If you’re looking to maximize your savings and earn a competitive rate, a certificate of deposit (CD) could be the right choice for you. By locking in a high CD rate today, you can watch your balance grow over time. However, with rates varying widely across financial institutions, it’s crucial to shop around and find the best offer available.
Traditionally, longer-term CDs have offered higher interest rates than shorter-term CDs. This was done to incentivize savers to keep their money on deposit for longer periods. However, in today’s economic climate, the opposite is true.
As of December 28, 2025, the highest CD rate available is 4.1% APY. This rate is offered by Sallie Mae Bank on its 15-month CD and Synchrony Bank on its 9-month CD.
The amount of interest you can earn from a CD depends on the annual percentage rate (APY). This is a measure of your total earnings after one year, taking into account the base interest rate and how often interest compounds. Typically, CD interest compounds daily or monthly.
For example, if you invest $1,000 in a one-year CD with a 1.63% APY and interest compounds monthly, your balance would grow to $1,016.42 after one year. Choosing a one-year CD with a 4% APY instead would result in a balance of $1,040.74 at the end of the year.
The more you deposit in a CD, the more you stand to earn. For instance, if you deposit $10,000 in a one-year CD with a 4% APY, your total balance when the CD matures would be $10,407.42, with $407.42 in interest earned.
When selecting a CD, the interest rate is an essential factor to consider. However, it’s not the only consideration. There are various types of CDs that offer different benefits, albeit potentially with slightly lower interest rates in exchange for flexibility.
Some common types of CDs beyond traditional CDs include:
– Bump-up CD: Allows you to request a higher interest rate if your bank’s rates increase during the CD’s term, typically limited to one rate adjustment.
– No-penalty CD: Also known as a liquid CD, allows you to withdraw funds before maturity without incurring a penalty.
– Jumbo CD: Requires a higher minimum deposit (usually $100,000 or more) and may offer higher interest rates in return.
– Brokered CD: Purchased through a brokerage rather than directly from a bank, potentially offering higher rates or more flexible terms but carrying more risk and potentially not being FDIC-insured.
By understanding the different types of CDs available and comparing rates from various financial institutions, you can make an informed decision to maximize your savings and earnings.
