CD Rates Are Up Again This Week. Shorter Terms and CD Ladders Are Good Savings Options Right Now, Experts Say

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Average CD interest rates continued on a steady — but incremental — upward track this week. 

And with the next Federal Reserve meeting less than a month away, experts predict the increases will continue. 

“We are expecting the Fed to continue to raise interest rate during [its] September meeting,” says Tony Chan, CFP, investment advisor and tax planner at Crossroads Planning in Orange, California. “If they do [rise], we will see an increase in mortgage rates, credit card rates & CDs.”

Here’s more on the latest CD rates this week and what to consider before opening a CD as rates rise: 

What is the Average CD Rate Right Now?

Average CD rates increased this week across one-, three-, and five-year terms.

The FDIC also revised its monthly data this week, showing one-year CDs are up to an average 0.46% APY, three-year CDs are 0.54%, and five-year CDs are 0.64%. 

Here are more of this week’s average CD rates:

How NextAdvisor Determines These Average Rates

We compare three different averages in our average CD rate analysis. First, we consider the national deposit rates from the Federal Deposit Insurance Corporation (FDIC). Second, we use Bankrate’s national index of deposit accounts, based on a weekly survey (like NextAdvisor, Bankrate is owned by Red Ventures). Finally, we calculate the current average rate of each bank on our list of best CD rates. Despite low national averages, you’ll find more rates aligned with the NextAdvisor average when comparing CD rates among different banks.

CD Deposit TermFDIC National Deposit RateBankrate National IndexNextAdvisor Average APY

Compared to national averages — which typically include non-high yield CDs from brick-and-mortar banks — online banks like those on our best CD rates list have higher APYs. Here are a few of the top CD rates this week, by term: 

1-Year CDs

  • CFG Bank: 3.05%
  • Bread Savings (formerly Comenity Direct Bank): 3.00%
  • Live Oak Bank: 2.75%

3-Year CDs 

  • Bread Savings (formerly Comenity Direct Bank): 3.55%
  • CFG Bank: 3.55%
  • Sallie Mae: 3.05%

5-Year CDs 

  • Bread Savings (formerly Comenity Direct Bank): 3.65%
  • CFG Bank: 3.65%
  • Synchrony Bank: 3.25%

Average CD Rates Compared to Last Week 

CD rates trended upward across the board, but each of the three rate surveys we track moved differently this week. 

The FDIC national deposit rate went up this month for one-, three-, and five-year terms. One-year CDs rose by 0.15%, while three- and five-year CDs rose 0.07% each. 

Bankrate’s weekly survey of national banks showed a much more modest change. Only one-year CDs increased by 0.03%.

But based on our analysis of the bank included on our best CD rates page, average rates increased by 0.08% for one-year, 0.10% for three-year, and 0.02% for five-year terms. 

Should You Open a CD as Rates Increase?

Most CDs have fixed rates, so if you open a CD in today’s rising rate environment and rates go up, you won’t be able to get a better rate on the money you have saved — at least not without paying a penalty.

For most CD types, withdrawing the money before your CD reaches maturity will result in a penalty. 

Some banks charge different penalties depending on your CD term, while others have a standard penalty fee for any CD. Typically, you’ll pay a portion of your interest earned — six months or nine months’ worth of interest payments, for example. Always check your bank’s policy and account agreement for information about penalty fees before opening your CD. 

When shopping around for the best CD, shorter-term CDs are best for now, so you don’t get stuck in a CD with a lower rate when rates rise, says Joanne Burke, CFP, and founder of Birch Street Financial Advisors. And you can avoid penalties if you need access to the money sooner than a long-term CD would allow.

Even though experts don’t recommend long-term CDs right now, if you want to lock in a good rate, consider a long-term CD with a penalty rate of six months or less, says Burke. 

Another option for avoiding penalties altogether if you’re set on saving with a CD is a no-penalty CD. These accounts tend to have shorter terms, and you won’t pay any penalty for withdrawing your money in full as long as you do so after the initial waiting period (usually about a week after funding your CD).

How to Maximize CDs Right Now Using a Ladder

Right now, shorter term CDs can help you take advantage of rising rates without locking away your money for too long. Even though longer-term CDs may have higher APYs right now, in a few months, shorter-term CDs may pay comparable interest rates. But with your money tied up already, you could miss out on potentially higher APYs. 

One way to incorporate CDs into your savings strategy in a way that helps you take advantage of rising rates is by using a CD ladder. “If anyone is interested in CDs now, I recommend laddering it so they can optimize their return rate,” says Chan. 

CD ladders involve opening several CDs, either with varying terms or at different intervals, to keep your money liquid while earning interest. As rates rise, you’ll have the opportunity to roll the money from each maturing CD into a new CD that may have a better interest rate. 

If rates are lower by the time your CDs mature, you’ll also have the option to put the funds toward something else. Keep in mind that this strategy requires you to monitor your accounts and regularly compare rates to get the best APY. 

Average CD Rate FAQs

Do CDs pay interest monthly?

Most banks compound interest daily and pay returns monthly. However, it depends on the bank. Check your bank’s account agreement before opening a CD to see how often interest is compounded and paid.

Is there a penalty for withdrawing from a CD before it matures?

Unless you choose a no-penalty CD, there is a penalty for withdrawing from your CD before it matures. The penalty depends on your bank, term, and type of CD.

What is the shortest CD term?

Most banks offer CD terms as short as three months, but some offer 1-month traditional CDs.

What’s the minimum deposit for a CD?

The minimum deposit for a CD depends on the bank you choose. Some don’t require a minimum amount while others may range from $100 up to $1,000, depending on the type of CD.