Despite the suggestion that a larger deposit entitles you to a higher return, that’s not always the case for jumbo certificate rates, which often pay less than standard CDs. Today’s best jumbo offers, which typically require a deposit of $100,000 or more, beat the best standard rates in four CD terms, while you can do better with standard CDs in the other four terms. So remember to shop every CD type before making a final choice.
Where Are CD Rates Headed This Year?
CD rates are very directly linked to the federal funds rate, with each Fed move generally driving CD rates in the same direction. But while today’s CD rates are already at their highest levels since 2007, whether they’ve peaked or will climb higher depends on what the Federal Reserve decides to do during its next meeting, which will conclude June 14.
Over the past 14 months, the Fed has been on a campaign to combat decades-high inflation, with aggressive increases totaling 4.25% in 2022, and three 2023 increases to-date totaling another 0.75%. That ascent has been a boon for CD shoppers, as well as those stashing cash in a high-yield savings or money market account.
Fed Rate Hike Pause Looks Likely
With the next Fed meeting now two weeks away, market watchers are closely scrutinizing the most recent economic indicators and comments from Federal Reserve Board members, searching for clues about what will happen next. Today, Fed Governor Philip Jefferson (who is also the nominee for Fed vice chair) and Philadelphia Fed President Patrick Harker both indicated that they think the central bank will skip a rate hike at the June meeting.
“A decision to hold our policy rate constant at a coming meeting should not be interpreted to mean that we have reached the peak rate for this cycle,” Jefferson said at a financial stability speech in Washington. “Indeed, skipping a rate hike at a coming meeting would allow the committee to see more data before making decisions about the extent of additional policy firming.”
The comments today follow similar remarks by Federal Reserve Chairman Jerome Powell May 19, when he said at a conference that he thought a rate hike pause was in order.
Today’s news has federal funds futures traders betting 3-to-1 in favor of a rate pause.
A Lot Can Still Happen
The lean toward a rate hike pause comes despite the fact that inflation is still not in the 2% range that the Fed is targeting. Last week, a key inflation indicator was released, showing that inflation remains stubbornly high at 4.4%. And employment data out today indicates that the labor market is heating up again—which could also feed inflation.
Much can still happen in the next two weeks, especially since more jobs and inflation data will be released before the Fed’s meeting. For CD rates, this means they could soon plateau (if the Fed announces a rate hold), or they could still climb higher (if the Fed implements another increase).
Even if CD rates haven’t peaked yet, they are already at their highest level in more than 15 years. So locking in a top-paying certificate now would still ensure you’ll earn an excellent rate for months or years to come.
Note that the “top rates” quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often five, 10, or even 15 times higher.
Rate Collection Methodology Disclosure
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD’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.