Shorter Terms Lead the Growth in April Average CD Rates

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The Federal Deposit Insurance Corporation (FDIC) released its latest monthly averages on major CD rates today, with the national average continuing to rise across every monitored term. But it was the shortest certificates of deposit (CDs) that gained the most, with the national average for 3-month CD rates tacking on 11 basis points over the March reading, reaching 0.78% APY.

Of course, the national averages are always much lower, by orders of magnitude, than the top rates you can earn by shopping around. While the highest FDIC average in any CD term right now is 1.54% APY for a 1-year term, our rankings of the best-paying CDs show that you can currently earn at least 5.00% in every CD term up to 3 years, and in the high 4.00% range for 4-year and 5-year certificates.

FDIC Averages Show Continued CD Rate Gain

The second biggest increase in April’s deposit rate averages was seen in the next shortest CD term, 6 months, with a gain of 6 basis points to pass the 1.00% threshold and land at 1.03% APY. 

But among mid-term and long-term CDs, the momentum is slowing. Each of the averages for CD terms of 1, 2, 3, 4, and 5 years moved only 2 to 5 basis points higher in the April reading.

Where you can earn the highest rate is also shifting. While the 5-year term had shown the highest average across terms as recently as December, the 1-year term has been sporting the highest average in every monthly reading since January. April’s average 5-year CD rate is 1.37% APY vs. a 1-year average of 1.54% APY.

This shift to the best-paying rates being offered in the shorter and mid-terms is also playing out in the top rates you can earn in our rankings for every CD term. Right now, the highest rate you can earn is 5.35% APY, available in both the 1-year and 2-year terms.

Rates Momentum Slowing Given Fed Expectations  

Rates for savings accounts and certificates of deposit have surged since the Federal Reserve began hiking interest rates in March 2022. Increases by double-digit basis points, like the 3-month average saw this month, have been common in many terms since September, and especially between November and January. That’s no surprise, given the Fed increased rates a total of 4.25% between March and December.

But so far in 2023, the Fed has only made two hikes, and each for the minimal increment of a quarter of a percentage point. Further, market projections are for only one more Fed hike this year, likely followed by a plateau and potentially even a decline before the calendar year ends.

Banks and credit unions are anticipating this slowdown and possible 2023 pullback by the Fed, and though the top rates in our rankings have largely held, slippage is beginning to show, with some institutions eliminating promotional rates or lowering their standard rates.

Rate Collection Methodology Disclosure

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide, and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD's minimum initial deposit must not exceed $25,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.

Article Sources
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  1. FDIC. "National Rates and Rate Caps."

  2. Federal Reserve. Open Market Operations.

  3. CME Group. CME FedWatch Tool.