The Best 6-Month CD Rates Are Still Lower Than Many Savings Accounts. How to Tell When They’re Worth It

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Six-month CDs are a safe pick in today’s rising rate environment. But that doesn’t mean they’re the best choice for every saver.

These short-term CD accounts are a good way to earn a return on money you’re setting aside for a goal in the near future, such as a down payment on a home or starting your side hustle, or simply for savings that you don’t plan to use for a while. 

When interest rates are falling, short-term CDs can help you lock in a solid rate for this type of goal. But right now, the best six-month CD rates are only on par or even less than what you can find from high-yield savings accounts, which are expected to keep rising over the next few months.

Still, six-month CDs are a “sweet spot,” says Marty O’Leary, a certified financial planner and founder of Stadium Financial, a financial planning firm in Lake Murray, Florida. That’s because they don’t require the time commitment of locking in a longer CD term, but can still help you earn a competitive rate and take advantage of potentially higher interest later on.

Here’s more about six-month CDs, and when to consider one as part of your financial plan. 

Best CD Rates for December 2022

Bank0.5 year apyMinium Deposit
Live Oak Bank4.25%$2500
Sallie Mae3.50%$2500
Synchrony Bank3.50%$0
Goldman Sachs Bank USA3.25%$500
TIAA Bank3.00%$1,000
Ally Bank2.75%$0
Discover Bank2.75%$2500
Capital One2.70%$0

Note: The APYs (Annual Percentage Yield) shown are as of December 02, 2022. The APYs for some products may vary by region.

Should I Invest in a 6-Month CD?

A six-month CD may be a good place to park your savings for a while, experts say — but in general, you probably don’t want to look at CDs much longer than that.  

Otherwise, you could miss out on higher rates to come, as the Federal Reserve just increased the rate range to 3.75% – 4%, and likely next month, too. “At least with the six-month CD, you’re going to be renewing that in six months at a higher rate,” says O’Leary. 

But for some savers, more flexible savings options, like a high-yield savings account with a variable APY, may be more useful. For example, if you want an emergency fund you can access quickly or you want the option to make contributions toward your balance over time. Plus, savings accounts have higher rates right now and they’re still going up.

For instance, say you have $1,000 saved. You could put that in a six-month CD with a 1.65% APY, and have a return of about $8.28 in six months when the term is up. 

If you put the same money in a high-yield savings account with a 2.00% APY, you could earn about $10 over the same timeframe. That return may be higher, though, as rates continue to rise. If there’s a chance you’ll need the money for a planned purchase or emergency, this is also a good way to keep your funds liquid while earning a return. 

Pros and Cons of 6-Month CDs

Six-month CDs can be useful for safeguarding money you know you won’t need for a few months. And in a falling rate environment, they can even help hedge against future lower rates. But they’re also less flexible than high-yield savings accounts and limit your ability to make contributions. Here are more pros and cons to keep in mind: 

Pros

  • Access your money in only a few months, which is quicker than longer term CDs

  • FDIC or NCUA insured deposit

  • Lock in a good rate when interest rates are falling

Cons

  • Withdrawal penalty if you take out money before your CD matures

  • Less flexibility compared to high-yield savings accounts

  • Fixed interest rate can hold back earnings in a rising rate environment

  • Cannot contribute more after making your initial deposit

6-Month CDs Compared to 12-Month and 18-Month CDs

As long as savings and CD interest rates continue to rise, experts recommend sticking to short-term options if you’re looking to open a CD. Here’s how six-month terms compare to other relatively short-term 12- and 18-month CDs today:  

12-Month CDs

A one-year CD today can offer a pretty competitive interest rate. And, like a six-month CD, also help you maintain access to your funds without too long of a commitment.

The average one-year CD rate, based on our list of best CD rates, is over 2.81%. That’s on par with high-yield savings accounts, but higher than six-month CD rates today. 

But it’s safe to assume these rates will increase even more as the Fed continues to raise the federal funds rate, and locking in a rate today could mean losing out. That’s why, while some experts do recommend CDs up to two years, others focus on only very short terms. 

“[Choose] CDs shorter than a year, just because we expect interest rates to continue to rise by the end of the year,” says Hannah Szarszewski, certified financial planner and founder of Blue Mountain Financial Planning, a financial planning firm in Melissa, Texas. 

To mitigate some of the risks of locking in a rate, you can also build a CD ladder made up of varying terms, including six-month and one-year CDs. This allows you to lock in rising rates over time and keep your money relatively liquid. When your CDs mature, you can roll the money into a savings option that has a better rate of return. 

18-Month CDs

Currently, 18-month CDs offer around 3%, which is much higher than current six-month CDs. But the tradeoff is the much longer term over which you’ll need to lock in your savings. 

Some experts don’t recommend CDs longer than 18 months right now since rates are still rising. You may miss out on a bigger return as rates climb, and you must wait a year and a half to withdraw without paying a penalty. 

If you’re saving for an emergency fund because you’re worried about an unexpected expense or three’s a chance you’ll need the money before the CD term ends, an account with more flexible access is best, such as a high-yield savings account or a money market account

6-Month CD FAQs

What if I want to withdraw sooner than 6 months?

If you withdraw from your CD before it matures, you’ll pay a withdrawal penalty on your principal balance. These penalties vary, but are usually a few months’ worth of interest. Always check the withdrawal penalty details within your bank’s account terms before opening.

Is my rate locked in for the entire period?

Yes, you will have the same rate on your six-month CD until your CD matures. You can roll the funds into a new CD or move it to a different account after your CD matures.

Are CDs safe?

CDs are not subject to market volatility. Because they’re deposit accounts, they’re FDIC-insured up to $250,000 per account.

What are alternatives to CDs?

You can avoid fixed interest rates and the need to have a deposit on hand by using a high-yield savings account. These accounts earn variable interest, which can help you keep up with rising rates, and let you contribute over time, so you don’t need a large sum of cash to deposit upfront.