After ten consecutive federal interest rate increases, the Federal Reserve is starting to signal that it may soon be prepared to pause rates.
If federal interest rates are near their peak, savers may still benefit. A rate pause means that today’s high savings rates will likely stay elevated — but it could also indicate now is a good time to lock in a CD rate.
However, savers today have a number of options when it comes to certificates of deposit (CDs). Different CD types allow you to strategize your savings differently, whether you’re certain a rate pause is coming or you’d rather leave open the opportunity to switch to a new, higher rate. Here’s what to know if you’re considering saving with CDs today.
Start by comparing today’s top CD rates here now.
3 types of CDs to consider now
These are three CD types that can help you maximize your savings today, whether you’re ready to lock in a top rate or want the option to boost your APY as rates reach their peak.
Traditional high-yield CDs
If interest rates are approaching a peak, that could mean now is actually the best time to lock in a great CD rate. High-yield CDs today are already among the most lucrative savings options, with some to rates reaching above 5% APY. While, historically, long-term CDs offered the best interest rates, you’re most likely to find the highest rates today on one-year CDs or shorter.
If you open a traditional CD, make sure you understand the requirements beforehand. Often, there’s a minimum deposit requirement you must meet upon account opening. And CDs carry penalties for early withdrawal, which may cost you a portion or even all of the interest you’ve earned.
Here are some great high-yield CDs available now:
- Bread Savings 1-year CD: 5.20% APY
- Citizens Access 1-year CD: 5.00% APY
- Synchrony Bank 6-month CD: 5.00% APY
Find more of the best high-yield CD rates available today here.
No-penalty CDs
Unlike traditional CDs, no-penalty CDs allow you to take out your deposit in full at any point. In some cases you may have to meet a short waiting period and many no-penalty CDs require you to withdraw your full balance if you choose to do so before the CD term ends. No-penalty CDs are often shorter in length with terms around one year.
In exchange for the added flexibility, no-penalty CDs generally carry slightly lower interest rates — though they are still on-par or higher than many top high-yield savings account rates today.
Here are a few of today’s top no-penalty CD rates:
- CIT Bank 11-month no-penalty CD: 4.90% APY
- Marcus 13-month no-penalty CD: 4.25% APY
- Ally Bank 11-month no-penalty CD: 4.25% APY
Bump-up CDs
Bump-up CDs are not very common, but they’re another flexible CD type that can help you take advantage of changing interest rates. With a bump-up CD, you’ll get the opportunity to request a rate increase if the bank raises the rate it offers on your term.
If you opt to request the bumped-up rate, you won’t have to pay any penalty, and you’ll earn the new, higher rate until your CD term ends. It’s important to read the complete terms of your CD upon opening, since some bump-up CDs only allow the rate bump once over the lifetime of the account, while others may allow more than one.
Here are some of the best bump-up CDs we found today:
- Marcus 20-month Rate Bump CD: 4.35% APY
- Ally Bank Raise Your Rate 2-year CD: 3.75% APY
- Synchrony Bank 24-month bump-up CD: 3.70% APY
The bottom line
Locking in a CD rate now may help you maximize today’s top rates at their peak. But if you’re looking for a bit more flexibility, it can pay to consider the different CD options available. Traditional, high-yield CDs — especially those with six-month to one-year terms — may offer the best rates but most rigid terms. No-penalty and bump-up CDs are other CD options with competitive interest rates that can give you more options if rates continue going up in the months to come.
Start your search for the best CDs by comparing today’s top rates here.
