Certificate of deposit rates continue to climb, with three of the top offers reaching and even surpassing an annual percentage yield, or APY, of 6% (though, to be fair, these extra-high offers often come with some hoops to jump through). See some of the best CD rates you can get now here.
And while gaining access to these often exclusive savings products can require some hurdles, experts say that if you’re looking for guaranteed returns and can afford to tie your money up for a bit, a CD may be worth a look.
Here’s what to know about the CDs with the best annual percentage yield, or APY, in October 2023, and we list some of our top finds below.
Why are certificate of deposit rates going up, and will CD rates continue to rise?
Savings rates for many deposit accounts have continued to climb over the past year. In the past year, 12-month CDs have climbed to 1.76% APY on average through Sept. 18 from just 0.60% this time last year, according to the Federal Deposit Insurance Corporation, or FDIC. Even shorter term CDs such as those with 6-month terms have reached an average of 1.36% APY from as low as 0.07% and 0.34% last year, respectively.
So why have savings rates climbed so much in such a short period of time? For starters, elevated inflation has triggered persistent rate hikes from the Fed. Over the past 12 months, the central bank has increased the benchmark funds rate to 5.25%-5.5% from nearly zero a year ago. Because a higher funds rate means bank and credit union debt obligations have become more costly, Hamrick says many smaller institutions have responded by making savings products increasingly lucrative to new depositors with hopes of rolling them into their various accounts along the way. Indeed, now you routinely find certain CDs paying 5% or higher, and you can see some of the best CD rates you can get now here.
““There’s no guarantee CD rates will continue to climb, so people should utilize these peculiarly high rates while they’re available.” ”
“Typically, financial institutions raise savings rates as they anticipate borrowing demand,” Hamrick explains, adding however that it’s “a bit of a mixed bag at the moment … given falling demand and availability of credit. Some institutions will continue to provide more generous returns than others in order to attract money, including some that might have previously gone into other assets including equities.”
These fixed-date offers may only continue to become more attractive in the months ahead, some pros say. “Between the rising yields in financial markets and the Federal Reserve’s devotion to a ‘higher for longer’ mantra, we have yet to see a confirmed peak in rates,” says Bankrate Washington Bureau Chief Mark Hamrick. “We will probably only know that after we’ve arrived.”
NerdWallet personal finance writer Elizabeth Ayoola adds that because of this continued pressure on inflation, all eyes now for what’s ahead should be on the central bank. “Seeing as the Fed recently paused rate hikes, it’s indicative that they’re close to their target inflation rate of 2%,” Ayoola says, adding that “there’s no guarantee CD rates will continue to climb, so people should utilize these peculiarly high rates while they’re available.”
What to know before you get a certificate of deposit
When looking for a CD, WalletHub analyst Jill Gonzalez says the first step is to decide how long to commit to locking up your money; in other words, what length of term you are looking for. “Searching for the term length is a good starting point when choosing a CD,” she says, adding that “you’ll also need to remember that your initial deposit is also your only deposit, and you cannot make any additional deposits over time.”
Additionally read the fine print on the CD to ensure you know all the fees, penalties and rules. “The point of fine print is that it should be understood before the decision to use a financial product like a CD. Otherwise, there can be regret after the fact if those terms were not fully understood,” says Hamrick.
Gonzalez says you should be sure to see whether the CD charges any monthly maintenance fees or penalties. “A CD will also charge you a significant fee if you withdraw funds before its maturity date,” she adds — so be sure to understand all the details around that. One other area to look our for, adds Hamrick, is Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) insurance.
10 of the best CDs rates of October 2023
Here are the 10 best deposit rates for CDs in October 2023. All of these accounts are protected by either the FDIC or NCUA, unless otherwise noted. Because some financial institutions offer better rates than others, it’s critical to read all of the fine print before opening an account to learn about any potential restrictions or hurdles.
