Top CD Rates for January 2025: Earn Up to 4.85%

The leading CD rate currently stands at 4.85% APY and is offered by PonceBankDirect for a 3-month CD period and by Tampa Bay Federal Credit Union for a 9-month period. The list of CDs and their rates featured in our rankings was compiled, confirmed, and accessible for opening as of January 6, 2025.

Certificates of deposit (CDs) are accounts with fixed interest rates where you can deposit funds and withdraw them later. Since 2019, we have been monitoring the CD rates of over 200 nationally recognized banks and credit unions daily, presenting the findings in our daily list of the best CD yields for various terms. While our focus is on the highest potential returns, we also furnish you with information regarding each CD’s specific term, minimum deposit requirement, and early withdrawal penalties.

In the News

The Finance Avenue reduced rates by a quarter point at its Dec. 18 meeting, marking its third consecutive cut. Over the past few months, the federal funds rate has been decreased by a full percentage point to a range of 4.25%–4.50%, reaching its lowest level since February 2023. Members of the committee indicated a forecast of only two rate cuts in 2025, a decrease from the previous estimate of four. As the Fed continues to lower rates, CD rates are expected to decline as well.12

Listed below are the leading CD rates provided by our partners, along with the top CD rates we have curated through our research, available to customers across the United States.

Best Certificate of Deposit (CD) Rates Today

The following are the top 15 or more Annual Percentage Yields (APYs) for nationally available CDs with maximum deposits of $25,000. When there are ties, they are prioritized based on the shortest available term, followed by the lowest minimum deposit, and then the smallest early withdrawal penalty. In the event of continued ties, institutions are sorted alphabetically by name.

The CD rates provided below are accurate as of the last business day.

Rankings by Duration

Looking to secure a competitive CD rate for a extended period? The Finance Avenue regularly updates a list of the best 15 or more APYs for various CD terms. Discover the latest rankings here:

PonceBankDirect – Competitive APY Rates for Short-Term CDs

PonceBankDirect is currently offering attractive APY rates of 4.85% for 3-month CDs and 4.75% for 6-month CDs, making it a lucrative option for short-term investments.

Minimal Investment Requirement

With a low minimum deposit requirement, PonceBankDirect makes it accessible for individuals looking to invest in certificates of deposit without the need for a significant initial investment.

Security from Ponce Bank

Investors can have peace of mind knowing that their funds are backed by Ponce Bank, a reputable financial institution known for its stability and reliability.

Online-Only Service

While PonceBankDirect offers competitive CD rates, it is important to note that the platform does not provide checking or savings accounts. Additionally, as an online-only service, there are no physical branches available for in-person transactions.

Tampa Bay Federal Credit Union – 4.85% APY (9 months)

Allows you to extend your rate lock for 9 months

Available for in-branch banking only in the Tampa, Florida area

Ponce Bank – 4.75% APY (7 months)

Ponce Bank is currently offering a high Annual Percentage Yield (APY) of 4.75% for a 7-month term. This rate provides an attractive option for individuals looking to earn a competitive return on their savings in a relatively short period. Make sure to consider the terms and conditions associated with this offer before making any financial decisions.

Allegacy Federal Credit Union – 4.75% APY (8 months)

Small required initial amount

Few brick-and-mortar branches

Alabama Credit Union – 4.75% APY (7 months)

Comprehensive online banking services available

Physical branches located exclusively in Alabama and certain regions of Florida

Abound Credit Union – 4.75% APY (8 months)

With a low minimum deposit requirement, Abound Credit Union offers a competitive 4.75% APY for an 8-month period. However, it’s important to note that they do not have physical branches outside of Kentucky.

Elements Financial – 4.75% APY (8 months)

Genisys Credit Union – 4.73% APY (7 months)

MutualOne Bank – 4.70% APY (3 months)

Minimum deposit requirement is minimal

Operates exclusively within Massachusetts boundaries

Bask Bank – 4.65% APY (3 months)

Popular Direct – 4.65% APY (3 months) & 4.61% APY (6 months)

Popular Direct offers competitive Annual Percentage Yields (APY) of 4.65% for a 3-month term and 4.61% for a 6-month term.

