Compare The Best CD Rates For February 15, 2024
When it comes to saving and growing your money, Certificate of Deposit (CD) rates are an important factor to consider. CD rates determine how much interest you’ll earn on your investment over a set period of time. If you’re looking for the best CD rates in February 2024, we’ve compiled a list of the top banks offering competitive rates.
The highest CD rates for February 2024 are
- Local Government Federal Credit Union — 18 months, 5.75% APY, $250 minimum deposit
- Hughes Credit Union — 17 months, 5.65% APY, $99,000 minimum deposit
- Space Coast Credit Union — 12 months, 5.50% APY, $500 minimum deposit
Remember that these rates are subject to change and may vary by region.
The following table compares the best CD rates today from 475 banks and credit unions, sorted from the highest APY to the lowest APY for 3-month, 6-month, 1-year, 2-year, and 5-year terms. You can also sort by term using the “Months” column.
Disclaimer: Interest rates change daily, and we’re doing our best to keep you updated. Please double-check with your bank or credit union!
What Has The Highest CD Rates Right Now?
As of February 12, 2024, the bank or credit union with the highest CD rate is 5.75% with Local Government Federal Credit Union. The minimum account opening deposit is $250.00.
The Best 3-Month CD Rates
The following banks and credit unions have the highest CD rates for three months.
The Best 6-Month CD Rates
The following banks and credit unions have the highest CD rates for six months.
|Best 6-Month CD Rates
The Best 1-Year CD Rates
The following banks and credit unions have the highest CD rates for 12 months.
|Best 12-Month CD Rates
|Hudson Valley Credit Union
|Space Coast Credit Union
|Lafayette Federal Credit Union
The Best 2-Year CD Rates
The following banks and credit unions have the highest CD rates for 24 months.
|Best 2-Year CD Rates
|Luana Savings Bank
|Pelican State Credit Union
The Best 3-Year CD Rates
The following banks and credit unions have the highest CD rates for 36 months.
|Best 3-Year CD Rates
|Mountain Credit Union
|Hughes Federal Credit Union
|Lafayette Federal Credit Union
The Best 4-Year CD Rates
The following banks and credit unions have the top CD rates for 48 months.
|Best 4-Year CD Rates
|Fedchoice Federal Credit Union
The Best 5-Year CD Rates
The following banks and credit unions have the highest CD rates for 60 months.
|Best 5-Year CD Rates
|Lafayette Federal Credit Union
|Virginia Credit Union
The Best 10-Year CD Rates
These credit unions and banks have the highest payouts on 10-year CDs.
|Best 10-Year CD Rates
|Apple Federal Credit Union
|Equitrust CD-Like Annuity
CD Rates Forecast
As we look ahead to 2024, it’s important to consider the forecast for CD rates and the factors that may impact them. One significant influencer of CD rates is the Federal Reserve and its decisions regarding interest rates.
CD rates are starting to decline due to anticipated interest rate cuts by the Federal Reserve. The pace of this decline will be determined by a combination of the actual cuts made by the Federal Reserve and various market conditions.
To stay informed about the latest developments, monitoring the Federal Reserve’s decisions and their subsequent impact on CD rates is crucial. Understanding these factors can help individuals make informed decisions regarding their savings and investment strategies.
|2024 CD Rates Forecast
|Anticipated interest rate cuts by the Federal Reserve
|Dependent on the actual cuts and market conditions
|Monitor Federal Reserve decisions to stay informed
What is a Certificate of Deposit (CD)?
A CD, or Certificate of Deposit, is a type of savings account where you agree to keep your money deposited for a specific CD term length. In return, financial institutions like banks and credit unions offer higher interest rates compared to traditional savings accounts. The key here is understanding CD terms and rates to maximize your earnings.
How Does a Certificate of Deposit Work?
A certificate of deposit (CD) is a popular investment option that provides a secure way to grow money. Understanding how CDs work can help you make informed decisions and maximize potential returns.
