With Rates Up to 6%, CDs Are a Smart Move in June

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Today's CDs Are Paying Sky-High Rates

Over the last 20 years, there's hardly ever been a better time to put money in a certificate of deposit (CD). That's because you can earn historically high returns—5% or better in most CD terms—with virtually no risk or uncertainty. That's remarkable when you consider that at the start of 2022, the top nationwide CD rates ranged from just 0.5% to 1.5% annual percentage yield (APY).

CD rates hit a nationwide peak last fall. Since then, the threat of a Federal Reserve rate cut has caused CD yields to soften a bit. As you can see below, the best CD rates are still lingering near their 20-year high-water marks.

It can be tempting to just lock in the highest CD rate that fits your needs, like the nation-leading rate of 6.00% APY that's available from Nuvision Credit Union for a 10-month term. If you can't tie up your funds for too long, a short-term CD may be your best bet.

But if you're able to commit some of your savings for longer, you could opt for a lower rate that comes with a much longer guarantee. For instance, you could earn 5.15% APY with Credit Human's choose-your-term CD of 18–23 months, extending your rate promise as far as 2026. Or you can stretch that to 2027 with the best 3-year CD rate of 5.00%, which is available from three different institutions.

Your Savings Account Rate Is Going to Fall—But a CD Rate Is Yours to Keep

The 2023 surge in savings and CD rates was triggered by the Federal Reserve's historic rate-hike campaign, which raised the federal funds rate 11 times between March 2022 and July 2023. The Fed's goal was to tamp down inflation that had reached a 40-year high of 9.1% after the pandemic.

The Fed's rate increases have so far brought inflation down considerably, to a recent reading of 3.4%. As a result, the Fed is now watching and waiting for the right time to start reducing the federal funds rate.

This is why you should consider a CD in June: We don't know how long these rates will last.

It's unclear when the Fed will feel confident enough to begin lowering its benchmark rate. But CME Group's FedWatch Tool shows that it's currently a toss-up among market watchers whether a Fed rate cut will be announced at the Sept. 18 meeting. It's not until the next meeting after that, on Nov. 7, that a strong majority of fed funds traders are betting rates will have dropped.

This is important because banks and credit unions will start to cut the rates they offer on savings accounts and new CDs as soon as it seems clear the Fed is going to make a rate cut. This means the money you hold in a high-yield savings account will likely earn less interest later in the year compared to today.

But CDs you open before the Fed is ready to cut rates will have a fixed rate that is yours for the full term of the CD. So even if the Fed were to cut rates twice this year and cut further in 2025, your existing CD rate is guaranteed and cannot be lowered.

Advice for CD Shoppers

When deciding to open a new CD, the two important things to determine are how much you can commit, and how long you can live without those funds. Once you know your desired deposit amount and duration, you can search our daily ranking of the best nationwide CDs to find today's top-paying options in any CD term.

A smart strategy is to decide what portion of your savings you'll keep in an easily accessible savings account—so you have access to some of your funds should you need them in an emergency—and how much you can lock into a CD. In addition to shopping your best options from our daily CD ranking, you can also find top savings account rates from our daily ranking of the best high-yield savings accounts.

Before committing funds to a CD, always be sure to review the bank's or credit union's early withdrawal penalty. Some of these penalties are reasonably mild, while others are so onerous they can eat into your principal. So it's smart to do your homework and avoid any CD with an unduly harsh penalty policy.

You can also consider splitting your CD money up into more than one certificate, perhaps with different terms, so that your money becomes accessible in phases (known as a CD ladder). Or you can open one CD right away with some of your available funds but wait to invest the rest after you watch rates for a while, and perhaps encounter an appealing CD deal that's new to the market.

How We Find the Best Savings and CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts 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.