The benchmark interest rate is currently at a 22-year high. Accordingly, mortgage rates are high (the highest since 2000). And rates on credit cards are around 20%. Interest on personal loans is elevated and even rates on home equity loans and HELOCs have risen in recent months. So, if you’re a borrower, expect to pay significantly more now for the same credit you would have gotten cheaper a year or two ago.
One positive rate increase to note? Those on high-yield savings and certificates of deposit (CD) accounts. Rates on both savings vehicles are exponentially higher than they were just a few years ago — and are many times greater than what many are earning with a regular savings account (currently just 0.43%). CDs, in particular, are one of the highest-earning savings account options available now and they’re likely to go even higher in the weeks and months to come.
How high are CD rates now, exactly? Explore your CD account options here and find out.
How high are CD interest rates now?
As of September 8, 2023, the national average for specific CD terms range from 1.76% APY for a 1-year term to 1.35% APY for three years and 1.42% for five. But that doesn’t tell the whole picture. By simply shopping around online today, savers can secure accounts with many times more interest.
The peak point for CD interest rates is about 5.50% currently, although there are some banks that are offering 5.55%, 5.56% and even 5.65% if you shop around. That said, to get the greatest rate, you’ll likely want to open a short-term CD now. While rates have historically been higher for long-term CDs, the volatility of the overall rate environment has banks and lending institutions offering more favorable terms for shorter-term CDs, in general.
And they’re likely to head even higher. With Federal Reserve chairman Jerome Powell hinting at additional rate hikes later this year, rates on CDs are likely to follow with it, making now one of the very best times to open a short-term CD. Remember that CD terms are locked with the rate the account is opened with. So if rates increase again during your term, you won’t be able to capitalize. But if you open a 3-month CD now, the timing could work out perfectly to take advantage of additional hikes at the end of 2023 or into 2024.
Don’t discount CD laddering, either
With the rate environment unpredictable, but current opportunities too good to pass up, savers should also strongly consider “laddering” multiple CD accounts. This involves opening up different CDs with different term lengths so that you, in theory, have one expiring as another starts. This gives you the flexibility to open new accounts at a potentially higher rate while not losing out the interest-earning capability of accounts at the currently high rates.
“If someone doesn’t know whether to buy a one year CD or a five year CD, they can always stagger the CD terms, putting a little in one year, three year and five year CDs,” Katie Brewer, CFP, founder of Your Richest Life financial planning firm, previously explained toCBS News.
The bottom line
Don’t pay much attention to the national CD interest rate averages and instead start shopping around online now. CDs are offering great rates and terms for a variety of savers, with some as high as 5.65%. And those could be going even higher later in 2023. So open one now to start earning more interest and consider opening another should rates tick up again soon. Get started here now.