The savings rate for certificates of deposit (CDs) has reached a four-year high, offering consumers the opportunity to lock in up to 4.15% annual percentage yield (APY) on their investments. This increase is due in part to the ongoing efforts by the Federal Reserve to curb inflation, which has caused interest rates to rise across the board.
Analysts attribute the rise in CD rates to the Federal Reserve's actions to combat inflation.
In response to these changes, a variety of CDs now offer rates of up to 4.15% APY. As consumers consider these high-yield rates, experts caution that while they are attractive, a potential drawback to locking in a high-yield CD is the penalties associated with early withdrawals.
According to data from Bankrate, a CD with a five-year term has a national average rate of around 3.7% APY. When choosing a CD, experts recommend considering both the rate and any minimum deposit requirements. For instance, an average minimum deposit of $5,000 is typically required for a five-year CD.