What Are Current CD Rates?
What’s a CD?
CDs are different than their savings account counterparts. Shorthand for “certificate of deposit”, CD accounts commonly share one characteristic: a fixed rate. Account holders scout banks to see whose offering the best rate for maximum savings, signing on before banks decide to lower rates on CD accounts.
Why Saving Accounts Rate Drop
CDs have an edge over their cousin, the savings account. Recently, the Federal Reserve has announced it’s cutting the federal funds rate down a quarter of a percentage point and banks will follow suit, likely lowering their savings account yields in response.
CD accounts, with their fixed terms and fixed rates, don’t adhere to the ebbs and flows like a traditional savings account. Your CD will remain unchanged, taking advantage of the rate you were initially given at its opening, no matter what the Federal Reserve or banks decide.
But CD accounts are not immune to change, that’s to say. Banks will still set the rate, but it just won’t change over the lifetime of your account. The national average for a five-year CD in May of this year peaked at 1.28% APY, the highest point it’s been since 2011, according to information gleaned from the Federal Deposit Insurance Corporation.
Meanwhile, one-year and three-year account rates followed a similar path of positivity, climbing to .67% APY and 1% APY. Also, online banks and credit unions have enjoyed the highest yields of CD rates this year. Online financial institutions tend to have a more climatic increase of yields, which could perhaps be attributed to their ability to save on brick and mortar needs, focusing on consumer aspects instead. These institutions saw their five-year account rate yield peak at 3.14% APY as the average for 10 online banks and credit unions.
CD Accounts and Their Current Rates
What about current CD rates? Unfortunately, the news for account seekers is that the rates have been dropping after hitting these peaks earlier this year. That doesn’t mean that banks aren’t offering lucrative rates for CD accounts. You may not be able to snag them at their peak, but you can still get a beneficial fixed rate for your CD account.
Marcus by Goldman Sachs
Marcus is an attractive route for CD seekers. If you choose to go with Marcus, you’ll be gifted with a 10-day CD rate guarantee, which will actually change your rate to match the higher one in the event your selected CD term happens to climb during this period of time. All that’s required of you is a minimum deposit of $500 to open a CD account.
Marcus by Goldman Sachs offers three different CD account term lengths: 1-year, 3-year, and 5-year. The accounts have a 2.50%, 2.60% and 2.80% APY respectively. As of now, Marcus has the highest APY going on the CD market.
Popular by Popular Direct
If patience is one of your virtues, then entertain the 5-year CD account with Popular Direct because it has the second-highest APY next to Marcus by Goldman Sachs. Its 5-year CD account has a 2.70% APY for a 5-year CD, although the catch may deter some account holders.
This 5-year account does have the requirement of a $10,000 minimum deposit, which is a little pricey and a considerable amount of money to stow away for a full five-year term. Popular Direct does offer a 3-year and 1-year CD account. For a 1-year term, your APY is 2.30%, and for a 3-year term, it’s 2.55%.
Consistency is key with Discover, and steady rates follow through with this notion with Discover’s three CD account term lengths. As of August of this year, Discover’s 1-year CD account has a 2.40% APY, its 3-year has a 2.50% APY, and its 5-year CD account has a 2.60% APY.
What makes Discover stand out among other CD account options is that it only requires a $2,500 minimum deposit, which aside from Goldman Sachs, is one of the best deals around. You can still enjoy high yielding rates without sacrificing large amounts of money, and as you’ll begin to see, that’s fairly unusual for a CD account.
Another CD account worth a mention is by Citizens Access. Its 5-year term CD account has a high yielding interest rate of 2.70% APY. Although this is certainly attractive, you do have to part with a minimum deposit of $5,000. Its other CD accounts are a 1-year CD with 2.50% APY and a 3-year CD with 2.60% APY.
Alliant Credit Union
If you’re in the market for a new banking solution that can save you money, a credit union could be the answer. Joining with Alliant Credit Union can get you into its lucrative CD accounts, with its 5-year term offering account holders 2.65% APY with a $1,000 minimum deposit. Other CD accounts with Alliant Credit Union include its 1-year with a 2.40% APY and a 3-year CD account with a 2.55% APY.
Synchrony by Synchrony Bank
Synchrony Bank offers one of the highest 5-year CD account rates at 2.80%. The best part is that its minimum deposit stands below most other banks and credit unions at $2,000. For its 1-year and 3-year termed accounts, Synchrony offers 2.50% and 2.60% respectively. Customers may find Synchrony especially attractive for a savings account like a CD because this bank doesn’t offer checking account options. Keeping your money separate from your checking account altogether could be an excellent choice for some looking for unique ways to save.
Barclays’ CD accounts have 2.45% for its 1-year term, 2.55% for its 3-year term, and a high APY of 2.75% for its 5-year term CDs. What makes Barclays utterly unique among the masses is that there aren’t minimum requirements for a deposit. Yes, you can put in just a $1 or $1,000 - it’s all up to you. Without sacrificing huge amounts of money to meet the minimum deposit, you can still enjoy the perks of an impressive APY with a Barclays CD account.
Choosing the Right CD Rate
It’s not all about the CDs’ rates. While this may be the initial draw to a certain bank or credit union, there are plenty of other factors to consider when selecting where to set up your CD account. Things like minimum deposit requirements, accessibility, and the other elements that surround CD accounts should be weighed before making the decision. This is especially true if you’re thinking of a longer termed CD account such as a 3-year or a 5-year.
Rates are always changing. Before signing onto a CD account, check to see the rate your preferred bank or credit union is currently offering. There’s no telling when a rate will peak or dip, but there are CDs that are generous enough to adjust your rate for the better during a certain period.
Typically, if the Federal Reserve decreases interest rates, there’s a good chance that CDs could decrease in response. However, the general consensus is that for the best type of savings, CDs have the upper hand over savings accounts and their subsequent interest rates. Even if the Federal Reserve lowers interest rates, you’ll still luck out better with a CD account if you can stash away your money for a 1-year, 3-year, or 5-year term as opposed to a savings account.