APYs Top 5% Ahead of the Holiday Weekend. Best CD Rates for Today, July 3, 2024

The clock is ticking on high certificate of deposit rates. Today’s top CDs earn up to 5.35% annual percentage yield, or APY -- but with rate cuts on the horizon, it’s only a matter of time before these APYs are a thing of the past.

Experts expect the Federal Reserve will lower the federal funds rate in the coming months, which means banks will start lowering their CD rates too. So if you’ve been thinking of opening a CD, now’s the time to lock in a great APY while you still can.

“I would recommend consumers open a CD in today’s environment knowing that the future rates will more than likely be lower than they are today,” said Dana Menard, CFP, founder and lead financial planner at Twin Cities Wealth Strategies.

Experts recommend comparing rates before opening a CD account to get the best APY possible. Enter your information below to get CNET’s partners’ best rate for your area.

Today’s best CD rates

Here are some of the top CD rates available right now and how much you could earn by depositing $5,000 right now:

How Fed decisions affect CD rates

CD rates are significantly impacted by where the Fed sets the federal funds rate, which determines how much it costs banks to borrow and lend money to each other. When the Fed raises this rate, banks tend to raise APYs on consumer products like savings accounts and CDs to boost their cash reserves and stay competitive. When the Fed cuts this rate, APYs on these products drop, too.

Beginning in March 2022, the Fed raised the federal funds rate 11 times to combat record-high inflation, and CD rates skyrocketed, with some accounts offering APYs over 5.5% heading into fall 2023. But as inflation began to show signs of cooling, the Fed paused rates at its September 2023 meeting -- and every meeting since then. As a result, CD rates plateaued and then began dropping as experts predicted rate cuts in the second half of 2024.

How long will CD rates stay high?

Over the past several weeks, CD rates held relatively steady as banks awaited and then responded to the Fed’s June decision to pause rates for the seventh consecutive time.

After months of regular APY cuts across a variety of banks and CD terms, rates seem to have leveled off. And if experts are correct about the future of Fed rate cuts, they should remain elevated for at least a while longer.

Here’s where CD rates stand compared to last week:

Experts anticipate at least one rate cut later this year, which means CD rates are likely to begin falling again.

“The Fed is starting to get the economic data they feel is needed to justify one rate cut for this year,” said Faron Daugs, CFP, founder and CEO at Harrison Wallace Financial Group. “I believe it will be after the election. However, if new data continues to indicate that inflation is easing, we could see a cut at the September meeting. There is a risk of looking too political by doing this in September, but it could just hinge on upcoming data as to the timing of a cut.”

Opening a CD today allows you to lock in a high APY and protect your earnings from rate drops.

Top reasons to open a CD now

With rates still attractive, now’s the time to open a CD and lock in a high APY. But a fixed rate isn’t the only perk you’ll enjoy by opening a CD today.

CDs are insured up to $250,000 per person, per bank, as long as the bank is insured by the Federal Deposit Insurance Corporation. Credit unions offer the same protection through the National Credit Union Administration. That means your money is safe up to the deposit limits if the bank fails.

Plus, unlike investments such as stocks, CDs are low-risk. You won’t lose your principal deposit or the interest you’ve earned unless you run into early withdrawal penalties -- which you can easily avoid by choosing the right term for your needs.

Choosing a CD: What to consider

A competitive APY is important, but there are other things you should consider when comparing CD accounts:

• When you’ll need your money: Early withdrawal penalties can reduce your interest earnings. So, be sure to choose a term that fits your savings timeline. “I recommend whatever term you are comfortable with having locked up as long as you don’t need that money to be liquid for the duration of the term,” said Dana Menard, CFP, founder and lead financial planner at Twin Cities Wealth Strategies. Alternatively, you can select a no-penalty CD, although the APY may not be as high as you’d get with a traditional CD of the same term.
• Minimum deposit requirement: Some CDs require a minimum amount to open an account -- typically, $500 to $1,000. Others do not. How much money you have to set aside can help you narrow down your options.
• Fees: Maintenance and other fees can eat into your earnings. Many online banks don’t charge fees because they have lower overhead costs than banks with physical branches. Still, read the fine print for any account you’re evaluating.
• Federal deposit insurance: Make sure any institution you’re considering is an FDIC or NCUA member so your money is protected if the bank fails.
• Customer ratings and reviews: Visit sites like Trustpilot to see what customers are saying about any bank you’re considering. You want a bank that’s responsive, professional and easy to work with.

Methodology

CNET reviews CD rates based on the latest APY information from issuer websites. We evaluated CD rates from more than 50 banks, credit unions and financial companies. We evaluate CDs based on APYs, product offerings, accessibility and customer service.

The current banks included in CNET’s weekly CD averages are: Alliant Credit Union, Ally Bank, American Express National Bank, Barclays, Bask Bank, Bread Savings, Capital One, CFG Bank, CIT, Fulbright, Marcus by Goldman Sachs, MYSB Direct, Quontic, Rising Bank, Synchrony, EverBank, Popular Bank, First Internet Bank of Indiana, America First Federal Credit Union, CommunityWide Federal Credit Union, Discover, Bethpage, BMO Alto, Limelight Bank, First National Bank of America, Connexus Credit Union.