Best CD Rates of June 2025

What are CD rates?

A CD rate is the interest you earn on your CD account balance. The annual percentage yield (APY) for the best CD rates today ranges from 2.75% to 4.40%. A CD’s APY represents the total interest you’ll earn over one year, including compound interest. 

When comparing CDs, the “interest rate” mentioned is often a simple interest rate, which does not account for the effect of compounding. Because APY factors in compounding, it’s usually higher than the interest rate and gives a clearer picture of how much you’ll earn each year.

CD rate news 2025

The Federal Reserve cut rates three times in 2024 – in September, November and December – which caused CD rates to start dropping. But so far in 2025, the Fed has kept rates stable.

While the Federal Reserve doesn’t set CD rates directly, it does decide the target range for the federal funds rate. Commercial banks and credit unions use the federal funds rate to determine their own interest rates for everything from deposit accounts and CDs to credit cards and loans.

The current federal funds rate ranges from 4.25% to 4.50%.

The ideal time to invest in a CD depends on your financial circumstances and goals. However, if you have extra funds to invest right now, locking in a high-rate CD is worth considering.

Are CD rates going up?

CD rates have generally been on a downward trend since the Federal Reserve started lowering the federal funds rate in 2024. 

The Federal Reserve kept rates steady at its May 2025 meeting, which means CD rates are likely to remain stable or even decrease over the next few months.

What is a certificate of deposit?

A CD is a type of savings account where you keep funds for a specific period of time, known as the CD term. In exchange for keeping the money with the bank for that term, you’ll typically earn a higher rate than you would with a traditional savings account.

You choose how much you want to deposit in a CD, so long as it meets the bank’s minimum requirement. You can also pick the term, which usually ranges from three months to five years, though some options are as long as seven years. 

Banks and credit unions often charge an early withdrawal penalty if you need to cash out the CD before the term ends. This means, for example, that you might lose three months’ worth of interest for an early withdrawal from a 6-month CD.

As you consider opening a CD, consider these important factors:

• Interest rate: Most CDs have a fixed interest rate that never changes during the term. This guarantees how much you’ll earn, but you won’t be able to take advantage of higher-earning CDs if rates rise, unless you open a new CD account.
• Term: Your funds will be tied up for a fixed period. If you have an emergency and need to access the money in your CD before its maturity date, you’ll likely face an early withdrawal penalty.
• Deposit amount: Some CDs require a minimum deposit amount. Also, you usually can’t add more funds to the CD once you open it, although some special CDs allow add-on deposits.

Types of CDs

Banks, credit unions and online lenders offer different CDs for different financial needs. Here are some popular options:

• Traditional CDs: This is a standard CD with a fixed interest rate and term. You’ll often earn a higher rate than with a traditional savings account. But if you withdraw funds before the CD’s maturity date, you could face a penalty and lose out on the remaining interest.
• Variable-rate CDs: With a variable-rate CD, your interest rate may rise and fall over the term of the CD based on certain benchmarks.
  Examples of benchmark rates:
  

  • Prime rate - Interest rate commercial banks charge their most creditworthy customers to borrow money
  • Consumer Price Index - A monthly government measure of inflation reflecting changes in the prices of consumers' day-to-day living expenses
  • Treasury yields - The yield (interest) paid by the U.S. government on its Treasury notes — the 10-year Treasury yield is a popular benchmark
  • Market index levels - Measures that represent the performance of different securities markets, such as the S&P 500 or Nasdaq Composite averages
• No-penalty CDs: A no-penalty CD lets you withdraw funds without penalties before your CD matures. However, some institutions may make you close your account after an early withdrawal, and rates tend to be less competitive for this type of account.
• Promotional CDs: Some financial institutions have promotional CDs with special rates to attract customers. They are usually available for a limited time and last for a short term, often less than a year. If you wish to renew the CD, you may have to switch to the standard CD rate.
• Jumbo CDs: If you want to deposit a large amount, such as $100,000 or more, you can usually earn the highest interest rates by investing in a jumbo CD.
• Step-up CDs: A step-up CD starts with a fixed interest rate and then lets you earn higher rates during your term with automatic scheduled increases. For example, a 24-month CD might begin with a 0.5% rate and then increase by 0.1% every six months.
• Brokered CDs: A brokerage firm can provide a broader selection of CD options, although extra fees may be involved for financial planning and asset management.

How to choose a CD

If you’re ready to invest in a CD, here are five steps to help you make the right choice.

1. Determine your financial goals

Ask yourself what you hope to gain from investing in CDs. If you want to build an emergency fund, a high-yield savings account (HYSA) might be a better fit. But if you’re saving for a long-term goal, such as a down payment on a home, then locking funds in a CD can help you stay on track.

2. Find a federally insured financial institution with competitive rates

A CD can help you get a better return on your savings, compared with a regular savings account. Research rates and stick to financial institutions that are insured by the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Administration (NCUA).

Standard FDIC or NCUA coverage is $250,000 per account holder, per institution, per ownership category. Common ownership categories include single accounts and joint accounts.

3. Pick a CD type and term

Explore the different types of CDs to find the best options for your long-term goals. Then decide how long you feel comfortable locking away your funds. 

CD terms commonly range from three months to as long as seven years, though each bank has its own selection. Many CDs will automatically renew when the term ends, but you often have a short grace period to make changes or remove the funds with no penalty.