The Basics: Principal Investment, Interest Rates, and Maturity Dates
When you invest in a CD, you essentially lend a sum of money, known as the principal, to a bank or financial institution for a fixed period. The bank pays you interest at a predetermined rate in return for this loan. This interest rate, typically higher than that offered by regular savings accounts, determines how much your investment will grow over the CD’s term.
The CD’s term refers to the length of time you agree to keep your money invested. This can range from a few months to several years, depending on your financial goals and the options offered by the bank or credit union. The CD matures at the end of the term, and you receive back your initial investment along with the accumulated interest.
Calculating CD Returns
Understanding how your CD’s returns are calculated is crucial for assessing its overall profitability. The two common methods used are simple interest and compound interest.
- With simple interest, the interest earned on your CD is calculated solely based on the principal amount and the agreed-upon interest rate. This means that the interest remains constant throughout the CD’s term.
- Compound interest, on the other hand, allows your investment to grow more significantly over time. With this method, the interest earned is added to the principal, creating a higher balance on which the subsequent interest calculations are based. As a result, compound interest provides the potential for greater returns compared to simple interest, especially for longer-term CDs.
CD Terms and Penalties
CDs typically offer different terms to cater to various investment needs and time horizons. Short-term CDs, such as those with a three-month or six-month term, generally offer lower interest rates but provide quick access to your funds. Long-term CDs, such as those with a five-year term, often offer higher interest rates but require you to commit your money for a more extended period.
How Do CD Rates Work?
Often, CD rates are dictated by several factors, including the federal reserve policies, fed funds rate, and national averages. Here are some key highlights and factors influencing CD rates:
Federal Reserve Interest Rate Changes
The Federal Reserve’s monetary policy decisions directly impact CD rates. When the Fed raises interest rates, CD rates also tend to increase. Conversely, when the Fed lowers interest rates, CD rates may decrease.
Economic Conditions and Inflation
Economic conditions and inflation rates influence CD rates. CD rates may be comparatively lower during a strong economy with low inflation. However, when the economy is facing inflationary pressures, CD rates may rise to compensate for the eroding purchasing power of the invested funds.
Banks and credit unions regularly adjust their CD rates to remain competitive in the market. As a result, CD rates can vary across different institutions. Keeping track of the competitive landscape helps investors identify the best rates available.
Treasury yields serve as a benchmark for other interest rates, including CD rates. When Treasury yields rise, CD rates tend to follow suit. Conversely, when Treasury yields decline, CD rates may also decrease.
Overall Savings and Deposit Rates
The general trends also influence CD rates in savings and deposit rates. Financial institutions consider the overall interest rate environment when determining their CD rates.
Economic Outlook and Policy Changes
Changes in economic outlook and policy decisions by governments or central banks can impact CD rates. Investors should stay informed about any policy changes and economic forecasts that may affect CD rates.
How to Choose the Right CD
When it comes to choosing a certificate of deposit (CD) that aligns with your financial goals, there are several important factors to consider. By carefully evaluating these factors, you can make an informed decision and maximize your savings potential. Here are some key considerations:
Annual Percentage Yield (APY)
The APY is a critical factor to consider when choosing a CD. It represents the interest rate you will earn on your investment over the course of a year, including compound interest. Higher APYs generally translate to greater returns on your savings. Compare the APYs different banks offer and select the highest rate available to maximize your earnings.
Minimum Deposit Requirements
Each bank sets its own minimum deposit requirement for CDs. You must ensure you meet the minimum deposit amount before opening an account. Some banks may have higher minimum deposit requirements than others, so consider your budget and choose a CD that aligns with your financial capabilities.
Early Withdrawal Penalties
CDs are designed for long-term investments, and withdrawing funds before maturity often incurs penalties. Familiarize yourself with the early withdrawal penalties associated with each CD option you’re considering. Evaluate how likely it is that you may need access to your funds before the CD’s term ends and choose an option with a reasonable penalty structure.
