| CD Term | June FDIC Average | July FDIC Average | Monthly Change (percentage points) |
| 3 months | 1.07% | 1.11% | + 0.04 |
| 6 months | 1.26% | 1.30% | + 0.04 |
| 1 year | 1.63% | 1.72% | + 0.09 |
| 2 years | 1.45% | 1.47% | + 0.02 |
| 3 years | 1.36% | 1.37% | + 0.01 |
| 4 years | 1.29% | 1.30% | + 0.01 |
| 5 years | 1.37% | 1.37% | Steady |
Don’t let these national averages fool you: Smart CD shoppers can earn 3-5 times more than the average simply by shopping around. For instance, while the 1-year CD rate average is an underwhelming 1.72% APY, the best 1-year CD rate in the country is an eye-popping 5.50% APY from Garden Savings Federal Credit Union. Or, you can lock in 5.70% APY with the best 18-month certificate from USAlliance Financial.
Tip
A rate of at least 5.00% APY is available in every CD term from 3 months to 3 years, with longer terms having top rates in the upper 4.00% range. Just shop your preferred term in our daily ranking of the top-paying CDs.
The stratospheric rise of CD rates over the past 16 months can be linked to rate decisions made by the Federal Reserve. From March 2022 through May 2023, it hiked the federal funds rate at 10 consecutive meetings, with the goal of combatting inflation that had reached a 40-year high. Since the fed funds rate is a direct driver of the rates banks and credit unions are willing to pay consumers for their deposits, CD rates also increased.
But in June 2023, the Fed opted to hold rates where they were to provide more time to measure the impact of its past increases. Because this rate “skip” was widely anticipated, many CD rates remained steady in May and early June. This can be seen in the FDIC’s June readings, which showed a slowing of increases in average rates, with some terms holding steady and one term actually giving up ground.
Now, a month later, the rate environment has evolved as the Fed approaches its next meeting on July 25 and 26. Because it has been all but certain for several weeks that the Fed will announce another quarter-point increase to its benchmark rate, many banks have already raised their CD rates in the lead-up to next week’s expected announcement.
Will CD Rates Climb Even Higher?
The Fed’s 10 rate increases to-date have pushed the federal funds rate to a target range of 5.00–5.25%, in what has been the fastest pace of increases in almost 40 years. It has also taken the benchmark rate to a near-20-year record, with only June 2006 through September 2007 registering higher (the fed funds rate was at 5.25%). As a result of these recent hikes, bank deposit rates are also at their highest levels since at least 2007.
But it’s possible, and even likely, that CD rates will rise a bit higher still, given the exceptionally high probability of a Fed rate increase next week. Though many institutions have already made rate increases in advance of the central bank’s announcement, others may be waiting to raise rates later this month or even in August.
That said, any increases in average CD rates are likely to be minor at this point, as the Fed’s rate increase would only be for a quarter percentage point. Compared to the 5.00% cumulative increase we’ve already experienced, another 0.25% will only move the rate needle slightly.
But what about after July’s announcement? It’s currently unknown whether there will be additional rate increases in 2023. The Fed’s June 14 post-meeting written report revealed the committee’s “dot plot,” which indicated that 12 of the 18 members believed at that time that the fed funds rate should be raised at least another 0.50% in 2023, which would translate into two additional increases (so one more after the likely July increase).
Since then, however, several indications of cooling inflation have come to light. Prices rose just 3.0% year-over-year in June, a notable improvement over May’s 4.0% level. As a result, a majority of market traders are currently betting that the Fed’s July increase will be its last hike of the year.
But nothing is ever reliably predictable about Federal Reserve rate predictions, especially when they project several months into the future. The Fed makes each rate decision based on up-to-the-minute economic indicators and financial news, and unexpected changes in inflation or employment data—or notable developments in the banking sector—can certainly steer Fed policy in a different direction.
If more Fed hikes do come, that would almost certainly translate into additional rate increases for savings, money market, and CD accounts as well. But since the Fed hikes are expected to be modest, it’s likely that any rate improvements for deposit products would also be mild.
Rate Collection Methodology Disclosure
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer money market, savings accounts, and CDs to customers nationwide, and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000.
Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.
