APY on an 11-month no-penalty CDWhile 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 safeguard deposit accounts up to $250,000 through the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), just like at traditional banks.Understand more: Helpful financial tactics before and after Fed rate adjustments
Interest rates paid on certificates of deposit and other savings accounts are set by the FDIC, an independent government agency established by Congress to maintain stability and public confidence in the U.S. financial system and provide insurance on consumer deposit accounts. Below are the FDIC national deposit rates for a $10,000 minimum deposit in March compared to February 2025 for various traditional deposit accounts:
– Savings: 0.41% (March) vs. 0.41% (February) – No change
– Interest Checking: 0.07% (March) vs. 0.07% (February) – No change
– Money Market: 0.63% (March) vs. 0.64% (February) – Down 1 basis point
– 1-month CD: 0.25% (March) vs. 0.22% (February) – Up 3 basis points
– 3-month CD: 1.43% (March) vs. 1.45% (February) – Down 2 basis points
– 6-month CD: 1.61% (March) vs. 1.63% (February) – Down 2 basis points
– 12-month CD: 1.78% (March) vs. 1.80% (February) – Down 2 basis points
– 24-month CD: 1.49% (March) vs. 1.45% (February) – Up 4 basis points
– 36-month CD: 1.35% (March) vs. 1.31% (February) – Up 4 basis points
– 48-month CD: 1.27% (March) vs. 1.23% (February) – Up 4 basis points
– 60-month CD: 1.34% (March) vs. 1.31% (February) – Up 3 basis points
The FDIC plays a crucial role in ensuring the stability of the financial system and maintaining public trust. Deposit rates are influenced by the Federal Reserve’s key interest rate, which impacts various financial products like CDs, loans, mortgages, and credit cards. Recent Fed actions include rate cuts in response to economic conditions, with a focus on achieving stable inflation and maximum employment.
The Federal Reserve, at its March 19, 2025 meeting, decided to keep the federal funds target interest rate unchanged at 4.25% to 4.50%. This decision reflects the Fed’s efforts to stabilize the economy, with considerations for achieving optimal employment levels and managing inflation. The Fed’s future actions will depend on incoming data and economic conditions, with a focus on sustaining growth while keeping inflation in check.
Looking ahead to the next Fed policy meeting on May 6–7, 2025, economists are closely monitoring economic indicators to anticipate potential changes in interest rates and their impact on financial markets
Monitoring inflation and labor reports closely, there is speculation regarding potential future cuts to the Fed rate. Data shows sticky inflation, decreasing from a peak of 9.1% in June 2022 to rates fluctuating between 2.5% and 4% since May 2023. Recent jobs data from the Bureau of Labor Services indicates unemployment increasing to 4.1% in February, up from 4.0% in January. Despite employers adding 151,000 jobs to payrolls, slightly below expectations, the figures suggest economic uncertainties amidst trade wars and planned layoffs. The consumer price index released in March shows a decrease in annual inflation to 2.8% in February, easing concerns about the economy’s health. Additionally, the producer price index reports a slowing wholesale inflation rate. Federal Reserve Chair Jerome Powell mentions the Fed’s economic outlook for slower growth and higher inflation, emphasizing the impact of tariffs. The upcoming rate decision announcement by the Powell-led panel is scheduled for May 7, 2025.
For more in-depth information on the Federal Reserve meeting, advice on managing finances, and tips on comparing certificate of deposit options, consider the following factors:
1. Term length: Choose a term based on your savings goals, opting for shorter terms for immediate needs and longer terms for higher APYs.
2. Rate of return: Look for the highest APY available for your selected term, as CD rates remain fixed.
3. Minimum deposit: Some CDs require a minimum deposit, potentially offering higher APYs for larger initial deposits.
4. Type of bank or financial institution: Consider digital banks for competitive interest rates, while traditional banks and credit unions may have exceptions.
5. Penalties and fees: Evaluate withdrawal penalties and fees, ensuring they align with your financial circumstances.
Access your funds from your CD before maturity to avoid early withdrawal penalties, which are often calculated in months of foregone interest. The longer the CD term, the higher the penalty fee. Learn when it’s beneficial to break a CD and an expert’s insights on early withdrawals and breaking even.
Advantages of a certificate of deposit include guaranteed returns with a fixed interest rate upon maturity, higher rates compared to traditional accounts, and a variety of term options to align with your financial objectives. However, drawbacks include penalties for early withdrawals, potentially lower returns than other investment options, and the inability to add more funds once the CD is locked.
Explore alternatives to CDs, such as high-yield savings accounts and money market accounts, for safe and flexible ways to earn interest. Consider higher-risk investments like stocks, index funds, and mutual funds for potentially greater returns at the cost of increased risk.
Stay informed with our FAQs on CDs, safety, and growing your money. Discover how banks profit from CDs and stay informed about your CD maturity date through notifications from your bank or setting your own alerts. Learn more about managing your finances effectively in our personal finance guides.
Customer deposit accounts vary in terms of flexibility and interest rates. Traditional savings accounts offer easy access to funds, while CDs require a locked-in deposit over a specific period, providing higher interest rates but with penalties for early withdrawal. Online-only banks like Lending Club and SoFi are safe, as they are either FDIC-insured or partner with established banks, ensuring protection for deposits up to $250,000.
Compound interest is the concept of earning interest on both the initial deposit and any interest earned over time, helping savings grow faster. The Annual Percentage Yield (APY) indicates the total interest earned over a year, including compound interest.
A jumbo CD requires a minimum deposit of $100,000 and offers a fixed interest rate. While traditionally offering higher rates, it’s essential to compare with other options due to current market conditions.
A no-penalty CD allows flexible withdrawals without penalties, but typically offers lower rates compared to traditional CDs or high-yield savings accounts. A CD ladder is a strategy to diversify investments across multiple CDs to take advantage of varying rates and maintain liquidity.
A brokered CD is purchased through a brokerage firm, offering access to a wider range of CDs beyond what traditional banks may offer.
Consider investing in brokered CDs through your investment account instead of just traditional CDs from a bank or credit union. With brokered CDs, you select a term length with a fixed interest rate, but you also have the option to purchase them either new or “used” from other investors. Before deciding to invest in brokered CDs, it’s important to understand the differences between saving and investing.
Saving involves keeping your money in secure accounts with minimal risk to your principal, while investing entails purchasing assets such as stocks, bonds, or mutual funds that have the potential to generate higher returns. To determine the best approach for growing your nest egg, explore our comprehensive guide on saving and investing.
Please note that the annual percentage yields (APYs) mentioned were current as of Friday, March 21, 2025, at 8:10 a.m. ET. Keep in mind that APYs and promotional rates for certain products may vary by region and are subject to change. For further insights, refer to the following sources:
– National Rates and Rate Caps, FDIC. Accessed March 18, 2025.
– Consumer Price Index Summary, U.S. Bureau of Labor Statistics. Accessed March 13, 2025.
– Producer Price Index News Release Summary, U.S. Bureau of Labor Statistics. Accessed March 14, 2025.
– Employment Situation Summary, U.S. Bureau of Labor Statistics. Accessed March 10, 2025.