The term length of a CD refers to the duration of the investment. Common terms range from 3 months to 5 years, with longer terms generally offering higher interest rates. Consider how long you can comfortably leave your money locked up in a CD without needing access. Selecting a term length that aligns with your financial goals and liquidity needs is crucial.
Comparing Fixed Rate and Variable rates.
|Interest Rate Stability
|Guaranteed to stay the same throughout the term.
|Fluctuates throughout the term, tied to benchmarks.
|Return on Investment
|Potential for higher return if interest rates rise.
|Exposed to interest rate risk.
|Limited; penalties for early withdrawal.
|More flexibility; some offer penalty-free withdrawals.
|Straightforward and easy to understand.
|Can be more complex due to fluctuating rates.
|– Limited flexibility.
– Might offer lower returns compared to other investments.
|– Unpredictable returns.
– Complexity in understanding.
|Investors who want a guaranteed return and are risk-averse.
|Investors willing to take on some risk for potentially higher returns.
This table concisely compares fixed-rate and variable-rate CDs based on the provided content. Let me know if you’d like any further details or adjustments!
Annual Percentage Yield (APY):
This term might sound complex, but it’s simply a measure that reflects the amount you will earn or owe over a year. The annual percentage yield (APY) is what you should look at when comparing CD accounts since it considers compound interest. This means that your initial deposit earns interest, and the interest you accumulate also leads to higher annual percentage yields.
Helpful Tool: APY Calculator
Types of CDs and Their Features
- Traditional CDs: The most common type, these have a fixed interest rate and a set term. You’ll face early withdrawal penalties if you take out money sooner than the maturity date.
- No-Penalty CDs: Perfect for those uncertain about locking away their money for extended periods. They allow you to withdraw money early without any early withdrawal penalty.
- Bump Up CDs: With these, if the CD rate today or in the future increases, you can request a ‘bump up’ to the higher rate.
- Step-Up CDs: The interest rate increases at set intervals, usually annually.
- Jumbo CDs: These require a higher minimum deposit but generally offer better CD rates than regular CDs.
- Brokered CDs: These are sold through brokers rather than banks; they offer high yields but might have different rules concerning early withdrawal.
- Add-On CDs: These allow additional deposits during the CD term without changing the maturity date.
Where to Find the Best CD Rates?
The highest CD rates today can often be found with online banks. Online banks tend to have less overhead compared to brick-and-mortar counterparts, allowing them to offer competitive rates. However, always ensure that the online bank or internet bank you choose is FDIC-insured or, in the case of a credit union, backed by the National Credit Union Administration.
Jumbo CDs and promotional CDs might also offer higher-than-average rates, but always check for terms and conditions, especially early withdrawal penalties. The table above allows you to research the best jumbo CD rates today.
Helpful Tool: CD Calculator
Long-Term CD vs Short-Term CD
|Typically five years or more.
|Six months to one year.
|Generally higher than short-term CDs.
|Typically lower than long-term CDs.
|Protection from Rate Fluctuations
|Yes, offers protection from interest rate fluctuations for the entire term.
|No, more exposed to rate fluctuations.
|Access to Funds
|Limited; might incur early withdrawal penalties.
|More flexible; easier access to funds without long commitment.
|Those wanting to lock in high rates for a longer period can commit funds without needing them.
|Less exposure due to shorter duration.
|More flexible; easier access to funds without a long commitment.
|Those uncertain about their financial future or anticipating higher interest rates in the near future.
Helpful Tool: How does a 3-month CD work
How to Build a CD Ladder
Building a CD ladder is a smart investment strategy that can help you maximize your returns while maintaining liquidity. By investing in CDs with staggered maturity dates, you can create a ladder of investments that mature at regular intervals. This allows you to take advantage of higher rates on longer-term CDs while still having access to funds as each CD matures.
Here’s a step-by-step guide on how to build and manage a CD ladder:
- Evaluate your investment goals: Determine how much money you want to invest and your desired investment timeframe. This will help you decide on the number of CDs and their respective terms.
- Research CD rates: Compare CD rates offered by different banks and credit unions. Look for competitive rates that align with the terms you have in mind for your ladder.
