Current CD Interest Rates

current CD interest rates

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A CD, also known as a certificate of deposit, is a type of savings account that has both a fixed date of withdrawal and an interest rate that’s fixed. The date of withdrawal is known as the maturity date. If you withdraw money from a CD or share certificate early, then you have to pay a penalty.

There are typically no monthly fees associated with a certificate of deposit.

Certificates of deposits, as well as share certificates (offered by credit unions), are considered a very low-risk investment. They are insured for up to $250,000 per depositor by the FDIC, so as long as you keep the amount that you are holding in CDs at any given institution under $250,000 then you are as secure as it’s possible to be.

Current CD Interest Rates

Current rates for CDs can change every week, but for the week of November 21, 2018, the current CD interest rates are (on average) as follows:

  • Five Year Jumbo CD: 1.52%
  • Five Year CD: 1.44%
  • One Year Jumbo .93%
  • One Year CD .88%
  • Money Market Account: .21%

This is currently right in line with the three-month trends, which are as follows:

  • Five Year Jumbo CD: 1.52%
  • Five Year CD: 1.44%
  • One Year Jumbo .93%
  • One Year CD .88%
  • Money Market Account: .21%

The chart below shows the changing CD rates from 2009 through today, based on length of time.

CDs are an interesting tool for savings, but they’re not right for everybody. Here’s more information about CDs, how they differ from a savings account, and how to decide if CDs are right for you.

How Does a CD Differ from a Savings Account?

Because a CD has a fixed withdrawal date, you can’t access the funds in it without paying a penalty unless you wait for the withdrawal date. With a savings account, you can normally take money out and put money in whenever you want.

Most CDs have terms of between a few months to five years. Generally speaking the longer term you commit to, the higher the interest rate and the more money you will earn on that CD.

CDs almost always have higher interest rates than savings accounts, so if you’re sure you’re not going to need the money during the CD term and don’t want to participate in more speculative investments – like the stock market––they are a good way to go.

When is a Savings Account a Better Choice?

A savings account is a better choice when you think you may need the money before the withdrawal date on the CD. Even though savings accounts almost always yield much lower interest rates, the penalty on taking money out of a CD early can be quite significant.

How to Get the Best Rates on CDs

Most of the time, the best rates on CDs are going to be through online banks. The reason for this is that online banks have lower overhead than their brick-and-mortar counterparts, so they can offer more competitive rates. Some online banks to consider are Marcus by Goldman Sachs, Barclays, Ally, and Synchrony. Another way to save with CDs without tying up all your money for 5 years is to use a CD ladder.

Consider a CD Ladder

Many savers find that the idea of tying up their money for 3 to 5 years of time in order to get the highest rates is daunting. If this is true for you, but you’re interested in using CDs as a savings vehicle you may want to consider “laddering”.

What happens with a CD ladder is that you invest your money over a variety of term lengths.

As an example, if you have $10,000 to start with, then you invest 2000 in each of the following CDs:

  • one-year
  • two-year
  • three-year
  • four-year
  • five-year

That way, the most you ever have a part of your money tied up is for one year. When the first one-year certificate comes due, you put the money into a new five-year certificate of deposit. You keep reinvesting the money every year as a comes due into the longer-term certificates.

By doing this, you always have money coming due every year and you can start to take it news of the higher interest rates from longer-term CDs.

Bottom Line

CDs can be a great way to save money for college tuition or retirement expenses and are particularly well suited to people who don’t like a lot of risk.