CD Rates Have Started to Fall—So Don’t Delay If You’ve Been Waiting to Lock In

CD Rates Reached Historic Highs This Fall

Certificate of deposit rates began climbing in early 2022 when it became clear that the Federal Reserve would launch a rate-hike campaign to combat increasingly high post-pandemic inflation. The Fed’s March 2022 hike to the federal funds rate was its first of 11 over the next 12 rate-setting meetings, raising the benchmark rate to its highest level since 2001.

Since the federal funds rate is a direct driver of what banks and credit unions are willing to pay consumers for their deposits, CD rates have also been pushed to their highest levels in more than 20 years. And though the Fed’s most recent rate increase was implemented in July, it’s been possible that more hikes could still come. As a result, CD rates have continued to edge higher this fall.

The Best CD Rates Have Recently Started to Slip

Unfortunately for CD shoppers, the historic highs we saw in October and early November have started to soften. In late August, we enjoyed the first nationally available 6.00% offer. And throughout October and November, six more contenders joined our daily ranking of the best nationwide CDs, with rates ranging from 6.00% to 6.50% APY. At the end of last week, however, all of those had been taken off the market, leaving us with a top nationwide rate of 5.80% APY.

Beyond just the tip-top rate in each term, our daily rate analysis also tracks how many CDs are paying an elite rate of 5.75% or better. That count had been climbing almost every week this fall until finally reaching a peak of 18 in early November. In the two weeks since, the number of CDs in the 5.75% club has dropped to 12.

There is a bright spot in recent news, however. After ending last week with a nationwide high rate of 5.80%, the leading APY has inched back up to the 6.00% mark—with a new record-rate CD unveiled today.

What’s the Best CD Term Right Now?

There are many ways to answer this question. You could certainly say the best CD term is the one paying the highest rate. But choosing a CD term is a very personal decision, one based on the time horizon you have for your savings. If you aren’t sure when you’ll want to use your cash, you’ll probably be more comfortable committing it to a CD with a short term. But if the cash you want to deposit in a CD is, say, retirement money you can afford to keep invested for several years, you may prefer locking in one of today’s 5%-plus rates for as long as possible.

Below are the top rates available in each of the major CD terms. As you can see, the way to earn the highest APY is to choose the new 6-month term leader, paying 6.00%. But that certificate only guarantees its rate for eight months. Instead, you may prefer to sacrifice a bit on the rate in order to extend your APY guarantee a year or two—or as many as five years—down the road.

Could CD Rates Still Climb Higher?

Predicting Fed rate moves many weeks or months into the future is an imperfect exercise. That’s because the Federal Reserve makes each rate decision one at a time, based on the latest economic data and financial news. At the moment, inflation data is encouraging, leading financial markets to forecast no further rate increases from the Fed. But since inflation has not yet come down the Federal Reserve’s target of 2%, it’s still possible the rate-setting committee will determine at a 2024 meeting that one more increase is required to fully tamp inflation down.

If the odds of another rate hike remain slim—or it becomes virtually certain the Fed is finished with its increases—then it’s unlikely CD rates as a whole will move any higher. And it’s more likely they will continue to dip. But as we always caution, there is no crystal ball on the economy, and if inflation doesn’t fall sufficiently, it’s not impossible we could see another Fed increase next year—and, in turn, a slight boost for CD rates.

That said, CDs are already paying historically high rates. So capturing one now—before they decline further—is probably a smart move. Even if rates do inch higher in early 2024, the increase will likely be marginal, and probably not worth the gamble of missing out on the stellar rates available today.

Rate Collection Methodology Disclosure

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.