CD and Savings Rates Keep Rising as the New Year Approaches. These Are the Best Right Now

Photo to accompany a story about the best CD and savings rates for week of December 26, 2022
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At the end of a huge year for savings and CD accounts, rates are still rising. 

After the Federal Reserve’s latest rate hike, banks increased their savings rates, and experts say the new year will bring increasing rates, too. At least for a while.

Even though inflation is slowly starting to come down, still-high prices and economic uncertainty mean that rates will remain high for a while longer. But the likelihood, and pace, of any future rate hikes will depend on how much inflation may improve in the weeks and months to come.

Alongside those higher rates still to come, expect the rates you earn on savings and CDs to grow. Already, some savings accounts are offering over 4.00% APY, and longer-term CDs are rising over 4.50% APY. 

Here’s what to know about savings and CD rates this week, and a look at what experts are expecting from rate changes in the new year:

How NextAdvisor Analyzes CD and Savings Rates

We compare three different averages in our average CD and savings rate analysis. First, we review national deposit rates from the Federal Deposit Insurance Corporation (FDIC) and Bankrate’s national index of deposit accounts based on a weekly survey (like NextAdvisor, Bankrate is owned by Red Ventures). We also calculate the current average rate of each bank on our list of best CD rates and best savings rates — you can find more about how we choose the banks included in our lists on those pages.

The differences between national average savings rates and NextAdvisor’s analysis of interest rates is largely due to the much higher APYs that online banks pay.

National surveys from the FDIC and Bankrate include many different types of financial institutions, including large national banks that charge as little as 0.01% APY. Our lists, on the other hand, is made up of online or hybrid banks with fewer overhead costs, which allows them to pass on savings in the form of interest to customers.

What Are the Best Savings Rates This Week?

Savings rates are still rising following the latest rate hike.

National indexes went up this week, too. Bankrate found average savings rates increased from 0.19% to 0.20% APY, while the FDIC national savings rate went from 0.24% to 0.30% month over month. Keep in mind, these national averages also include traditional savings account rates, which can sometimes offer as low as 0.01%.

NextAdvisor’s weekly analysis 

As far as the rates we track at NextAdvisor — which include only high-yield savings accounts — the average went up from 3.43% last week to 3.51% now.

Average Savings Rate
Last week3.43% APY
This week3.51% APY

Here are a few of the highest-earning savings accounts this week:

[READ MORE: The Highest Savings Account Rate Right Now is 4.11% APY. Here’s Where You Can Get It]

What Are the Best CD Rates This Week? 

As we’ve consistently seen over the past several months, CDs are following the same pattern as savings, though with slightly lower increases. 

National index rates increased this week. Bankrate’s survey of average CD rates showed that one-year CDs went from 1.36% to 1.37% APY, three-year and five-year CDs stayed the same at 1.13% and 1.16% APY, respectively.

As for the monthly FDIC report, rates on one-year CDs increased from 0.90% to 1.07% APY. Three-year CDs increased by slightly less, from 0.90% to 1.02% APY; five-year CDs went from an average 0.98% to 1.09% APY.

NextAdvisor’s weekly analysis

The rates we track weekly at NextAdvisor showed a slightly higher bump:

1-Year Term3-Year Term5-Year Term
Last week4.26% APY3.78% APY4.05% APY
This week4.32% APY3.83% APY4.04% APY

Here are the best CD rates by terms this week: 

1-Year 

  • CFG Bank: 4.75% APY 
  • Live Oak Bank: 4.60% APY 
  • Bread Savings: 4.50% APY 

3-Year 

  • CFG Bank: 4.60% APY 
  • Bread Savings: 4.40% APY 
  • Sallie Mae: 4.40% APY 

5-Year 

  • CFG Bank: 4.60% APY
  • Bread Savings: 4.40% APY 
  • Discover Bank: 4.40% APY 

[READ MORE: The Highest Short-Term CD Rate Is Over 4%, But It’ll Cost You. What to Know]

Preparing for the New Year

Rate hikes may slow down in the new year, but don’t expect them to fall anytime soon.

The Fed is going to continue to raise rates until it feels like inflation is at the target level around 2%, which we haven’t yet reached, says Jennifer Kang, CFP and founder of JWK Financial, a financial planning firm in Honolulu, Hawaii.  

While we may not see repeats of this year’s consecutive 75 basis point rate hikes, that means the Fed still has a way to go. In the new year, rate hikes will likely stay between 25 and 50 basis points, predicts Anna N’Jie-Konte, NextUp honoree, financial advisor and the founder of Dare to Dream Financial Planning.

In the meantime, rising rates and inflated prices still have experts feeling uncertain about an economic downturn yet to come. 

“Companies are still raising prices and consumers are buying. That’s the issue,” says Kang. 

You can’t control broader economic factors on your own, but you can take steps to secure your own financial outlook today. Pay down any outstanding credit card balances which could grow more expensive as rates rise, be careful about the terms of any new debt you take on, and start building an emergency fund with a few months’ expenses.

“I don’t want anybody to panic,” says N’Jie-Konte. “This isn’t a panic situation. I think it’s a time to be prepared.”  

Prioritize Your Savings

One of the best ways to prepare for the future — no matter what’s in store — is by saving.

Right now, high-yield savings and CD rates are close to 4.00% APY (or more in some cases), which can result in a big boost to your savings balance. Plus, savings rates will remain competitive as long as the Fed continues raising interest rates and banks feel pressure from consumers to keep rates high, adds N’ Jie-Konte. 

Savings accounts, which are easily accessible and allow regular contributions, are best for savings you may need on short notice, like your emergency fund. But CDs can be good for longer-term goals or money you already have saved for a specific purpose, like school tuition or a down payment on a future home. 

If you do choose a CD, it’s still best to stick to short terms, like six-month CDs, for now while rates remain high, then aim for longer terms in the new year. “When that six-month period is over, I’d look at as long of a term as I can get,” says Kenneth Chavis IV, CFP, a NextUp honoree and senior wealth manager at LourdMurray, a wealth management group.

Most importantly, make sure your account is FDIC-insured and a good fit for your goals. Many banks will continue to push interest rates higher next year, but details like minimum deposit, any fees, transfer limits, and options for account access can affect how you save in the long run.

Savings and CD Rate Frequently Asked Questions

What is considered a good CD rate?

Right now, many CDs across different terms earn at least 4.00% APY. You may consider anything above the current average rates a good CD rate. But you should also consider other account details before opening, such as term length, minimum deposit, and fees.

Are CD rates higher than savings?

CD rates are higher than savings rates in some cases, but it depends on the term. The average high-yield savings rate according to NextAdvisor’s analysis is around 3.5%, while the average one-year and five-year CDs are both above 4.0% APY.

Which banks have the best CD rates?

Experts recommend sticking to short-term CDs as rates rise. Merrick Bank has the highest six-month CD rate, with a 4.40% APY and steep $25,000 minimum deposit. For one-year terms, CFG Bank has the best rate, with a 4.86% APY and a $500 minimum deposit.

Who has the best savings rates right now?

UFB Direct has the highest savings account rate right now. It offers 4.11% APY.