4. Understand early withdrawal penalties

Life can be unpredictable, and you may need to withdraw funds from your CD before the term ends. Before investing in a CD, review the early withdrawal penalties so you can be prepared for the worst-case scenario.

One way to account for unexpected expenses is to invest in a CD ladder, which is a series of CDs with staggered maturity dates. This way, you can access your cash at regular intervals if you need it.

5. Deposit funds

You may need to deposit a certain amount of money to open a CD. This is known as a minimum balance requirement. 

These requirements vary by financial institution, but a common minimum deposit is $1,000. Some banks don’t require a minimum, while others set a steep minimum, such as $25,000.

Pros and cons of CDs

Is a CD right for you?

Ultimately, the decision of whether to open a CD comes down to your financial goals and needs. 

For example, if you want to buy a new car in a year, opening a 12-month CD can provide guaranteed earnings, so you’ll know how much money will be available for the purchase. 

Getting a CD can also help you build discipline with your savings. Because you may be charged a penalty for early withdrawals, you’ll be less likely to dip into your savings prematurely, helping you stay on track to reach your goals.

On the other hand, if you’re looking for a place to stash your emergency savings, you’ll probably want an account where you can access the money anytime, such as a high-yield savings account.

How to build a CD ladder

A CD ladder is a savings strategy that involves buying multiple CDs and staggering their maturity dates to give you regular access to your cash without penalties. You can spread your funds evenly over several CDs or put larger amounts in a couple of them.

Here’s an example of how to build a $15,000 CD ladder spread over five CDs:

• Take the total investment — in this case, $15,000 — and divide it by five. That means you have $3,000 to invest into five CDs.
• Start by putting $3,000 in a 1-year CD.
• Next, spend $3,000 on each of the remaining four “rungs” of the CD ladder: a 2-year CD, a 3-year CD, a 4-year CD and a 5-year CD.
• When each CD matures, you can either cash them out or keep your ladder going by reinvesting your savings using the same timeline.

How much does a $10,000 CD make in a year?

Your earning from a CD depends on the rate, term and deposit amount. Unlike a traditional savings account, you can’t keep adding funds to your CD after opening it.

Here’s a breakdown of how much you could earn with a $10,000 CD using different rates and terms.

Note that the above examples are for CDs that compound interest annually, but you can also find CDs that compound monthly. That means interest will be added each month, and you’ll earn interest on that interest in future months. Some CDs compound interest daily.

Alternatives to CDs

Although CDs normally earn higher rates than other types of savings accounts, they might not be the best option for achieving your money goals. 

If you need regular access to your savings or want to set up automatic deposits, one of the following savings accounts might be a better choice.

• Traditional savings account: Banks and credit unions have traditional savings accounts you can link to your checking account for quick transfers. Although these accounts can offer flexibility, they tend to earn lower rates than other deposit accounts.
• High-yield savings account: Rates on these accounts are generally more competitive than traditional savings accounts, but you may need a minimum balance to earn the advertised APY. You can usually get the highest rates with an online bank, although some brick-and-mortar banks also have solid rates.
• Money market account: These accounts provide easy access to your money with typically higher returns than a traditional savings account. MMAs come with convenient checking account features, such as debit cards and checks. But many money market accounts may require a large opening deposit and limit your monthly transactions. 
• Short-term bond fund: These can be ideal for conservative investors who want a high return over a short period of time. Investments are usually in corporate bonds or other fixed-income securities.
• Brokerage account: A brokerage account allows you to hold savings and invest funds in various ways, such as buying and selling stocks, mutual funds, and exchange-traded funds (ETFs). Some brokerage accounts are free, while others charge fees, especially if you use brokerage-assisted services.
• Retirement account: If you want to maximize your long-term savings and take advantage of tax benefits, then a traditional individual retirement account (IRA) may be a good choice. However, IRAs have strict rules and penalties for early withdrawals.

Frequently asked questions

What happens if I withdraw from a CD early?

The exact penalties depend on the details in your CD account agreement, but federal law sets certain minimum penalties for early withdrawals. For example, if you withdraw funds within six days of opening a CD account, you will need to pay seven days’ worth of simple interest. You can estimate how much an early withdrawal might cost with our early withdrawal penalty calculator.

How are CDs taxed?

Any income earned from your CD accounts will be taxed as interest income for the tax year in which it was earned. You should receive a 1099-INT in January outlining the interest earned during the previous tax year. Use this form when filing your tax return.

Should I put my emergency funds in a CD?

Because you’ll need quick access to your emergency fund, a CD may not be the best choice for it. Instead, you may want to use a high-yield savings account or money market account. You could also consider dividing your emergency savings between multiple accounts for short-term expenses and using a CD ladder for longer-term expenses.

Do CDs charge fees?

Most CDs are free to open and don’t charge maintenance fees like some traditional savings or money market accounts. However, brokered CDs may carry commission or asset-based fees. Also, most CDs charge early withdrawal fees if you decide to cash out before the end of the term.

Can you lose money on a CD?

Because CDs have fixed interest rates, the primary way you might lose money is by making an early withdrawal. And even then, the earned interest might be enough to cover the penalty your bank charges. But CDs do have an opportunity cost: If interest rates rise, you’re still stuck with your lower rate. And if inflation increases, it can erode the purchasing power of your money over time, even after accounting for the interest you earn.