The best CD prices for July 2023

CD prices haven’t been this high in years. The Federal Reserve has been raising interest rates throughout the year to fight inflation, raising CDs’ annual percentage returns to attractive levels. If you’re looking for a CD, you might want to consider opening one with one of the state-insured issuers listed below.

Shop at the best CD prices

To find a CD that best suits your needs, buy a CD that combines the best interest rate available, a term that meets your savings goal, and a minimum deposit that fits your budget. You should also consider the term and the prepayment penalty should a financial emergency arise.

Find a bank, credit union, or neobank that offers a CD that’s right for you, then evaluate other factors like branch locations, a robust set of online tools, numerous customer service options, and easy-to-follow instructions on how to open and close a CD.

The life of a CD affects the amount of interest – or annual percentage return – that you are offered. APYs offered on CDs increase as maturities increase from short to medium term. However, longer maturities do not always mean higher CD interest rates.

In the current market, average interest rates are increasing between 1-month and 1-year CDs, as shown in the table below. However, the annual percentage rate of interest flattens out when the CD term exceeds one year.

What is a CD?

A certificate of deposit, or CD for short, is a type of savings account. You can open a bank CD by depositing a lump sum at a traditional bank or an online bank. Credit unions also offer CDs, called stock certificates.

While CDs pay compound interest similar to deposit accounts like savings accounts, high-yield savings accounts, money market accounts, and even some checking accounts, CDs have higher interest rates. In exchange for this more competitive, fixed APR, you must agree to keep your cash in the bank for a period of time known as the CD Term.

Unlike traditional savings or checking accounts, the money you put into a CD is not readily available to you. If you decide to withdraw money from a CD before the due date, your bank may charge you an early access penalty. A prepayment penalty could offset all or part of the interest you earn on a CD. In some cases, you could even lose part of your original deposit.

Choosing the right CD can come down to finding the highest APR for the term you are looking for. But you should also learn about prepayment penalties in case an emergency arises and you need to access your money before the term expires.

Pros and cons of a CD account

Advantages

Disadvantages

  • Normally, if you need your cash before a CD’s due date, you’ll pay a penalty.

  • Competitive prices for CDs – especially long-term CDs – may not keep pace with inflation.

  • Although CDs are safer, they offer lower returns than mutual funds and stocks.

Types of CDs

In addition to the traditional certificates of deposit, there are several other types of CDs to consider.

  • Bump-up CDs: A bump-up CD allows you to request an increase in your APY if interest rates at your financial institution rise before your CD matures. In general, you can only apply for one tariff increase per semester with a bump-up CD. The starting APR on bump-up CDs is often lower.

  • Step-up CDs: Step-up CDs are similar to bump-up CDs. However, with a step-up CD, your financial institution increases your APR at set times.

  • Available CDs: A cancelable CD gives the bank the right to cancel the CD before its due date. A cancelable CD may offer a higher APR than a traditional CD.

  • CDs without penalty: A no-penalty CD allows you to withdraw funds from your account before the due date without paying a prepayment penalty. For CDs with no penalty, APYs are usually lower.

  • Bull CDs: The interest you earn on bull CDs is tied to a specific market index. When this market index rises, a bull CD pays you a predetermined percentage in interest. Most Bull CDs also have a guaranteed minimum return.

  • Bear CDs: Bear CDs are also tied to a specific market index, but the returns you can earn from a bear CD are based on proportions of each market decline that occurs.

  • Jumbo CDs: With a jumbo CD, a bank requires a higher minimum deposit requirement when opening it—often $100,000 or more—than with a traditional CD.

  • Uninsured CDs: Uninsured CDs are not NCUA or FDIC insured. They may offer a higher APR, but think carefully and consider seeking professional advice before committing to this higher-risk account.

  • Variable Rate CDs: When you open a CD with a variable interest rate, the APY can fluctuate with market interest rates. When interest rates rise, you earn more from your savings. But if interest rates fall, your APR could go down.

  • Zero Voucher CDs: Zero coupon CDs pay no interest during their life. Rather, you purchase the CD at a discount. When the CD matures at the end of its term, the bank pays you the full face value.

How to save with CDs

Below are three common CD saving strategies to consider.

CD ladder

  • CD laddering is a savings strategy that involves opening multiple CDs with staggered due dates. By staggering the due dates of your CDs, you can retain access to a portion of your savings at regular intervals while still earning higher returns than with a savings account.

CD barbell

CD ball

How to select a CD

When choosing a CD, consider the following factors:

  • Prices: Banks and credit unions control their interest rates, so you’ll find that APYs on CDs can vary widely between financial institutions. Look around to find the best prices.

  • Tariff type: When comparing APRs, find out if the CD has a fixed or variable APR.

  • Expression: CDs can last as little as a month or as long as 25 years.

  • Penalties or Monthly Fees: With a typical CD, you pay a penalty if you withdraw funds before the due date. You could lose some or all of the interest you have earned and in some cases even some of your principal.

  • Minimum deposit: CD minimums vary by bank or credit union and typically range from $500 to $5,000.

Kat Tretina contributed to this article.

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