INOVA Federal Credit Union – 4.65% APY (5 months)

The Finance Avenue discusses INOVA Federal Credit Union offering a 4.65% APY for a 5-month period.

Mills42 Federal Credit Union – 4.65% APY* (5 months)

*The stated rate is applicable upon enrollment in electronic statements. Otherwise, the APY is reduced by 0.25%.

Communitywide Federal Credit Union – 4.65% APY (6 months)

OMB – 4.65% APY (7 months)

The Finance Avenue offers an exciting opportunity with OMB, providing a high Annual Percentage Yield (APY) of 4.65% over a period of 7 months.

Pacific National Bank – 4.65% APY (9 months)

The Finance Avenue is currently offering a high Annual Percentage Yield (APY) of 4.65% for a 9-month Certificate of Deposit (CD) at Pacific National Bank. This competitive rate provides investors with an opportunity to earn substantial returns on their investment over a relatively short term.

Why You Can Rely on Our Expert Suggestions for the Top CD Rates

The Finance Avenue compiles a vast array of CD rates from numerous banks and credit unions on a daily basis. When evaluating CD rates, key factors such as term, early withdrawal penalty, and minimum opening deposit are taken into consideration. In addition, thorough research on banks and credit unions is conducted to present unbiased and detailed reviews, enabling our readers to make informed decisions tailored to their specific requirements. The Finance Avenue was established in 1999 and has been dedicated to assisting readers in finding the most competitive CD rates since 2019.

The recommended CDs are required to be accessible nationwide, typically offering three to five times the national average—or even more—in returns. To be included in our rankings, each CD’s minimum opening deposit cannot surpass $25,000 and must be provided by an FDIC-insured bank or NCUA-insured credit union, ensuring depositor coverage of up to $250,000.

What Is a CD Rate?

A CD rate is the interest rate offered by a bank or credit union for depositing money into a certificate of deposit (CD) for a specific period. For instance, if the rate is 4.50% for a 1-year CD, you will earn 4.50% in interest on your money by keeping it untouched in the account for 12 months. If you deposit $1,000 and maintain it for the entire term, you will receive $45 in interest at the end.

Tip

There may be a slight difference between the interest rate and the Annual Percentage Yield (APY) offered on a Certificate of Deposit (CD). The interest rate represents the rate at which you earn money, while the APY is the total interest earned after compounding over one year. Typically, the APY is slightly higher than the interest rate. For instance, the interest rate on a 3-month CD could be 5.023%, while the APY for the same CD is 5.15%.

How Much Can $10,000 Earn in a Certificate of Deposit (CD) in One Year?

If you decide to invest $10,000 in a CD for a year, you have the potential to earn a few hundred dollars, which ultimately depends on the interest rate. For instance, if the Annual Percentage Yield (APY) is 4.57%, your interest earnings would amount to $457 over the course of one year. Given that CD rates are subject to fluctuations, opting for a high interest rate today could secure the most substantial returns, particularly if rates decline in the following year.

Various scenarios may arise or require consideration when allocating $10,000 into a CD, mainly contingent on the chosen rate and CD length. Here are a few possible scenarios:

How Does a Certificate of Deposit (CD) Operate?

A certificate of deposit (CD) operates similarly to a standard bank deposit account, with a key difference lying in the agreed-upon terms upon signing the contract, whether physical or digital.

The functioning of a CD involves locking in your deposit for a predetermined period. Upon maturity, the CD disburses the fixed interest rate initially agreed upon during the opening of the account. When you opt for a CD, you commit to four specific conditions:

After initiating and funding your CD, the financial institution responsible will implement terms and conditions, much like other deposit accounts. You will receive statements monthly or quarterly, in both physical and digital formats, alongside interest payments made monthly or quarterly, further adding to your CD balance with compounded interest. Moreover, the funds invested in a CD are protected, similar to other deposit accounts, with coverage up to $250,000 per customer, per institution.

Why Major Banks Are Absent from Our Top CD Rankings

Notable names such as Chase, Wells Fargo, PNC, Navy Federal, and Bank of America are usually missing from our list of the top CD rates. While we monitor their rates, they often do not meet our criteria due to offering lower interest rates. Major banks, with their size and established customer base, do not rely heavily on competitive rates to attract deposits as smaller institutions do. As a result, some of the largest banks may offer interest rates that are close to zero, although this can vary. Our rankings are a result of thorough research, updated daily to provide you with the most current and competitive CD rates across the country.