- Allocate your funds: Divide your investment amount into equal parts to be allocated to each CD in your ladder. Distribute the funds across different terms, such as 6 months, 1 year, 2 years, and so on.
- Create your CD ladder: Open multiple CDs with varying maturity dates. Start with the shortest-term CD and continue adding CDs with increasing maturity dates.
- Roll over maturing CDs: As each CD matures, reinvest the principal and interest into a new CD with the longest remaining term in your ladder. This ensures a continuous flow of maturing CDs.
- Monitor and manage: Regularly review your ladder and adjust as needed. Keep track of the maturity dates and interest rates to make informed decisions when rolling over CDs.
By building a CD ladder, you can potentially earn higher rates on longer-term CDs while still maintaining access to funds as each CD matures. It’s a strategic investment approach that balances return and liquidity. Consider consulting with a financial advisor to tailor a CD ladder strategy that aligns with your financial goals.
Helpful Tool: CD Ladder Calculator
Pros And Cons Of CDs
|Benefits of CD Rates
|Cons of CD Rates
|Higher interest rates compared to traditional savings accounts
|Limited flexibility with penalties for early withdrawal
|Fixed interest rate provides stability and predictable returns
|Might offer lower returns compared to other investments like stocks
|FDIC insured up to $250,000 per account category, ensuring safety of funds
|Interest rate risk with variable-rate CDs, returns can fluctuate
|Various types of CDs available to suit different needs (e.g., No Penalty, Bump Up, Step-Up CDs)
|Inflation risk, especially with long-term CDs, as the purchasing power of the interest earned may decrease over time
|Various types of CDs are available to suit different needs (e.g., No Penalty, Bump Up, Step-Up CDs)
|Complexity in understanding variable-rate CDs and fluctuating returns
|No-penalty CDs offer more flexibility with penalty-free withdrawals
|Early withdrawal penalties (except for No-penalty CDs) if funds are withdrawn soon after opening
Is Your Money Safe in CDs?
Absolutely! CDs are among the safest investments. Most CDs from banks are FDIC insured (Federal Deposit Insurance Corporation) up to $250,000 per account ownership category, ensuring your money’s safety. Credit unions offer similar protection through the National Credit Union Administration (NCUA).
Alternatives to CDs
Though CDs offer reliable returns, sometimes you might be looking for more liquidity or slightly different terms:
- High-Yield Savings Accounts: These are high-interest savings accounts.
- Money Market Accounts: They combine features of both checking and savings accounts, usually offering higher interest rates than traditional savings accounts but might have monthly fees.
- Fixed Annuities: These pay fixed interest rates, but they’re not FDIC-insured but rather insured by an insurance company. They also come with a more extended commitment period (up to 20 years).
Helpful Tool: Compare the alternatives to CD accounts
History of CD Account Rates
The 1980s In the 1980s, the average CD interest rate was around 12%. This was a great return on investment, especially compared to savings account rates, typically around 0.75%. As a result, CDs became increasingly popular in the 1980s as more and more people began looking for ways to invest their money.
The early 1990s saw a decrease in CD interest rates, with the average rate falling to around 11%. This decline was due to several factors, including the recession of the early 1990s and the Gulf War. Despite this decrease, high-interest CDs remained popular investment options and were a good way to earn a higher return on your money.
The early 2000s were a period of instability for CD interest rates. The average rate fell to around ten percent in 2001, before rising to 12% in 2002. However, the terrorist attacks of September 11th caused a sharp decrease in CD interest rates, with the average rate falling to just over six percent in 2003. Despite this decrease, CDs remained a popular investment option for many people.
CDs are a fantastic way to grow your money securely. You can maximize your returns by understanding CD terms, rates, and the offerings of different financial institutions. Whether you’re looking for short-term CDs or specialty CDs or even exploring options beyond the traditional CD accounts, there’s an avenue for every investor. Remember, personal finance is about making informed decisions, so always stay updated with the current CD rates and trends. Happy investing!
