What's a good CD interest rate in 2025?
There are plenty of savings accounts and investments in which to store your money, but few guarantee a high, fixed rate for months or even years. A certificate of deposit (CD) account is one of the rare exceptions.
Interest rates on this account type surged in recent years as the Federal Reserve issued a series of interest rate hikes in an attempt to tame rising inflation. As inflation declined in 2024, however, the Fed eased its approach. In the final months of the year, the Fed issued three consecutive interest rate cuts, thus bringing the federal funds rate to a range between 4.25% and 4.50%. That reduced what savers could earn on a variety of accounts, including CDs. And it slightly changed the definition of what a "good" CD interest rate is now, in 2025.
That doesn't mean these accounts aren't still a smart way to grow your money, though, especially before additional rate cuts are issued. Before getting started, however, it helps to know the specifics on what rates to look for.
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What's a good CD interest rate in 2025?
CD interest rates range from 0.23% for a 1-month CD to 1.32% on a 5-year CD, according to December 2024 data from the FDIC. So, technically, any CD rate over that mark would be considered a good one right now.
But savers can earn an exponentially higher interest rate (think in the 4% to 5% range) by exploring their local banks and credit unions instead. And they may be able to secure an even higher rate by turning to online banks, specifically. Online banks don't have the costs of maintaining physical banking branch locations. In turn, they're able to pass on those savings to CD account holders in the form of higher interest rates. And now is a great time to open a CD online, locking in a high rate while they're still available, ahead of additional Fed rate cuts to come.
For example, while the average 5-year CD rate is a minimal 1.32%, by shopping for accounts online, you may be able to find a rate of 4.25% for the same term. That's more than three times the average, easily obtained by turning to an online bank instead of your current local branch.
That noted, today's CD rates are markedly lower than they were at this point in 2024. In recent years, for example, select savers were able to open accounts with rates as high as 6% and 7%. Those opportunities have largely faded, emphasizing the importance of locking in a fixed, high-rate CD for as long as you can right now.
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What's a good high-yield savings account interest rate in 2025?
For those savers who still want to earn a high rate – but don't want to give up the flexibility that would be required by locking their money in a CD – a high-yield savings account could be a viable alternative. While rates on traditional savings accounts are just 0.42% now, you may be able to get a high-yield savings account rate of up to 4.75%. That's 1,030% better simply by moving your funds from one savings account to another.
But there are some caveats to consider. Like CDs, the best high-yield savings account rates are typically found with online banks, not local ones. And, perhaps most importantly, unlike CDs, high-yield savings account rates are variable. That's a major advantage with interest rates on the rise but it could be detrimental in 2025 with additional rate reductions expected for later in the year. So you'll need to weigh these features versus what's available with today's CD accounts to better determine which is right for you.
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The bottom line
A "good" CD interest rate is essentially anything over 1.32% now. Fortunately, there are multiple accounts in the 4% range to be found currently, both for short- and long-term CDs. And if you prefer the flexibility of a savings account, a high-yield version can also offer similar returns. Just don't leave your money untouched in a traditional account. Today's high CD and high-yield savings rates are unlikely to remain this high for much longer so it makes sense to take advantage while you still can.
