10:28 pm - February 4, 2026
Certificate of deposit rates continue to decline as financial institutions adjust to the Federal Reserve’s recent policy changes, but savers can still secure competitive returns by acting quickly. According to current market data, the best CD rates available today remain above 4%, with United Fidelity Bank offering the highest rate at 4.05% APY on its 18-month certificate of deposit. These rates represent a significant opportunity for savers looking to lock in returns before further declines occur.
Currently, short-term CDs with terms ranging from six to 12 months generally offer rates between 4% and 4.5% APY, according to industry reports. These yields remain substantially higher than traditional savings accounts, making certificates of deposit an attractive option for risk-averse investors seeking guaranteed returns.
Historical Context of CD Rates
The current CD rate environment stands in stark contrast to the ultra-low rates that persisted for much of the past two decades. Following the 2008 global financial crisis, the average one-year CD paid around 1% APY by 2009, with five-year CDs returning less than 2% APY, according to historical banking data.
The trend of falling rates continued throughout the 2010s as the Federal Reserve maintained its benchmark interest rate near zero to stimulate economic growth. By 2013, average rates on six-month CDs had plummeted to approximately 0.1% APY, while five-year CDs returned an average of just 0.8% APY.
However, a gradual improvement occurred between 2015 and 2018 when the Fed began increasing rates as the economy expanded. This marked the end of nearly a decade of ultra-low rates, though the gains were short-lived.
Recent Rate Movements and Fed Policy
The COVID-19 pandemic in early 2020 triggered emergency rate cuts by the Federal Reserve, causing CD rates to fall to record lows once again. Subsequently, spiraling inflation prompted the Fed to implement 11 rate hikes between March 2022 and July 2023, leading to higher yields on savings products including certificates of deposit.
In September 2024, the Fed initiated a rate-cutting cycle after determining that inflation was essentially under control. Additionally, three more rate cuts were announced in 2025, contributing to the steady decline in CD rates from their recent peak.
Despite the downward trend, CD rates today remain elevated by historical standards. This presents a window of opportunity for savers to lock in competitive yields before rates decline further.
Understanding the Yield Curve Inversion
Traditionally, longer-term CDs have offered higher interest rates compared to shorter-term products, compensating savers for the increased risk of locking away funds for extended periods. However, current market conditions show the highest average CD rate is for a 12-month term, indicating a flattening or inversion of the yield curve.
This pattern typically emerges during uncertain economic times or when investors anticipate future interest rate declines. The inverted yield curve suggests that financial institutions expect rates to decrease over the coming months and years.
Key Factors When Choosing a CD
Selecting a high APY certificate of deposit is important, but savers should consider multiple factors before committing their funds. The appropriate term length depends on when you anticipate needing access to your money, as early withdrawals typically result in penalties.
Online banks often provide higher interest rates than traditional brick-and-mortar institutions due to lower overhead costs. Meanwhile, savers should verify that any financial institution they consider carries FDIC insurance or NCUA insurance for credit unions, protecting deposits up to applicable limits.
Additionally, understanding account terms beyond the interest rate is essential, including maturity dates, withdrawal penalties, and minimum deposit requirements. Inflation considerations also matter, as fixed CD returns might not always keep pace with rising prices, particularly for longer terms.
As the Federal Reserve’s monetary policy continues to evolve, further adjustments to CD rates are expected in the coming months. The timing and magnitude of future rate changes remain uncertain, though most analysts anticipate continued gradual declines from current levels.
