When it comes to saving money and earning interest, a certificate of deposit (CD) can be a great option. By locking in a competitive rate on your savings, you can watch your balance grow over time. However, not all CD rates are created equal, so it’s important to shop around for the best offer.
Historically, longer-term CDs offered higher interest rates than shorter-term CDs. Banks would incentivize savers to keep their money on deposit longer by offering better rates. However, in today’s economic climate, the opposite is true.
As of December 14, 2025, the highest CD rate available is 4.25% APY, offered by United Fidelity Bank on its 2-year CD. This rate can help your savings grow significantly over the term of the CD.
The amount of interest you can earn from a CD depends on the annual percentage rate (APY). This measures your total earnings after one year, considering 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 1.7% APY and interest compounds monthly, your balance would grow to $1,017.13 at the end of the year. Choosing a CD with a higher APY, like 4%, would result in a balance of $1,040.74 after a year, including $40.74 in interest.
The more you deposit in a CD, the more you stand to earn. Depositing $10,000 in a one-year CD at 4% APY would result in a total balance of $10,407.42 at maturity, earning you $407.42 in interest.
When selecting a CD, the interest rate is crucial, but it’s not the only factor to consider. There are different types of CDs that offer various benefits, even if they come with slightly lower interest rates. Some common types include:
– Bump-up CD: Allows you to request a higher interest rate if rates go up during the term.
– No-penalty CD: Lets you withdraw funds before maturity without penalty.
– Jumbo CD: Requires a higher minimum deposit and often offers higher interest rates.
– Brokered CD: Purchased through a brokerage, potentially offering higher rates or more flexible terms.
Each type of CD has its advantages and disadvantages, so it’s essential to choose the one that best fits your financial goals and needs. By exploring the different CD options available, you can make an informed decision to help your savings grow.