Frequently Asked Questions
What are CD rates?
CD rates, also known as certificates of deposit rates, refer to the interest rates offered by banks for holding a CD account. These rates can vary depending on the bank, the term length of the CD, and market conditions. Savers often compare CD rates to find the best return on their investment.
What is the highest CD rate in history?
According to the Federal Reserve Bank of St. Louis data, the best bank CD rates were prevalent more than 30 years ago, with an 18.65% return on three-month CDs in 1980. Currently, consumers can buy CDs at 6% rates.
Are CDs safe?
Your CD is protected up to $250,000 when held at an FDIC-insured bank or an NCUSIF-insured credit union, whether with an online bank, a physical bank, or a credit union, as the U.S. government backs these accounts. Ensure you stay within the insurance limits for each account ownership category.
Are there fees associated with CDs?
CDs usually have penalties for early withdrawals, except for No-penalty CDs. However, even these might have penalties if funds are withdrawn within the first 6 to 7 days of opening.
What is considered a good CD rate?
A reasonable CD rate is influenced by your personal financial needs and how long you can lock up your money. Typically, longer terms offer better yields because banks value the certainty of holding your funds for a set duration. To ensure you’re getting a good deal, compare CD rates to national averages, noting that some banks offer rates exceeding 5 percent.
Is an online bank the best choice for a CD?
Online banks often provide higher APYs than traditional brick-and-mortar banks due to their lower overhead costs. These savings are passed to customers as higher rates. Additionally, online banks might offer more competitive rates than local banks to attract and retain customers.
How long can you leave money in a CD?
CDs typically renew automatically, but if left unclaimed, they can be transferred to the government based on state laws. To prevent your CD from being considered abandoned, maintain regular contact with your bank and ensure they have your current mailing address.
Do CDs have beneficiaries?
Banks let you name a beneficiary for your CD, who will get your savings if you die. Experts recommend doing this. Without a named beneficiary, your CD savings will go through a court process called probate after your death.
Can you lose money on a CD?
Your money is safe if your CD is in an FDIC-insured bank or NCUA credit union and meets their guidelines. However, withdrawing early could cost you some interest or even part of the principal.
What happens if I withdraw from a CD early?
Early withdrawal from most CDs results in a penalty, typically a few months to a year of interest. Only no-penalty CDs allow fee-free early withdrawals. Explore various CD types for more information.
Who has the highest 12-month CD rate?
Hudson Valley Credit Union offers 5.67% APY for 12 months.
Who has the best CD rates?
Local Government Federal Credit Union offers 5.75% APY for 18 months.
Who has the highest-paying CD right now?
Local Government Federal Credit Union offers 5.75% APY for 18 months.
What is the best CD rate for $100,000?
Lafayette Federal Credit Union offers one of the best CD interest rates today at 5.61% APY for 12 months.
Who has the best online CD rates?
Raisin offers the highest online bank CD rates.
Can you withdraw interest from CD without penalty?
In most cases, you cannot withdraw interest from a certificate of deposit (CD) without incurring a penalty. The penalty is typically a percentage of the interest earned or a certain number of days’ worth of interest. However, there are no-penalty CDs that earn less interest with more liquidity.
What are the different CD terms available?
CD terms can range from as short as 3 months to as long as 10 years or more. Each term offers different interest rates and potential returns. It’s important to consider your investment goals and time horizon when choosing a CD term.
What are the pros and cons of investing in CDs?
The pros of investing in CDs include guaranteed returns, FDIC or NCUA insurance (up to certain limits), and the ability to choose different terms. However, CDs also have drawbacks, including limited liquidity and potential penalties for early withdrawal. It’s important to weigh these factors against your specific financial goals.
How can I build a CD ladder?
A CD ladder is an investment strategy that involves spreading your CD investments across different terms. To build a CD ladder, you would invest in CDs with staggered maturity dates. This strategy allows you to access your funds periodically, earn higher rates on longer-term CDs, and maintain liquidity.
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