Best CD Rates Today – Falling APYs Make Now the Time to Act, July 18, 2024

Certificate of deposit rates may have reached their tipping point. After months of holding rates relatively steady, we’re starting to see banks drop them across CD terms. So, if you want to maximize your earning potential, there’s no time like the present to open a CD.

Today’s top CDs boast annual percentage yields, or APYs, up to 5.35%. But with inflation finally cooling, experts expected the Federal Reserve could start cutting rates as early as September — and some banks are already cutting their rates in anticipation.

Fortunately, since your APY is locked in when you open a CD, nabbing one of today’s best CD rates will allow you to enjoy high earnings regardless of where rates go next.

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 rates available on today’s best CDs and how much you could earn by depositing $5,000 right now:

What affects CD rates?

The Fed doesn’t directly set CD rates, but its actions have ripple effects. It regularly adjusts the federal funds rate to keep the economy in check, raising it when inflation is high and lowering it when inflation cools. This rate determines how much it costs banks to borrow and lend money to each other. So, 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.

Starting 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 when inflation showed signs of cooling, the Fed paused rates seven times beginning with its September 2023 meeting. As a result, CD rates plateaued and then began dropping as experts predicted rate cuts in the second half of 2024.

Where experts see CD rates heading next

CD rates held relatively steady in June as banks awaited and then responded to the Fed’s decision to pause rates for the seventh consecutive time. But we’re beginning to see them waver as experts speculate on the Fed’s next moves.

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

The timing of Fed cuts depends on where inflation stands when the Fed meets next. The latest Consumer Price Index report, which measures inflation rate changes, revealed inflation is down 0.1% year over year. As a result, many experts believe the Fed could begin cutting rates as early as September.

“With US inflation data cooling and consumer prices dropping for the first time in four years, the financial markets are illustrating a narrative that the Fed will most likely cut rates in September,” said Faron Daugs, CFP, founder and CEO at Harrison Wallace Financial Group. “I’m on board with this bet and anticipate a rate cut taking place sometime in the coming weeks in the fall.”

Others are hedging their bets.

“The market is pricing in a high probability of a rate cut in September. However, I don’t feel as certain as the market, which is pricing in over a 90% chance of at least one rate cut,” said Noah Damsky, CFA, Principal of Marina Wealth Advisors. “I wouldn’t be surprised at a rate cut in September, [but] an over 90% probability of a rate cut is too aggressive. I feel more strongly that the Fed will cut rates in November than in September.”

But whatever the Fed decides at its upcoming meetings, it’s worth noting that we’ve seen several banks drop APYs across CD terms in the past couple of weeks for banks we track at CNET. And with Fed rate cuts on the horizon, we’re likely to see this trend continue. In other words, locking in a high APY now could be a smart strategy.

“Once the Federal Reserve lowers interest…