Deposit account rates are falling, but certificates of deposit continue to offer competitive returns above 4% APY. Investors can lock in these rates today to preserve earning power.
Short-term CDs with six to twelve month terms currently provide rates around 4% APY, significantly higher than traditional savings accounts. As of January 20, 2026, the highest available CD rate is 4% APY, offered by Marcus by Goldman Sachs on its 1-year CD.
Historical data shows CD rates have fluctuated dramatically over recent decades. The early 2000s saw relatively higher rates before declines during economic slowdowns. Following the 2008 financial crisis, average one-year CDs paid approximately 1% APY by 2009, with five-year CDs below 2% APY.
Rates continued falling through the 2010s, reaching lows of about 0.1% APY for six-month CDs and 0.8% APY for five-year CDs by 2013. This period coincided with Federal Reserve policies maintaining near-zero benchmark interest rates.
A slight improvement occurred between 2015 and 2018 as the Fed gradually increased rates and the economy expanded. However, emergency rate cuts during the COVID-19 pandemic in early 2020 pushed CD rates to new record lows.
The situation reversed post-pandemic as inflation surged, prompting eleven Fed rate hikes between March 2022 and July 2023. This led to higher APYs on savings products including CDs.
By September 2024, with inflation under control, the Fed began cutting the federal funds rate. Three additional cuts followed in 2025, causing CD rates to steadily decline from their peak. Despite this downward trend, current rates remain high by historical standards.
Today's CD market shows an unusual pattern where the highest average rate is for 12-month terms rather than longer durations. This flattening or inversion of the yield curve often occurs during uncertain economic times or when investors anticipate future rate declines.
When selecting CDs, financial experts recommend considering multiple factors beyond APY. These include investment goals and time horizons, as early withdrawals typically incur penalties. Terms commonly range from several months to multiple years.
Rates vary significantly among financial institutions, with online banks often offering higher yields than traditional brick-and-mortar banks due to lower overhead costs. Prospective investors should verify FDIC or NCUA insurance coverage.
Additional considerations include specific account terms such as maturity dates, withdrawal penalties, and minimum deposit requirements. Investors should also weigh inflation's potential impact on fixed returns, particularly for longer-term CDs.