Best CD Rates Today: March 5, 2025

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Lock in Competitive Returns with CDs

The good news is that you can lock in a competitive return on a Certificate of Deposit (CD) today and preserve your earning power. Read on for a snapshot of CD rates today and where to find the best offers. CD rates have remained high by historical standards, especially for shorter terms. For example, it’s possible to find rates of 4.00% APY or higher for terms of about one year and under.

Current CD Rates Overview

Although interest rates for longer-term CDs aren’t quite as high, the best available rates still hover near 3%-4% APY for terms of three years or more. The Federal Reserve held interest rates steady for most of 2024, with a target rate of 5.25%-5.50%. However, as inflation cooled and economic growth improved, it finally slashed the federal funds rate by 50 basis points in September, and another 25 basis points in November and December. Today, the federal funds rate stands at 4.25%-4.75%. Experts believe there will be additional rate cuts in 2025.

Factors to Consider Before Investing in CDs

Whether or not you should put your money in a CD depends on several factors. Earning a competitive interest rate is important, but it’s not the only consideration to keep in mind. Here’s a closer look at some of these key factors to think about:

1. Interest Rates

CDs make for a more attractive investment option when interest rates are high or trending downward since they lock in the current rate for the entire term. Considering the recent trends in interest rates, it could be a good time to put your money in a CD and secure a guaranteed rate of return.

2. Financial Goals

CDs are a safe investment choice if you’re looking to preserve capital and earn a steady return. They are insured up to the federal limit in most cases, making them a low-risk option. That said, if you’re saving for a long-term goal like retirement, a CD may not be the best choice since market investments tend to provide higher returns, on average.

3. Liquidity Needs

CDs require you to lock in your money for a set period, known as the term. If you think you’ll need to access your money before the term ends, you may want to avoid CDs, as they come with penalties for early withdrawal. A savings account or other type of deposit account may be a better option.

Where to Find the Best CD Rates

CDs are available from most banks. However, if you’re interested in maximizing your returns, it’s important to look beyond your current bank. Not all CDs offer competitive rates, even in a high interest rate environment. That’s why comparing multiple CD account options is important, especially among financial institutions that are known for offering higher rates.

Online Banks: A Great Option for High-Yield CDs

One of the best places to find high-yield CDs is through online banks. Since they are less expensive to operate than traditional brick-and-mortar banks, online banks can pass on those savings to customers in the form of higher interest rates. Be sure to explore various online banking options to find the best CD rates available today.

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