CD rates change constantly, so there's no single answer

The rate your CD will pay depends on three things: the bank or credit union offering it, how long you lock your money away, and what week you're looking at. A one-year CD at one bank might pay 4.50%, while the same term at another pays 3.75%. A five-year CD at the same bank might pay less than the one-year, or more — banks set these independently based on what they need.

Right now, the best rates are typically between 4% and 5.35% for terms between one and five years, but that's a snapshot. Rates move when the Federal Reserve changes its policy rate, when banks compete for deposits, or when economic conditions shift. The rate you see today won't be the rate you see in three weeks.

What matters for you is not what rates are "right now" in general, but what specific banks are offering on the specific term you want. That's something you check directly with the banks you're considering, because rates vary that much.

Key Takeaways

  • CD rates vary by bank, by term length, and by the date you check — there is no universal "current rate."
  • Longer terms don't always pay more; a five-year CD can pay less than a one-year CD at the same bank.
  • Online banks and credit unions often pay higher rates than brick-and-mortar banks because they have lower overhead costs.
  • The rate you lock in is the rate you keep for the entire term, even if rates rise or fall after you open the account.
  • You need to check the actual banks you're considering to find out what they're paying, because comparing general "current rates" won't tell you what you'll actually earn.

Why rates differ so much between banks

Banks set CD rates based on what they need at that moment. A bank that has plenty of deposits and doesn't need more money might offer 2.5% on a one-year CD. A bank that needs to attract deposits to fund loans might offer 4.75% on the same term. Neither rate is "wrong" — they reflect what each bank is trying to do.

Online banks almost always pay more than traditional banks with physical branches. That's because they don't have the cost of maintaining buildings, hiring tellers, or running a branch network. They pass that savings to you in the form of higher rates. A brick-and-mortar bank might pay 3.5% on a one-year CD while an online bank pays 4.75% on the same term.

Credit unions sometimes pay higher rates than banks, sometimes lower. It depends on the credit union's funding situation and membership base. The only way to know is to check the ones you can join.

How term length affects what you earn

You might expect that longer terms always pay more — that a five-year CD pays more than a one-year. That's often true, but not always. Sometimes a bank will pay more for a one-year CD than a three-year, or the same rate for both. Banks are responding to what they think will happen to interest rates in the future, not following a rule.

When banks think rates will fall, they try to lock in longer-term deposits by paying more for five-year or ten-year CDs. When they think rates will rise, they pay less for longer terms because they want to keep their options open. You can't predict which way a bank will price its terms, so you have to look at what they're actually offering.

The term you choose should be based on when you'll need the money, not on chasing the highest rate. If you need the money in two years, a five-year CD locks it away and charges you a penalty to get it out early. That penalty can wipe out months of interest.

What happens to your rate if market rates change

Once you open a CD and lock in a rate, that rate does not change. If you open a one-year CD at 4.5% and rates rise to 5.5% the next month, you still earn 4.5%. If rates fall to 3%, you still earn 4.5%. The rate is fixed for the entire term.

This is why timing matters, but not in the way people usually think. You can't time the market perfectly, and trying to usually costs you money. What matters is that you understand the rate you're locking in is the rate you'll get, and you're comfortable with it for the length of the term.

How to find the rates banks are actually offering

The most reliable way is to visit the websites of banks and credit unions you're considering and look at their CD rates directly. Most banks list rates on their homepage or in a rates section. You'll see the term (one year, three years, five years, etc.) and the annual percentage yield, or APY, next to it.

Some comparison websites aggregate CD rates from multiple banks, which can save you time if you're comparing many options. But always verify the rate on the bank's own website before you open the account, because rates change and websites don't always update instantly.

When you're comparing, make sure you're looking at the same term at each bank. A one-year CD at Bank A is not comparable to a three-year CD at Bank B. Also check whether the bank requires a minimum deposit — some banks require $500, others $10,000 or more.

Why the rate you see might not be the rate you get

Banks change their rates frequently, sometimes daily. If you see a rate on a website and wait a week to open the account, that rate might be gone. Some banks also offer promotional rates for a limited time, then drop back to a lower standard rate.

When you're ready to open a CD, contact the bank directly or go through their website to lock in the rate before you complete the application. Don't assume the rate you saw yesterday is still available.

The relationship between CD rates and the Federal Reserve

The Federal Reserve sets a target range for the federal funds rate, which is the rate banks charge each other to borrow overnight. When the Fed raises this rate, banks eventually raise the rates they offer on savings products, including CDs. When the Fed lowers it, CD rates typically fall.

The lag between a Fed rate change and a change in CD rates is usually a few weeks to a few months. Banks don't move instantly. Also, the Fed's rate and the CD rate you see are not the same number — a Fed rate of 5.25% to 5.50% might correspond to CD rates of 4% to 5%, depending on the term and the bank.

If you're wondering whether to open a CD now or wait, remember that you can't predict what the Fed will do or when banks will move their rates. The safest approach is to open a CD when you have money to set aside and the rate is acceptable to you, not when you think rates might move.

Frequently Asked Questions

Are CD rates higher at online banks than at regular banks?

Usually yes. Online banks have lower operating costs and typically pass that savings to customers through higher CD rates. But always compare the specific banks you're considering — some online banks pay less than some traditional banks, depending on their current funding needs.

Can I lock in a rate before I open the CD?

No. You lock in the rate when you actually open the account and deposit the money. Some banks let you see the rate in advance, but it can change before you complete the application. Check the rate on the bank's website immediately before you apply.

What if I open a CD and rates go up the next day?

Your rate stays the same for the entire term. You're locked in at the rate you agreed to when you opened the account. This is why some people regret opening a CD right before rates rise, but it's also why you benefit if rates fall after you open it.

Do credit unions pay better rates than banks?

Sometimes. Credit unions are not-for-profit, so they can offer competitive rates, but it varies by credit union and by the current market. You have to check the credit unions you can join to see what they're offering.

Should I open multiple CDs at different banks to get different rates?

You can, but compare the rates carefully first. Opening five CDs to chase an extra 0.25% in rate might not be worth the time and complexity. Focus on finding one or two banks with competitive rates and terms that match when you'll need the money.