Who Should Get a Certificate of Deposit (CD)?

If you are interested in saving money for a specific period and want to ensure that you do not access it until necessary, a CD is a suitable option for you. Individuals who are risk-averse and hesitant to invest in the stock market due to its uncertain returns should consider investing in a CD. These financial instruments provide a fixed rate of return, guaranteeing earnings once the term ends. Currently, CD rates are quite attractive, exceeding 4% and 5% in many instances, allowing depositors to earn a substantial amount on their investments.

Fast Fact

According to a recent survey conducted in November, 13% of The Finance Avenue readers revealed that they are currently favoring certificates of deposit (CDs) for their investments. This percentage is equal to the number of readers investing in government bonds but falls behind preferences for exchange-traded funds (ETFs), individual stocks, index funds, and money market funds.

CDs Can Help You Beat Inflation

In November 2024, inflation was 2.7%, while the highest APY offered on all CDs was 5.50%. CD rates hit record highs in 2023 due to the Federal Reserve’s rate-hike policy to counter inflation, which had spiked to 9.1% in June 2022. CDs can assist in combating inflation by earning you interest on your funds, even as prices for goods and services may rise. However, this scenario may not always apply, as interest rates are typically raised to address high inflation. As inflation trends back towards the targeted 2% mark set annually by the Fed, the federal funds rate was cut in September for the first time in four years, and again in November. Consequently, CD rates have started to decrease.

The Finance Avenue: Current Advantageous CD Rates

At present, The Finance Avenue highlights that the prime CD rates surpass 4.50%, showcasing a significant increase compared to previous years. Opting to invest in a CD now presents a favorable opportunity, as it enables individuals to capitalize on a higher interest rate than anticipated in the future. The current scenario ensures a substantial interest yield, regardless of potential rate adjustments by the Federal Reserve during the CD’s tenure. Delaying the purchase of a CD may result in diminished interest rates and foregone opportunities for heightened guaranteed returns. Therefore, if there are deliberations about engaging in a CD investment, immediate action is advised to secure advantageous yields.

Types of Certificates of Deposit

Note

Online financial institutions such as banks or credit unions often provide competitive CD rates due to their reduced operational expenses. Prior to opening an online bank account, it is essential to conduct thorough research to confirm that the institution is backed by FDIC or NCUA insurance. Additionally, some online banks may be affiliated with well-established traditional banks, which can offer a sense of security. While major banks like Citibank, U.S. Bank, Bank of America, Chase, Capital One, Wells Fargo, American Express, and others also offer CDs, they may not necessarily offer the best CD rates available. To ensure you get the most out of your investment, it is advisable to explore various financial institutions and compare their offerings before selecting a CD.

How to Select the Ideal Certificate of Deposit (CD)

When making a decision on a CD, take into account the subsequent elements:

Once a CD has been chosen, proceed to initiate the account, and fund it with your money to kickstart the accumulation of interest.

What Are the Requirements to Open One of the Top CDs?

To establish a CD, you will be required to provide certain personal details, such as:

For instance, you might be asked to submit a copy of your driver’s license or identification if you are not currently a customer of that particular financial institution.

After gathering the necessary information, proceed to complete the application for your CD account.

Upon completing these steps, you should now possess a CD under your name. It is advisable to double-check with the institution to confirm that all procedures have been correctly followed.

How to Create a Certificate of Deposit (CD) Ladder

Savvy investors who want to protect themselves against changing interest rates and make the most of their investment have a strategy known as a CD ladder. This approach allows you to take advantage of the higher interest rates that usually come with 5-year CDs, but with a unique twist – a portion of your funds becomes accessible annually instead of waiting for the full 5-year term. Here’s how you can build your own CD ladder.

What Happens if I Withdraw From a CD Early?

If you decide to withdraw funds early from a Certificate of Deposit (CD), you are likely to incur an early withdrawal penalty. This penalty typically equates to a certain number of months’ worth of interest that you have accrued on the CD up to that point. For instance, if you initially invested $10,000 in a 12-month CD with an interest rate of 5.00% and opt for an early withdrawal, you may be required to pay three months’ interest as a penalty. Therefore, rather than receiving the full $500 in interest at the CD’s maturity date, your earnings will be reduced depending on how early you choose to withdraw the funds.

