Certificates of deposit (CDs) can be a great choice if you’re looking for a low-risk investment to generate interest on cash you don’t need to use immediately. CD rates have mostly held tight over the past week and remain much higher than last year’s levels. The national average for a 6-month CD with a $25,000 deposit stands at 1.87%, while a 1-year CD currently yields 1.97%. Additionally, 2-year and 3-year CDs offer average rates of 1.70% and 1.62% respectively.
| CD RATES TODAY | ||
|---|---|---|
Term | Average APY | High rate |
3-month CD | 1.32% | 5.39% |
6-month CD | 1.87% | 5.26% |
1-year CD | 1.97% | 5.37% |
2-year CD | 1.70% | 4.88% |
3-year CD | 1.62% | 4.67% |
Source: Curinos. Data accurate as of August 27, 2024. Quoted rates are based on a $25,000 deposit.
Three-month CD rates
Rates on three-month CDs have seen no change since this time last week, remaining at 1.32% today.
Over the past month, rates on three-month CDs have climbed marginally.
The current national high for a three-month CD is 5.39%, which would earn more than $330 in interest with a $25,000 deposit.
Six-month CD rates
By choosing a top-rated six-month CD, you benefit from a winning mix of competitive interest rates and a short-term commitment.
The national average APY for six-month CDs is 1.87%, up marginally from 1.86% last week and 1.83% one month ago.
The current top national rate for a 6-month CD is 5.26%, according to the data available from Curinos. Shopping around can help you find better deals.
With that rate, you’d earn almost $650 in interest if you deposited $25,000.
One-year CD rates
If you’re up for setting aside your savings for a full year, you’ll be able to snag even more impressive rates. One-year CDs can give you returns as high as, or even higher than, longer-term options.
Rates on 12-month CDs are remaining stable. The national average APY is 1.97%, the same as last week and down two basis points from a month before.
The current national high for a 12-month CD is 5.37% which would earn more than $1,340 in interest with a $25,000 deposit.
Two-year CD rates
Interest rates on CDs with longer terms have taken a tumble.
The national average APY is 1.70%, a one basis point fall from last week and down two basis points from one month ago.
The current national high for a 24-month CD is 4.88%. By locking in a rate close to this high, you’ll make the most of your returns on this longer-term investment.
If you invest $25,000 in a 24-month CD at the high rate of 4.88%, you’d earn around $2,500 in interest.
Three-year CD rates
The national average APY for a three-year CD stands at 1.62%, which is the same as last week and down from 1.63% a month ago.
The highest rate was 4.67%, which would net almost $3,669 in interest if you invested $25,000.
Methodology
To establish average certificate of deposit (CD) rates, Curinos focused on CDs intended for personal use. CDs that fall into specific categories are excluded, including promotional offers, relationship-based rates, private, youth, senior, student/minor, affinity, bump-up, no-penalty, callable, variable, step-up, auto transfer, club, gifts, grandfathered, internet-only and IRA CDs. The average CD rates quoted above are based on a $25,000 deposit.
Frequently asked questions (FAQs)
Generally, the earnings you make from your CDs are considered taxable income by the IRS. If you earn $10 or more, the financial institution should send you (and the IRS) a yearly 1099-INT form reporting your interest earnings. Even if you don’t receive a form, you’re still required to report the income.
For earnings of at least $1,500, you’ll need to itemize your interest income sources on Schedule B of the 1040 form. The silver lining is that there are some exceptions, but they mainly apply to government-issued investment vehicles.
The tax amount you pay depends on your specific marginal tax bracket.
Interest income from treasury bills, notes, and bonds, like I bonds, is exempt from state and local income taxes.
CD rates change on a regular basis, but the higher the better. As of August 27, 2024, the national average interest rate for a 12-month CD sat at 1.97% APY, according to data from Curinos. But you can find plenty of banks advertising APYs well above this average, especially if you take a look at the top contenders in our ranking of the best CD rates.
A basis point is the term used to describe one hundredth of one percentage point. Therefore, if the yield on a CD increased from 1.50% to 1.60%, it increased by 10 basis points.
