Key Takeaways
- Allocating some of your money to a CD can boost your overall savings balance by year's end, helping you reach your 2024 savings goals.
- The highest-paying CDs now offer rates of 5.50% to 6.00% for 3 to 11 months.
- Depending on how much you put in a CD and the rate you lock in, we calculate how much you can earn each month and by the end of this year.
- If you can commit some of your savings longer than 2024, you can benefit from a longer-term CD, guaranteeing one of today's high rates for a year or more—even if the Fed begins cutting rates.
- It's also smart to keep some of your savings accessible by putting it in one of today's top-paying, high-yield savings accounts.
The full article continues below these offers from our partners.
Short CDs Provide the Maximum 2024 Savings Boost
If you primarily have your eye on saving as much as you can this year but aren't sure you want to commit your funds very far into the future, a short-term certificate of deposit (CD) is a smart move. And right now, you're in luck. That's because banks and credit unions expect the Federal Reserve to reduce interest rates sometime this year, and as a result, they're offering their highest CD rates on short terms.
We rank the best CD rates in the country every day, and right now, the top rates range between 5.50% and 6.00% APY, with eight options to lock in that rate. While the shortest terms are 3 and 5 months, which won't get you all the way to 2025, five of the eight offers in this top rate tier will let you maximize your earnings all the way to the end of 2024, or even a few months into the new year.
So, how much can you bump up your 2024 savings by putting some of your money into one of these top-paying CDs? Here are the various earnings possibilities for CD deposits ranging from $1,000 to $25,000, invested in a CD paying 6.00%, 5.55%, or 5.50% APY.
For Longer-Lasting Savings Benefits, Lock a CD Rate Until Mid-2025—or Beyond
If you can manage to sock away some of your savings longer than just the next six months, you can consider opening a longer-term CD. While the rates on these certificates are a bit lower than the top rates you saw above, they offer the significant advantage of guaranteeing their rates much further into the future.
That means if the Federal Reserve lowers interest rates one or more times this year or makes cuts in 2025 as well, the interest rate of the CD you lock in now will keep delivering its higher earnings until the CD matures. In other words, you could be earning one of the rates below—predictably and with a guarantee—until 2025, 2026, or even as long as 2029.
Be Sure to Earn a Top Rate on Non-CD Savings, Too
When deciding to open a CD, it's always smart to make sure you keep some of your savings accessible. You don't want to commit all of your available savings to a CD because if you take money out of the CD before the end of its maturity term, you'll be hit with an early withdrawal penalty.
The smart solution is to keep some of your savings in a high-yield savings account where it can earn a good return and allocate a portion of savings you feel confident you can live without one or more CDs. We make it easy to find a top-paying account with our daily ranking of the best high-yield savings account rates, where the top rate is currently 5.55% APY.
The downside of savings accounts
While the current top savings account rate of 5.55% APY is competitive with CDs, it's important to know that savings account rates come with no guarantees. Banks and credit unions can lower savings account rates any time they wish. And with Fed rate cuts likely to come this year, savings account rates are expected to be lower by year's end than they are now. In contrast, the rate on an existing CD cannot be lowered.
Best CD Rates for July 2024: Up to 6.00% APY
Best High-Yield Savings Accounts of July 2024—Up to 5.55%
Best Money Market Account Rates for July 2024—Up to 5.35%
How We Find the Best Savings and CD Rates
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. It also cannot specify a maximum deposit amount that's below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. 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.
FAQs
A 6-month CD is a type of savings option that lets you maintain a fixed interest rate for a short period of time. The national average CD rate on a 6-month term is 1.81% APY (Annual Percentage Yield), according to the FDIC.
Which is a CD that offers a higher rate for every six months you are invested? ›
Compare our 6-month CD rates
| Bank & CD Offer | APY | Min. Deposit |
|---|
| Quontic CD Member FDIC. | APY: 5.05% | Min. Deposit: $500 |
| Barclays Online CD Member FDIC. | APY: 4.85% | Min. Deposit: $0 |
| LendingClub CD Member FDIC. | APY: 5.00% | Min. Deposit: $2,500 |
| Tab Bank CD Member FDIC. | APY: 5.27 | Min. Deposit: $1,000 |
3 more rowsJun 24, 2024
Another advantage of high-yield savings accounts is high interest rates, relative to traditional accounts and, lately, some CD accounts. You can access your money when you need it. If you need to withdraw money from your high-yield savings account, you can typically do so without penalty.
