The best 18-month certificate of deposit (CD) rate is currently a 4.40% annual percentage yield (APY) from EagleBank.
Use the table below to explore 18-month CD rates at various financial institutions and learn about the factors to consider before deciding whether a CD is the right option for you.
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When you save money in a CD, you agree to set aside these funds for a fixed period of time, known as the CD term. With an 18-month CD, the term is 18 months.
The APY — the rate you earn on your savings — is typically guaranteed for the entire CD term, so you don’t have to worry about the rate changing during the 18 months. This makes it easier to predict how much your savings will earn.
Before stashing your savings in an 18-month CD, it’s important to understand the potential early withdrawal penalty. If you need to tap into your savings before the term ends, you’ll likely have to pay a penalty to do so. The penalty depends on the bank and the term length, but it is typically a certain number of months’ worth of interest.
One of the best ways to find the highest 18-month CD rates is to shop around. CD rates can vary significantly between lenders, as can minimum opening deposits and early withdrawal penalties. It’s a good idea to compare options at various types of financial institutions, such as traditional banks and credit unions, as well as online banks.
You may have better luck locking in a high CD rate at an online bank, which can often feature more competitive rates than traditional brick-and-mortar banks. By operating primarily online, these banks have fewer overhead costs and can pass along some of the savings to customers in the form of higher interest rates.
Learn more: Online Banking vs. Traditional Banking: Which Is Right For You?
Various factors influence CD rates, including changes to the federal funds rate, which is set by the Federal Reserve and is the rate at which commercial banks lend to each other overnight. Banks often use the federal funds rate as a starting point when setting the prime rate and other rates to charge borrowers.
The federal funds rate can also influence CD rates. If the Fed raises rates, you may see higher CD rates, and if it lower rates, the opposite may occur.
Treasury yield changes can affect CD rates as well. The Treasury yield is the rate the U.S. government pays on its debt, such as Treasury bills. Banks often use Treasury yields as a reference point when setting CD rates.
Additional factors that may affect rates are competition with other financial institutions and term length.
Here are some factors to consider while comparing CD providers:
A rate of 4.00% APY or higher is currently considered a high rate for an 18-month CD. At the time of writing, the highest rate for an 18-month CD is 4.40% APY.
Whether you should get an 18-month CD depends on your financial needs and goals. If you don’t need the money for 18 months, opening a CD can be a safe and predictable way to grow savings with a guaranteed rate. One thing CDs aren’t ideal for is emergency savings because you’ll want easy access to the funds. If you want to build an emergency fund, a high-yield savings account may be a better option.
When your 18-month CD reaches its maturity date, you have a few different options: 1) withdraw the money and use it to achieve a financial goal, such as buying a car, 2) roll the funds into a new CD or 3) withdraw the funds and put the money into a different account, such as a savings account. Keep in mind, your CD may automatically roll over into a new CD at the end of your term unless you tell your bank otherwise.
The amount you can earn with an 18-month CD depends on how much you deposit, the term and the APY. Here’s an example of how much you could earn, assuming a deposit of $5,000 and a 4.40% APY.
At the end of the 18-month term, you’d have earned about $334, so you’d have $5,334 to withdraw, roll over or use toward other financial goals.
A CD ladder involves opening multiple CDs with varying maturity dates so you can access cash at regular intervals. For example, you’d open a 1-year CD, an 18-month CD and a 3-year CD instead of one 3-year CD. This strategy also allows you to secure a CD with a higher interest rate if rates have gone up.