The Best CD and Savings Account Rates Right Now, and Why The Fed’s Latest Rate Hike Could Send Them Even Higher

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It’s a great time to save money — especially if you’re keeping it in the right place.

The Federal Reserve just raised its target federal funds rate range to 3.00% – 3.25%, the highest it’s been in more than a decade. That means better interest rates on the best high-yield savings accounts and best CDs.

These account rates are related — but not directly tied to — federal interest rates determined by the Federal Reserve. This year, the Fed has made a series of rate hikes in an effort to reverse runaway inflation rates. And given the latest rate increase, experts expect interest to only continue upward.  

“Clearly, rates are going up at the next meeting, Chris Chen, a certified financial planner with Insight Financial Strategists in Newton, MA, told us ahead of this week’s announcement. In fact, the Fed raised rates by 75 basis points, in its fifth rate hike this year. “The question is, will it be enough to tame inflation?”

Higher interest rates mean more costly debts, from mortgage rates to credit card interest. But for savers, higher rates can put a few more dollars back into your pocket thanks to earnings on your savings balances. 

Here’s a look at the best savings and CD rates this week, and experts’ predictions for rate movements to come: 

image of Kendall Little
Kendall LittleSenior Staff Writer, NextAdvisor

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.

Best CD Rates Right Now

Average CD rates increased pretty significantly this week. Based on Bankrate’s weekly survey, average CD rates for one-year terms increased by 0.11%, while three- and five-year terms rose by 0.08%. Among the rates we track at NextAdvisor, one-year CD averages are at 2.77%, three-year CDs offer an average 2.96%, and five-year CDs 3.24%.

But experts warn against falling for the higher rates of long-term CDs today. “Lock into CDs for no longer than two years,” says Joanne Burke, certified financial planner and founder of Birth Street Financial Advisors. Even if you’re building a CD ladder, which can help you keep up with rising rates more than a single CD, two-year terms should be the longest, she says. 

Here are a few of the best CD rates this week, by term: 

1-Year 

  • CFG Bank: 3.05% APY
  • Bread Savings: 3.00% APY
  • Sallie Mae: 2.85% APY

3-Year 

  • Bread Savings: 3.55% APY
  • CFG Bank: 3.50% APY
  • Sallie Mae: 3.15% APY

5-Year 

  • Bread Savings: 3.65% APY
  • CFG Bank: 3.60% APY
  • Synchrony Bank: 3.50% APY

Best Savings Rates Right Now 

Savings account interest rates moved a bit slower this week. Averages remained the same among national indexes, but the high-yield savings rate averages we track at NextAdvisor did go up slightly, from 2.00% APY to average 2.03% APY.

Ahead of the Fed’s next rate hike, now is a great time to open a competitive high-yield savings account with a variable interest rate that will increase alongside federal rates. Here are the best interest rates this week: 

  • UFB Direct: 2.61% APY
  • Prime Alliance Bank: 2.26% APY
  • TAB Bank: 2.16% APY
  • Lending Club Bank: 2.15% APY
  • Bread Savings: 2.15%

What to Know As Rates Rise

Interest rates are rising as part of the Fed’s plan to bring down the runaway inflation rates we’ve experienced this year. And experts say we still have a ways to go until inflation catches up.

In the short term, Chen says, inflation may cause many Americans “massive pain” when it comes to prices.

“It is going to be a pain for consumers,” echoes Shannon Grey, certified financial planner and founder of InvestEdge Planning, a financial planning firm in San Diego, CA. She predicts another 75 basis point increase, which would increase rates by the same margin as the last rate hike in July. Though “they could go even higher if they want to be really aggressive,” Grey says. 

Should You Open a CD or High-Yield Savings Account Right Now? 

The experts we’ve spoken with agree on their advice for savers right now: don’t lock your money into a long-term CD account; maintain liquidity. 

“The problem and the advantage of CDs is that you’re locking in the rate,” says Chen. “If you won’t need the money in the next five years, please don’t put it in a 3.25% CD when you have an 8% inflation rate. Instead, go for the high-yield [savings] accounts.” 

Based on rates this week, you can earn well over 2% APY from high yield savings accounts, “which is way below inflation, but is better than zero,” says Chen. 

High-yield savings accounts offer more liquidity and flexibility in case of an emergency and their variable rates can help you continue to take advantage of rising savings rates

“When the Fed changes their language around combating inflation, then we’re talking a little bit more about going into the intermediate [CD] terms and the longer terms,” says Grey. “[Until then] structure yourself to be really flexible in case those interest rates continue to rise, because it’s going to give you the opportunity to lock in higher rates.”

CD and Savings Rate FAQs

What is the best CD rate?

You can find CD rates even on 1-year terms above 3% APY right now. Remember, it’s best to stick to shorter-term CDs as rates continue to rise. 

What is the best savings rate?

The best savings account rates are around 2.15%-2.20% APY, though a few banks offer even higher than that. As the Fed continues to raise rates, variable APYs on high-yield savings accounts will likely increase.

How long will CD and savings rates increase?

As long as the Fed continues to raise rates, experts predict that interest rates on CDs and savings accounts will rise, too.