Where Are CD Rates Headed This Year?

CD rates are already at record highs, but can we expect them to climb higher still?

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Certificate of deposit (CD) rates have skyrocketed since the Federal Reserve began raising interest rates a little over a year ago, offering people in the U.S. the chance to earn more on their cash savings than they have in over a decade. With another small Fed rate hike expected Wednesday—possibly the last for a while—CD rates could go even higher before plateauing and possibly falling later this year.

Key Takeaways

  • CD rates are at record highs, with dozens of options paying 5.00% APY or more in various terms.
  • The Federal Reserve is expected to raise the federal funds rate another quarter-point on Wednesday.
  • The majority of market forecasters predict this next hike will be the last of this campaign, but a notable minority are forecasting one additional hike in June.
  • Either way, we are most likely nearing the Fed's rate peak, making it a great time to lock in a CD rate that will deliver guaranteed returns for months or years into the future.

CD Rates Are at Record Highs Already

Certificate of deposit rates are directly influenced by the Federal Reserve's rate moves. In an effort to tame inflation, the Fed has raised the federal funds rate a remarkable nine times since the beginning of March 2022, for a total of 4.75% in increases.

Rates on deposit accounts such as high-yield savings accounts, money market accounts, and CDs have surged in step, and the rates for CDs across all terms have jumped four to five fold. Take 1-year CD rates as an example. In February 2022, the top-paying 1-year CD offered a rate of 1.00% APY, while today you can earn up to 5.25% APY on a 1-year certificate.

In fact, average CD rates are the highest they have ever been since the FDIC began tracking this data in 2009. The best CD rates, which Investopedia tracks, are also at their highest. You can find dozens of options paying 5.00% APY or better, with the very best certificates currently reaching 5.50% APY.

Today's Best CD Rates
Term Today's Top Nationwide Rate FDIC National Average
3 months 4.90% APY  0.78% APY
6 months  5.50% APY  1.03% APY
1 year 5.25% APY 1.54% APY
18 months 5.30% APY FDIC does not track
2 years 5.15% APY 1.43% APY
3 years 4.90% APY 1.34% APY
4 years 4.73% APY 1.29% APY
5 years 4.68% APY 1.37% APY
To view the top 15–20 nationwide rates in any category, click on the desired account type in the left column above. Source: Top nationwide rates from Investopedia daily rate tracking. National averages from FDIC, April 18, 2023.

What Does the Future Hold for CD Rates?

An added hike could further improve CD rates, but since this will likely be just a small increment compared to the accumulated rate increases of the past 14 months, the impact could be slight. CD rates probably already are, or soon will be, as good as they're going to get for consumers who want to save for a while. Here's why.

The Federal Reserve has implemented two rate hikes so far this year, and both were small hikes of 0.25% each. The Fed's pace has slowed because inflation rates are easing, with February's Consumer Price Index (CPI) reading 6%, and then the March figure (the latest that's been released) registering at a lower 5%.

That's a sign that the Fed's rate-hiking has begun to work. But with inflation still significantly higher than the desired target of 2%, the Fed has signaled that its work is not yet done. At the time of this writing, market forecasters peg the odds of a 0.25% increase on Wednesday at about 91%.

If this hike comes through, it could push some CD rates slightly higher. But since the increase is small relative to what the Fed has already implemented, and because many banks and credit unions have already ratcheted up rates in anticipation of expected Fed rate moves, some institutions may hold rates instead of bumping their APYs higher.

Of course, this week's Fed meeting is only one in its regular schedule of meetings held every six to eight weeks. At this time, the majority of interest rate futures traders predict the Fed will hold at the next interest rate level and that we'll have reached the Fed's peak for this campaign.

However, slightly more than 30% of forecasters are currently betting the Fed will raise rates another 0.25% at its mid-June meeting. It's far too soon to count on any June prediction, but if a second hike were to come to fruition in June, the case for CD rates to continue moving upward becomes much stronger.

Currently, no one is forecasting more than two additional hikes of 0.25% this year. If this turns out to be correct, it means a hike Wednesday would take us to either the Fed's rate peak or within just a quarter point of that high point.

Rates Could Go Down Later This Year

It's also important to note that predictions through the end of 2023 include the real possibility that we'll see Fed rate decreases. It's very difficult to count on forecasts that far ahead, as the Federal Reserve makes each rate decision in real-time based on the freshest economic data, and it's impossible to predict what will happen in the economy weeks or months from now.

But forecasts of falling rates signal that the coming weeks are an excellent time to snag an attractive CD rate with whatever funds you can live without for a while. While any eventual Fed rate decreases will reduce rates on money held in savings and money market accounts, what you lock in with a CD is a guaranteed rate you can enjoy for months or years to come.

It's useful to keep your perspective on how high CD rates already are and whether trying to eke out the best possible rate is worth the risk of losing out and ending up with a lower rate than you could have gotten. Rates are impossible to predict and time, so it would be wise to make your CD move soon, knowing you'll be locking in a stellar rate but not worrying about whether you might have been able to earn another tenth or quarter percentage point.

Rate Collection Methodology Disclosure

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide, and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account'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
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Federal Deposit Insurance Corporation. "National Rates and Rate Caps".

  2. Federal Reserve. "Federal Open Market Committee".

  3. Bureau of Labor Statistics. "Databases, Tables & Calculators by Subject - CPI for All Urban Consumers (CPI-U)."

  4. CME Group. "CME FedWatch Tool."