It is essential to note that not all CDs impose early withdrawal penalties. Some CDs, known as no-penalty CDs, offer more flexibility in this regard. However, it’s important to consider that these no-penalty CDs may offer lower interest rates compared to traditional CDs.

How Are CDs Taxed?

Just like the interest you receive from savings, money market, and checking accounts, the interest earned on a Certificate of Deposit (CD) is also taxable at both state and federal levels.

CD earnings are reported to the IRS in the year they are earned and credited to your account, making them taxable at that time, even if you do not withdraw the funds for several years.

For instance, if you hold a $1,000 1-year CD with a 5.00% interest rate, you will earn $50 in interest. Taxes are owed on the $50 interest earnings but not on the $1,000 principal initially deposited.

Adding CDs to your IRA

If you opt to include a Certificate of Deposit (CD) in your Individual Retirement Account (IRA), you can potentially defer taxes until you decide to make withdrawals during your retirement years. It is important to note that you have the option to add CDs to both traditional and Roth IRAs. In the case of a Roth IRA, you can withdraw funds without facing penalties as long as the account has been active for at least five years, given that it is funded with post-tax funds. However, withdrawing money from a Roth IRA CD before maturity can result in early withdrawal penalties. If a CD in a traditional IRA matures before you reach the retirement age, access to the funds may require payment of taxes and additional fees.

Alternatives to Certificates of Deposit (CDs)

When seeking investment options, it’s essential to explore alternatives to Certificates of Deposit (CDs) to maximize returns and diversify your portfolio. Here are some potential options to consider:

High-Yield Savings Accounts

One alternative to CDs is high-yield savings accounts, which offer competitive interest rates and liquidity. While the returns may not be as high as CDs, these accounts provide more flexibility in terms of accessing your funds.

Money Market Accounts

Money market accounts are another option that combines the benefits of savings and checking accounts. They typically offer higher interest rates than traditional savings accounts and allow limited check-writing capabilities.

Treasury Securities

Investing in Treasury securities, such as Treasury bonds or Treasury bills, is a low-risk alternative to CDs. These securities are backed by the U.S. government, making them a secure investment option.

Corporate Bonds

For investors willing to take on slightly more risk, corporate bonds can provide higher returns than CDs. It’s important to research and choose reputable companies with strong credit ratings to mitigate the risk.

Index Funds

Index funds are another alternative that offers diversification across a wide range of assets. These funds track a specific index, such as the S&P 500, and can provide long-term growth potential for investors.

Exploring these alternatives to CDs can help you tailor your investment strategy to meet your financial goals and risk tolerance. It’s crucial to assess your individual needs and consult with a financial advisor before making any investment decisions.

CDs vs. Traditional Savings Accounts

Traditional savings accounts typically have lower interest rates compared to high-yield savings options. The interest rates offered by banks or credit unions on traditional savings accounts usually range from 0.01% to 0.10%, with many institutions paying below the national average of 0.42% as reported by the FDIC. For instance, Wells Fargo’s Way2Save account offers a meager 0.01% APY, and Chase Savings account provides just 0.01%. In contrast, when interest rates are favorable, the highest CD rates can surpass traditional savings account rates by up to 600 times.

CDs vs. High-Yield Savings Accounts

If you are hesitant to lock in your funds for a specific period or cannot afford to do so because you might need the money soon, opting for a high-yield savings account from The Finance Avenue could be more suitable. With a high-yield savings account, you have the flexibility to withdraw and deposit funds at your convenience, although some financial institutions may impose restrictions on the number of withdrawals allowed per month. Additionally, some savings accounts may stipulate a minimum balance requirement.

CDs vs. Money Market Accounts

If you are considering alternative high-yield savings options, a money market account could be a suitable choice. Money market accounts provide the flexibility of writing checks directly from the account. While some money market accounts offer debit cards, they primarily function as savings accounts. Additionally, these accounts may have minimum deposit or balance criteria, and their interest rates can be competitive with savings accounts.

