CD Rate History: How Today’s Rising Interest Rates Compare

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Today, the best high-yield CDs earn about 3.5% APY — a long way from the double-digit rates certificates of deposit made a few decades ago. 

CDs may not be the high-earning investment vehicle they once were, but their popularity has grown recently, mostly because interest rates on the most competitive CDs are much higher right now than they have been the last few years.

The Federal Reserve has increased interest rates multiple times this year, with additional rate hikes expected.. Because rates are on the rise, experts recommend sticking to shorter-term CDs today, which can help you take advantage of higher rates in the near future without locking up your cash long-term. 

Here’s more about how CD rates have ebbed and flowed over time, and how looking to the past can help you decide whether a CD is a good choice for you today.

Historical CD Rates from the 1980’s to Now

CD rates have always fluctuated alongside federal interest rates and changes in overall market conditions. FDIC data on non-jumbo CDs (less than $100,000 balance) only goes back to 2009. For the information below, we used a combination of FDIC data and Bankrate historic CD rates (like NextAdvisor, Bankrate is owned by Red Ventures). 

Here’s a closer look at movements in certificate of deposit rates since their all-time highs in the 1980s to pandemic-era lows, and everything in between.

The 1980s

CD rates were booming in the 1980s. 

Early on, inflation was sky-high — reaching as much as 13% in 1980. In response, the Federal Reserve began a series of rate hikes, similar to what the Fed is doing today to bring down inflation. 

Those rising interest rates — the effective federal funds rate was as high as 19% by January 1980 — resulted in historically high rates for savers. Six-month jumbo CD rates (which do tend to be higher than regular CDs) were up to 15.79% APY in 1981, according to available Fed data. And though they did come down as the decade went on, CD rates were in the double digits throughout the 1980s, with average one-year CDs reaching over 11% in 1984 Bankrate data shows, though they mostly hovered around 7%-9% APY later.

The 1990s

Throughout the 1990s, inflation was much lower. Though rates started to lose some steam as a result, compared to the previous decade, CDs could still be well worth pursuing. 

For the majority of the decade, the federal funds rate hovered between 3% and 6%, with CD rates largely following.

2000s and Now

Like federal interest rates, CD rates dropped sharply starting in 2000, and have mostly remained low since. 

Jumbo six-month CDs could earn a little above 6% on average at the turn of the millenium, yet fell to under 1% by 2009, as a result of the Fed slashing rates at the start of the Great Recession in 2007.

Average one-year CD rates then remained under or around 1% APY for much of the 2010s,  before reaching a new low when the Fed again cut interest rates to near-zero in response to the COVID-19 pandemic in 2020. By 2021, average one-year CD rates were barely above 0.10% APY. 

This year, the Fed has once again started to raise rates to combat inflation, with more rate hikes expected over the next several months. Today, the national average CD rate remains relatively low, but you can find higher rates from online banks with high-yield CDs, reaching as much as 2.5%-3.5% APY, depending on the CD term.

Here’s a closer look at some of the best CD rates today:

Best CD Rates for January 2023

Bank1 year apy3 year apy5 year apyMinimum Deposit
Live Oak Bank4.60%2.00%2.00%$2500
Bread Savings (formerly Comenity Direct)4.50%4.50%4.50%$1,500
TIAA Bank4.30%3.80%3.45%$1,000
Goldman Sachs Bank USA4.30%4.00%3.80%$500
Synchrony Bank4.30%4.30%4.30%$0
American Express National Bank4.25%1.15%4.25%$0
Sallie Mae4.25%4.40%4.25%$2500
Barclays Bank4.25%4.30%4.30%$0
Ally Bank4.15%4.25%4.25%$0
Discover Bank4.15%4.35%4.40%$2500
Capital One4.15%4.35%4.35%$0

Note: The APYs (Annual Percentage Yield) shown are as of January 03, 2023. The APYs for some products may vary by region.

When Were CD Rates at Their Highest?

CD rates tend to closely follow the interest rates set by the Fed. That’s why they reached a peak in the 1980’s, when interest rates were very high across the board in the government’s attempt to lower the decade’s very high inflation. 

Savers could earn upwards of 10% APY on a CD. But borrowers paid the price in high interest rates on loans, too. In fact, in 1981 and 1982, average annual mortgage rates were over 16% APR, according to Freddie Mac data.

CD rates remained high throughout the 1980s, and were still competitive into the 1990s, but have not since reached those same peaks.

Are CDs Still Worthwhile?

Certificates of deposit won’t get you the best return on your investment, but there are plenty of cases in which they can be a worthwhile addition to your portfolio. Retirees, for example, may move their savings out of more risky investments and into CDs for a predictable, guaranteed return.

Retired people or those nearing retirement — who may be more reluctant to invest money in a volatile stock market right now — may get a lot of value from a CD, says Lynnette Khalfani-Cox, CEO and co-founder of Returns around 3% aren’t comparatively exceptional, but these less-risky accounts do offer protection on your principal, unlike other investments.

CDs are also useful for money you know you want to use toward a specific purchase in the future, since they offer a fixed return over a fixed timeline you agree to at the start. 

“If you know you’re gonna buy a home next year, you can put your down payment in a one-year CD and it will be ready 12 months from now,” says Greg McBride, chief financial analyst for Bankrate. 

Will CD Rates Go Back Up?

CD rates are already on the rise. Earlier this year, some of the interest rates on our list of best CD rates were lower than 1%. Now, some of the highest rates are 3.5% or more.

And with more federal rate hikes expected over the next several months, experts believe CD rates could climb even higher.

If you’re considering opening a CD in today’s rate environment, it can pay to compare different options — especially high-yield CDs from online banks.

“The biggest banks are really dragging their feet on interest increases for savings and CDs,” McBride says. You’re more likely to find the best interest rates from online banks with fewer overhead costs or even credit unions in your area, rather than large, national chains.

But it’s unlikely we’ll see CD rates anywhere near the highs of the 1980s again. In fact, locking your money into a CD that cannot keep up with today’s high inflation rates could mean “your dollar’s buying power is getting eroded,” says Khalfani-Cox. CDs provide security and a fixed return, while investing in the stock market may be better for long-term investments, for example, and Series I Savings Bonds may make a better hedge against inflation. Before you open a new CD, take time and compare different savings and investing options to find which one best suits your goals.