The full article con﷽tinues below♔ these offers from our partners.

Today's CD Rates Aren't Far Below Their Historic Peak

From March 2022 to July 2023, the 澳洲幸运5官方开奖结果体彩网:Federal Reserve aggressively fought decades-high inflation by repeatedly raising the federal funds rate. With 11 hikes, the Fed increased its benchmark rate by a cumulative 5.25%—to its highest level since 2001.

This has been great news for savers, as the 澳洲幸运5官方开奖结果体彩网:federal funds rate directly impacts what banks and credit unions are willing to pay consumers for theirಌ deposits. And as a result, the rates you can earn on high-yield savings, money market, and CD accounts surged to historic highs last fall.

But since July, the central bank has held its benchmark rate steady for five meetings in a row. Though future Fed rate moves are never fully predictable, it's largely expected the Fed won't make any more rate hikes in this campaign. As a result, banks and credit unions have been mildly throttling back on CD rates over the last few months.

But don't assume that it's too late to open a CD—the graph below shows how high CD rates still are. While it's true they have come down from their record peaks in almost every term, the 4% and 5% yields you can still snag are better returns than we've seen in most of the last two decades.

Why CDs Are So Smart Right Now

One of the big advantages of 澳洲幸运5官方开奖结果体彩网:certificates of deposit (CDs) is that they let you lock in a rate you'll be guaranteed for a set period of time. So when you open a CD, you're not🌺 just signing up for a known interest rate, but also an agreed-upon time duration, or term. What's great about this when rates are elevated—like they are now—is that your high yield will not go down.

This provides not only predictability for your earnings but also removes the possibility of future Fed rate moves diminishing your return. And it is indeed very possible that the Fed will begin lowering its benchmark rate this year. At its meeting concluding on March 20, the majority expectation of Fed members was that the committee would reduce the federal funds rate by 0.75 percentage points by year's end.

The Fed's timing on starting to cut rates is a big question right now, but it's bound to come once inflation gets more under control. Once it appears the Fed is ready to cut its benchmark rate, returns on 澳洲幸运5官方开奖结果体彩网:high-yield savings accounts, 澳洲幸运5官方开奖结果体彩网:money market accounts, and newly issued CDs🧔 will start falling. But a CD rate you've already locked in is yours to keep until the CD matures.

How Much Can I Earn With $10,000 in a CD?

The amount of interest you can make by committing to one of today's CDs depends, of course, on the term you choose and the particular CD you open. But using a common investment amount of $10,000, we demonstrate below what you can earn by opening a 澳洲幸运5官方开奖结果体彩网:top-paying CD in any of the major terms.

We've also shown how those earnings compare to a savings account paying 3%, helping you understand what you stand to gain with a CD commitment. Granted, 3% is a hypothetical savings account rate—you may be earning more than that right now. But you may also be earning less—possibly much less.

It's also important to consider that earning 3% on a savings account right now does not mean you'll be able to earn that much in a year or two. Note, for example, that before the Fed started raising rates in 2022, the top nationwide rate on a high-yield savings account was 澳洲幸运5官方开奖结果体彩网:just 0.70% APY. So in our calculations below, CDsꦦ will come out even further ahead if savings accou🌳nt rates fall while you still hold the CD.

Earnings on a $10,000 CD Opened at Today's Top Rates

Only Have $5,000 or Less for a🍬 CD? Or Maybe More?

Maybe $10,000 is more savings than you can afford to commit, and $2,000 or $5,000 is more your speed. Or maybe you have a bigger amount—like $25,000—to invest. Below we've laid out the earnings you could expect at those different deposit amounts.

CDs Have a Cꦚatch—But You Can Use🀅 It to Your Advantage

There is one important trade-off to CDs—they carry an 澳洲幸运5官方开奖结果体彩网:early withdrawal penalty that you'll incur if you decide you need to cash out before the CD's maturity date. Sometimes these are relatively mild, but other times they're quite harsh. Since every bank and credit union has its own policy, be sure you find out how any penalties will be calculated before you commit to a CD. And if two CDs are fairly similar in rate, go with the one that has t💜he less onerous penalty.

There is a silver lining to early withdrawal penalties, however. Because cashing out early will cost you, it can be an effective deterrent to spending your savings on something you didn't previously plan for. So if you choose your CD term carefully, keeping your money on deposit until maturity will not only help you keep your money saved, but it will also maximize what you earn on those savings.

How We Find the Best Savings and CD Rates

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 fo🙈r credit unions), and the account's minimum initial depos♍it 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, 澳洲幸运5官方开奖结果体彩网:read our full methodology.