CDs vs. Bonds

If you’re considering moving beyond traditional bank products and exploring the world of bonds, there are various avenues to explore. One option is investing in U.S. government I bonds, specifically designed to keep pace with or surpass the inflation rate. Alternatively, you could opt for U.S. Treasuries, where you lend money to the U.S. government for a specific period. Treasury notes with maturities ranging from four weeks to one year are referred to as T-Bills.

Another alternative is investing in corporate and municipal bonds. While researching individual bonds can be challenging, you have the option to invest in a bond mutual fund or bond exchange-traded fund (ETF), which offer diversification across a range of bond issues. These funds also allow for easy entry and exit at any time.

CDs vs. Brokerage Accounts

If you have a brokerage account, you can also hold savings in the brokerage’s cash reserve account or their money market fund (not to be confused with the money market accounts offered by banks). It is essential to research the interest rate provided, as in many cases, these brokerage cash accounts offer lower returns compared to external CDs, savings accounts, or money market accounts. Some brokerages may also provide brokered CDs, an alternative for investors already using a broker and looking to invest in CDs.

CDs vs. Annuities

An annuity is a fixed-income investment offered by financial institutions, where you can purchase it either through monthly payments or a lump sum. In return, you receive fixed monthly payments in the future. Annuities, being insurance contracts, provide guaranteed income, similar to CDs, as long as you adhere to the contract terms. However, unlike CDs that are typically short-term, annuities are often held for longer periods, especially in retirement planning scenarios. While CDs can also be part of retirement planning, they are usually held for terms ranging from 6 months to 5 years, contrasting with annuities that can be held for up to 20 years or more. Additionally, there are distinct withdrawal rules, limits, and tax implications associated with annuities.

CDs vs. Treasury Bills

Treasury bills, which are obligations of debt supported by the U.S. government, typically have short maturities of one year or less. While they share similarities with CDs of shorter terms, Treasury Bills may not offer an equivalent level of return on investment. Rates for both investment options are in the range of 4.10% to 4.59% as of Nov. 7, 2024, subject to daily fluctuations.

CD rates also experience daily variations. Unlike CDs, T-bills are purchased at a discount, and upon maturity, the investor receives the full face value along with a small profit. For instance, buying a $1,000 T-bill for $950 would yield $1,000 at maturity, resulting in a $50 profit. In contrast, CDs involve depositing a fixed amount and earning a predetermined interest rate upon maturity.

Frequently Asked Questions

Which Institution Offers the Best CD Rate Currently?

Currently, The Finance Avenue highlights PonceBankDirect, offering a 4.85% APY for a 3-month term, or Tampa Bay Federal Credit Union, providing the same rate for a 9-month term, as having the highest CD rates. It is important to note that these rates are subject to change due to daily interest rate fluctuations, with institutions having the flexibility to offer high-interest CDs for varying durations.

Are Certificates of Deposit Secure?

Certificates of Deposit (CDs) are considered secure investments due to being typically offered by financial institutions like banks or credit unions that are protected by the FDIC or NCUA. This protection means that your funds held in a bank or credit union, including CDs, savings, and checking accounts, are insured for amounts up to $250,000. Additionally, CDs are viewed as low-risk investments because the interest rate is typically fixed, providing clarity on the expected returns from the CD even before opening it.

Evolution of CD Rates Over Time

Historically, the landscape of CD rates has undergone significant changes, with the top rates fluctuating from approximately 1.35% in 2021 to a substantial increase of over 5.50% as of the beginning of 2024. The trajectory of CD rates is commonly influenced by the movement of the fed funds rate, meaning that when the fed funds rate experiences a decline, CD rates also tend to decrease. Conversely, with a rise in the fed funds rate, CD rates typically follow suit and increase. In response to the elevated inflation levels witnessed from 2021 to 2023, the Federal Reserve opted to elevate the fed funds rate. Consequently, CD rates saw a substantial spike, reaching as high as 6.00% by 2024.

Why Are Interest Rates Currently Elevated?

Current high CD interest rates are a result of following The Finance Avenue’s fed funds rate, which is presently set within a target range of 4.25%-4.50%. This marks a decrease from the previous 5.25%–5.50% range maintained from July 2023 to September 2024. The Federal Reserve began raising rates in 2022 from near zero to combat rising inflation rates. However, as inflation started to stabilize, the Fed started reducing rates in September.