Alpena Alcona Area Credit Union: 7.19% APY for a 7-month CD
Not everyone will qualify for this CD at Alpena Alcona Area Credit Union — depositors here must either live, work, own property, attend school or worship in Michigan to open an account. However, for those who do, they may be eligible to earn the highest available savings rate on the market today at 7.19% APY for a 7-month CD. That said, this rate is also one of the most limited. New account holders must make a minimum deposit of $500 to get started and only a maximum balance of $7,000 can qualify. If that sounds like a match, just note that like with most CDs, there are early withdrawal penalties for taking out your money ahead of the maturity date.
Truliant Federal Credit Union: 6.55% APY for an 17-month CD
Bring at least $5,000 of new money to Truliant FCU and this industry leading rate on a 17-month CD can be all yours. Like with most credit unions, though, you will have to become a member; and where you live means everything. To join, depositors must live in either North Carolina, South Carolina, Virginia, Georgia or Tennessee, or be a member of one of a number of qualified employer groups. Other ways include having an immediate family or household member as part of the credit union.
American Eagle Financial Credit Union: 6.00% APY for a 6-month CD
For eligible members living in Connecticut and Hampden, Massachusetts, this 6-month CD from American Eagle FCU might just be what you’re looking for. If you fit the geographical description, all you need to open an account here and take advantage of one of the best available CD rates is to bring at least $500 and you’re set.
Latino Community Credit Union: 5.90% APY for a 12-month jumbo term certificate
Not everyone will qualify for the minimum account requirement for this jumbo term certificate. That’s because you’ll need at least $200,000 to open this jumbo CD, as well as quality for membership. To join, you will have to open an account with a local branch in one of a select number of North Carolina counties and fill out an online application.
Allin Credit Union: 5.80% APY for a 12-month jumbo term certificate
You’ll need quite a bit of cash to open this 12-month jumbo term certificate from Allin CU. That’s because this leading offer requires depositors to bring at least $100,000 to start an account. This credit union also requires that members be a part of one of 800 businesses and organizations in Alabama, Florida and Mississippi. There are also other more accessible offers for those with smaller deposits. Bring a minimum of $25 and the 12-month Smart Start CD can also be yours as an alternative. Depositors here can also add money to the certificate at any time during the period to earn additional interest.
Finworth: 5.80% APY for an 18-month CD
No membership requirements are needed for this high rate on an 18-month CD. That said, there is a relatively high deposit requirement of $50,000. Also, like with just about any CD, be sure to stick with this one through the full term to avoid an early withdrawal penalty.
Credit Human: 5.80% APY for a 12- to 17-month share certificate
Share certificates with 12- to 17-month maturity terms come with a high APY at Credit Human. You need a $500 deposit minimum to get started and become a member. This means either living, working, worshiping or attending school in Credit Human’s designated service areas in San Antonio or New Orleans. New depositors may also join if they study at one of a select number of trade schools, colleges or universities or have a family member who is also a current member. One additional way is by joining the American Consumer Council.
My eBanc: 5.77% APY for a 12-month jumbo time deposit
Come with the minimum $100,000 required to open a jumbo time deposit and earn 5.77% for a 12-month term. There are no monthly maintenance fees and no membership restrictions to open an account.
TotalDirectBank: 5.76% APY for a 6-month CD
No membership requirements here. Just make the $25,000 minimum deposit by ACH and you’re set. You are also limited to $1 million per CD and must stick with this one through the full term or risk an early withdrawal penalty.
Local Government FCU: 5.75% APY for an 18-month share certificate
Membership is required to access the 18-month share certificate at Raleigh-North Carolina-based Local Government Federal Credit Union. Depositors or their family members here must be an employee or volunteer of North Carolina’s local government, including both elected and appointed officials. But unlike some competitors, this account comes with a highly accessible $250 minimum balance requirement and does not restrict its customers with a maximum deposit limit. That said, LGFCU is insured by the National Credit Union Association, or NCUA, for up to $250,000, so anything above that limit is not protected in the event of closure or failure.
This story originally appeared on Marketwatch
