The best ways to take advantage of today's high CD rates, according to experts

In the current high interest rate environment, it's easy to find certificates of deposit (CDs) paying 4%-5% annual percentage yields (APYs), if not more, depending on factors such as CD duration. Given the potential to earn a substantial, guaranteed return on your investment with these CD interest rates, you probably want to think strategically about how to optimize your CD choices.

With returns on CD accounts higher than they've been in years, we spoke to a few experts to see what they recommend in order to take advantage now.

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The best ways to take advantage of today's high CD rates, according to experts

Here are a few recommendations, based on the experts we spoke to, for taking advantage of today's elevated CD interest rates.

Shop for the best rates

Many different financial institutions, including banks and credit unions, offer CDs, but the rates can vary significantly from one to another.

"Some of the best ways to take advantage of today's high CD rates is to compare financial institutions in your area and ask your primary financial institution if they do rate matches," says Dana Jones, vice president, retail operations at Neighborhood Credit Union.

You also might find that buying a CD through a brokerage works out to your advantage, although you should be aware of potential risks with these CDs, like the possible loss of some principal if you need to liquidate early.

"Right now, brokered CDs are where we are seeing the most competitive rates," says Devin Carroll, owner and lead advisor at Carroll Advisory Group.

But you also might find that certain banks and credit unions offer highly competitive rates.

"Some of the best rates available come from online banks, smaller community banks, and credit unions. These financial institutions have to work harder to attract new customers than the big banks with branches on every main street, and offering great rates is one of the best ways to do so," says Ben McLaughlin, president of Raisin US.

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Build a CD ladder

Another way to take advantage of today's high CD rates is to build a CD ladder, meaning you open CDs of varying durations to spread out risk.

"While interest rates may be higher for longer than most of us originally anticipated, they won't stay at this level forever.  Locking in these rates across short and long maturities will help to reduce the risk of future reinvestment at a much lower rate," says Carroll.

A CD ladder can also help you get access to your funds on a more frequent, rolling basis, compared to if you only chose long-term CDs.

"Instead of opening a single CD which locks your deposits into the term of the CD, laddering has you open multiple smaller CDs of varying durations. This gives you the opportunity to access some portion of your funds regularly—say, every three months—without penalty, allowing you to address accessibility for emergencies while capitalizing on higher yields with less risk," explains Jennifer White, senior director, banking and payments intelligence at J.D. Power.

Search for promotions/special rates

As part of shopping around for the best rates, also look for incentives that can make the base CD rate even more attractive.

"The current race to attract consumer deposits is driven by higher interest rates, but banks are looking for differentiated reasons why you should select their product. As a result, there are unprecedented offerings for cash back offers or bonuses along with opportunities to automatically increase savings through these products," says White.

"Take the time to research if you could earn a bonus from your preferred bank. Now is the time to not leave a bonus on the table," she adds.

Know what you're getting into

While you want to compare financial institutions to see where you can get a good rate, you don't want to rush into opening a CD you don't understand. At times, a lower-rate CD might be a better fit for your financial needs.

"The best option is the one that meets your needs best—including length of CD — but ensure that the product you select is backed by the security of FDIC insurance," says Dan Robinson, SVP and consumer banking CMO at Synchrony.

Note that CDs from credit unions generally are also federally insured by the National Credit Union Association. Brokered CDs coming from federally insured financial institutions often still have that insurance, but you should still confirm.

Also, look into factors like early withdrawal penalties to see which CDs align with your risk tolerance.

"Make sure you read all the fine print. Some CDs have high minimum deposits which might be unrealistic or out of reach for your situation. Others have penalties for things like withdrawing funds early," says McLaughlin.

"If you find yourself in a tight situation and need to make a withdrawal, that move could really cut into your earned interest," he adds. "We always advise people to make sure they already have an easily accessible emergency fund before locking up money in a fixed-term CD."

The bottom line

These are some of the best ways to take advantage of today's high CD rates, but keep in mind that the best option for you might differ from the best option for someone else. Some more niche types of CDs, for example, like index-linked CDs, could be a good fit for some investors but not for others.

"Lesser-known CD options can play a role in any personalized finance strategy, but it's critical to spend time first assessing your financial goals," says Robinson.

Also, keep in mind that today's high interest rates won't last indefinitely, so you might not want to wait too long to act after evaluating your options. "Customers only receive great rates for products that they end up selecting, so make sure that you're able to make a decision and lock in a rate while they're still as attractive as they are when you start your search," adds Robinson.