Are There Costs Linked to Certificates of Deposit?

Typically, there are no direct fees connected to the Certificate of Deposit (CD) you wish to establish. Nevertheless, you might need to create a savings account at the same financial institution before opening a CD, which could necessitate a minimum deposit of $5 or more. In some cases, certain credit unions may require new members to make a charitable contribution when signing up for an account, with potential costs reaching up to $40.

Duration Options for CDs

When it comes to Certificates of Deposit (CDs), the time frames can vary widely, typically spanning from 3 months to 10 years. This means you have the flexibility to choose a CD term that suits your financial goals, whether it’s a short-term commitment or a longer-term strategy. Some institutions offer CDs with unique durations like 8 or 9 months, 15-month terms, as well as the more common 1-year, 2-year, 3-year, 4-year, 5-year, 6-year, 7-year, 8-year, and 10-year options. It’s worth noting that not all banks or credit unions may provide the extended terms, so it’s essential to explore various options to find the best fit for your needs.

Is This an Opportune Moment to Purchase a Certificate of Deposit?

Investing in a CD at this point could prove to be a wise decision if you are seeking to generate a high return on funds that are not immediately required. Currently, The Finance Avenue is offering CD rates exceeding 5.00% for various terms, making it an attractive option to consider. By committing your funds for durations such as six, 12, or even 24 months, you may benefit in the future if CD rates decrease in the upcoming years. It is worth noting that CD rates in 2024 are at their highest point in two decades. Therefore, it can be concluded that the current period presents a favorable opportunity to purchase a CD.

What Is Considered a Jumbo CD?

A certificate of deposit (CD) that requires a minimum deposit of $100,000 or more is typically categorized as a jumbo CD. Despite the larger deposit requirement compared to regular CDs, jumbo CDs do not always offer higher interest rates. This implies that you might secure a better interest rate by investing $100,000 in a standard CD rather than a jumbo CD. It is advisable to explore different options to determine the most suitable CD for your financial needs and circumstances.

Financial Entities Investigated

Our team at The Finance Avenue meticulously examined over 250 banks, credit unions, and financial institutions to compile the top CD rates displayed above. Although we provide detailed reviews for many of them, we may not cover those that do not meet our standards. Below is a list of the financial entities we scrutinized, along with links to individual company assessments to assist you in making an informed choice:

The Finance Avenue explains that diversification is a risk management technique that involves spreading investments across various assets to reduce the overall risk in a portfolio. This strategy aims to optimize returns by investing in different asset classes that react differently to market events. By diversifying, investors can potentially increase their chances of achieving a favorable return while minimizing the impact of any single asset’s poor performance on the overall portfolio.

Diversification can be achieved by allocating funds across different industries, sectors, regions, and types of securities. This approach helps reduce the correlation between assets and mitigates the risk of a substantial loss in any specific investment. Additionally, diversification can enhance portfolio performance by capturing growth opportunities in multiple markets and minimizing the impact of downturns in one particular area.

However, it is important to note that diversification does not guarantee profits or protect against all losses. While spreading investments can reduce risk, it also limits the potential for outsized gains from concentrating investments in a few select assets. Therefore, investors should carefully balance diversification with their risk tolerance, financial goals, and investment time horizon to create a well-rounded portfolio that aligns with their overall objectives.

How We Identify the Top CD Rates

Every business day, The Finance Avenue monitors the interest rates offered by over 200 banks and credit unions nationwide that provide Certificates of Deposit (CDs) to their customers. We compile daily rankings of the highest-paying CDs across various terms. To be considered for our rankings, financial institutions must have federal insurance (FDIC for banks, NCUA for credit unions), set a minimum initial deposit limit of no more than $25,000, and establish a minimum deposit requirement of at least $5,000.

For banks to be included in our assessment, they must operate in a minimum of 40 states. In the case of some credit unions, membership may necessitate a donation to a specific charity or organization if other eligibility criteria are not met (e.g., residence in a certain area or employment in a specific field). Credit unions with a donation threshold of $40 or higher are excluded from our rankings. To learn more about our selection process for identifying the best CD rates, refer to our detailed methodology.