After its November 2024 meeting, the Federal Reserve lowered its benchmark interest rates to the target range of 4.50% to 4.75%. This followed a larger rate cut in September, which was the first reduction since 2020.
For savers, this means that the sky-high APYs they've enjoyed on deposit accounts have started to drop. That makes now the perfect time to fund a traditional, fixed-rate CD before APYs fall further. Read on for details on why this might be the right move for your money and how to decide between a CD and a high-yield savings account.
Compare offers to find the best savings account
How CDs work
Unlike traditional or high-yield savings accounts, which have variable APYs, most CDs lock your money into a fixed interest rate the day you open the account. That's why if you suspect interest rates will drop further, it can be a good idea to put money in a CD to preserve the high APY you would earn.
CDs have specified term lengths, ranging from three months to five years. You typically can't access your money (without paying a penalty) until the CD term ends, also known as the maturity date. At maturity, you can get your money back, in addition to the interest you've earned.
Here are the top CDs to put your cash in now
The top CDs currently on the market typically offer APYs above 4% for six-month and one-year terms. For context, in 2021, when rates were around their lowest, the national average 12-month CD had an APY of just 0.15%. Two banks that we recommend are Bread Savings™ (formerly Comenity Direct) and BMO Alto, which both offer competitive rates on their 12-month CDs.
Bread Savings™ (formerly Comenity Direct) CDs
Annual Percentage Yield (APY)
From 3.70% to 4.00% APY
Terms
From 6 months to 5 years
Minimum balance
$1,500 minimum deposit
Monthly fee
None
Early withdrawal penalty fee
Early withdrawal penalty applies. For terms shorter than 1 year, the penalty is 90 days simple interest. For terms 12 months to 3 years, the penalty is 180 days simple interest. For terms 4 years and up, the penalty is 365 days simple interest.
Terms apply.
BMO Alto CDs
Annual Percentage Yield (APY)
From 2.75% to 3.00% APY
Terms
From 6 months to 60 months
Minimum deposit
None
Monthly fee
None
Early withdrawal penalty fee
An early withdrawal of principal before maturity will cost an early withdrawal penalty. The penalty is calculated using the interest rate applicable to the CD at the time of early withdrawal. If the amount of the penalty exceeds the amount of your accrued and unpaid interest, then a reduction of principal would be required in order to pay the penalty:
Terms apply.
And, if a year seems like too much time to lock up some savings, Synchrony Bank's 9-month CD also offers a solid APY for your cash.
Synchrony Bank CDs
Annual Percentage Yield (APY)
From 0.25% to 4.00% APY
Terms
From 3 months to 60 months
Minimum balance
None
Monthly fee
None
Early withdrawal penalty fee
There may be an early withdrawal penalty if you withdraw funds from the principal prior to the CD maturity date (the last day of the CD term). The penalty is applied to the amount of principal withdrawn (there's no penalty on interest). For the No-Penalty CD, early withdrawals are not permitted within the first 6 days after account funding. Following that, only withdrawal of the entire balance is allowed.
Terms apply.
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For CD accounts, a penalty may be imposed for early withdrawals. After maturity, if your CD rolls over, you will earn the offered rate of interest for your CD type in effect at that time.
When to choose a high-yield savings account instead
Though FDIC-insured CDs are one of the safest places to put your money, being unable to touch your funds before the CD term ends might make some people uncomfortable if they're strapped for cash.
In this case, a high-yield savings account could be the better place to put your money. You'll have access to your funds whenever you need them penalty-free (though some banks limit withdrawals or transfers to six each month). The best high-yield savings accounts also offer APYs above 4%, but these rates are variable and can change at any time, unlike traditional CDs which guarantee a fixed rate for the entirety of their terms.
Some of the top high-yield savings accounts on the market right now include LendingClub LevelUp Savings and UFB Portfolio Savings. Both of these accounts offer above-average APYs, zero monthly fees and complimentary ATM cards for easy access to your cash.
LendingClub LevelUp Savings Account
Annual Percentage Yield (APY)
4.00% (with monthly deposits of $250 or more), or 3.00%
Minimum balance
None
Monthly fee
None
Maximum transactions
Excessive transactions fee
None
Overdraft fees
N/A
Offer checking account?
Yes
Offer ATM card?
Yes
Terms apply.
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every savings article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Catch up on CNBC Select's in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
