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*Indicates the highest APY offered for each term. To see our lists of the highest paying CDs under bank, credit union and jumbo certificate terms, click on the column headers above.

Where are CD prices going this year?

The Federal Reserve announced at its most recent meeting that it would hold rates steady, marking the fourth meeting in a row. To combat decades-long high inflation, the Fed aggressively raised interest rates between March 2022 and July 2023, bringing the federal funds rate to its highest level in 22 years.

This has created historically favorable conditions for CD buyers, as well as anyone holding cash in a savings or high-yield money market account. CD prices continued to climb until peaking this fall, reaching their highest levels in two decades.

But with inflation slowing and the Fed's wait-and-see policy since July, many banks and credit unions have started lowering their CD rates. And this should continue after this latest announcement from the Fed. This is because the central bank's statement abandoned previous rhetoric that future rate hikes would still be possible. It now seems clear that the Fed's rate hike campaign is over.

This means we have entered a new phase, in which the Fed committee is focused on choosing the right time to pull the trigger on an initial rate cut. But Fed Chairman Jerome Powell said that while the economy has made promising progress, inflation remains too high and so the committee will not discuss implementing a rate cut until it can be ensured that the downward trajectory of inflation is both sufficient. And sustainable.

The January jobs report surely won't help on this front. New jobs and wage growth have been much higher than expected, which could prompt the Fed to keep rates high for longer than investors expected.

“Job gains, if not revised downward in future releases, will certainly dampen early rate cut prospects,” wrote Scott Anderson, chief U.S. economist for BMO Capital Markets. “The Fed was right to be cautious in announcing short-term rate cuts at the (last) FOMC meeting.”

The Fed's next rate announcement will be on March 20. At his January 31 press conference, Chairman Powell indicated that he did not anticipate an interest rate cut as early as the first quarter, adding, “I don't think it's likely that the committee will reach a level of confidence by the end of the year. the March meeting. And he reiterated his cautious stance in a “60 Minutes” interview that aired a week ago.

What this means for CD rates is that they will likely fall gradually, until it becomes clear that the Fed is ready to make a reduction. Once this appears to be a reality, banks and credit unions will likely begin lowering their rates more substantially.

Note that the “highest rates” cited here are the highest nationally available rates that Investopedia has identified in its daily research of rates for hundreds of banks and credit unions. This is very different from the national average, which includes all banks offering a CD with this term, including many large banks that pay paltry interest. So, national averages are always quite low, while the best prices you can find while shopping are often 5, 10, or even 15 times higher.

How we find the best prices for CDs

Every business day, Investopedia tracks rate data from more than 200 banks and credit unions that offer CDs to customers nationwide and determines the daily rankings of the highest-paying certificates for each major term. To qualify for our listings, the institution must be federally insured (FDIC for banks, NCUA for credit unions) and the CD'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 make a donation to a specific charity or association to become a member if you don't meet other eligibility criteria (for example, you don't live within a certain region or do not work a certain type of job), we exclude credit unions with a required donation of $40 or more. To learn more about how we choose the best rates, read our full methodology.

Investopedia / Alice Morgan

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