What do CD rates do in a recession? ›
Because CD rates follow the federal funds rate, CD rates will usually go down during a recession.
How much does a $1000 CD make in a year? ›
That all said, here's how much a $1,000 CD will make in a year, based on four possible interest rate scenarios: At 6.00%: $60 (for a total of $1,060 total after one year) At 5.75%: $57.50 (for a total of $1,057.50 total after one year) At 5.50%: $55 (for a total of $1,055 total after one year)
What is considered a good 6 month CD rate right now? ›
The best six-month certificate of deposit (CD) rate is currently 5.48% annual percentage yield (APY), while the national average rate is 2.52%. With rates expected to fall later in the year, the experts we interviewed said now is the time to lock in high yields on CDs.
How much does a $10,000 CD make in 6 months? ›
Earnings on a $10,000 CD Over Different Terms
| Term Length | Average APY | Interest earned on $10,000 at maturity |
|---|
| 3 months | 1.56% | $39.05 |
| 6 months | 2.52% | $126.66 |
| 1 year | 2.61% | $264.14 |
| 18 months | 2.23% | $339.84 |
3 more rowsJun 14, 2024
Projections suggest that we may see no rate increases in 2024, and that the Fed might start dropping its rate later this year, according to the CME FedWatch Tool on June 11. If the Fed rate drops, CD rates will likely follow suit, though it's up to each bank and credit union if and when that occurs.
Do you pay taxes on CDs? ›
Key takeaways. Interest earned on CDs is considered taxable income by the IRS, regardless of whether the money is received in cash or reinvested. Interest earned on CDs with terms longer than one year must be reported and taxed every year, even if the CD cannot be cashed in until maturity.
Why should you deposit $5000 in CD now? ›
Higher interest rates
Rates on CDs are the highest they've been in years, with many online banks offering savers an APY of 5.5% or greater. Compared to the 0.43% many are getting with a regular savings account, you're essentially losing money by not withdrawing your money and depositing it into a CD instead.
Banks and credit unions often charge an early withdrawal penalty for taking funds from a CD ahead of its maturity date. This penalty can be a flat fee or a percentage of the interest earned. In some cases, it could even be all the interest earned, negating your efforts to use a CD for savings.
What happens if you put $50,000 in a high-yield savings account? ›
How much of a difference does this make? If you deposit $50,000 into a traditional savings account with a 0.46%, you'll earn just $230 in total interest after one year. But if you deposit that amount into a high-yield savings account with a 5.32% APY,* your one-year interest soars to over $2,660.
Can you get 6% on a CD? ›
Right now, the only financial institution offering a 6% CD is Financial Partners Credit Union. To become a member of the credit union, you must live, work or go to school in Orange County, San Diego County, Riverside County, Los Angeles County, the city of South San Francisco or the city of Alameda.
Should I lock in a CD now or wait? ›
How CDs work. Unlike traditional or high-yield savings accounts, which have variable APYs, most CDs lock your money into a fixed interest rate the day you open the account. That's why if you suspect that interest rates will soon drop, it can be a good idea to put money in a CD to preserve the high APY you would earn.
Are CDs safe if the market crashes? ›
Are CDs safe if the market crashes? Putting your money in a CD doesn't involve putting your money in the stock market. Instead, it's in a financial institution, like a bank or credit union. So, in the event of a market crash, your CD account will not be impacted or lose value.
How much does a $5000 CD make in a year? ›
How much interest would you make on a $5,000 CD? We estimate that a $5,000 CD deposit can make roughly $25 to $275 in interest after one year. In comparison, a $10,000 CD deposit makes around $50 to $550 in interest after a year, depending on the bank.
Is CD interest paid out monthly? ›
There is no law that says a CD must pay compound interest or that it must be compounded at a certain frequency. That's up to each issuer. In practice, however, most CDs compound either daily or monthly.
What does APY mean for 6 month CD? ›
The annual percentage yield (APY) on a certificate of deposit (CD) is the amount of interest you will earn each year.
