Deposit account rates are declining, but you can secure a competitive return with a certificate of deposit (CD) today. The best short-term CDs offer rates around 4% to 4.5% APY. The highest CD rate currently is 4.1% APY, offered by Marcus by Goldman Sachs and Sallie Mae.

In the 2000s, CD rates were higher but fell after the financial crisis in 2008. By 2009, average one-year CD rates were around 1% APY. The trend continued into the 2010s, with low CD rates. However, rates improved between 2015 and 2018 as the economy expanded.

Following the COVID-19 pandemic, the Fed raised rates 11 times between March 2022 and July 2023, leading to higher CD rates. In September 2024, the Fed started cutting rates, causing CD rates to decrease. Despite this, CD rates remain high by historical standards.

Traditionally, longer-term CDs offered higher rates, but the highest average CD rate today is for a 12-month term. This indicates a flattening or inversion of the yield curve. Consider your goals, financial institution, account terms, and inflation when choosing a CD.

When opening a CD, consider the length of the term and potential penalties for early withdrawal. Research rates from various financial institutions, including online banks, which often offer higher rates. Understand the maturity date, withdrawal penalties, and minimum deposit requirement before investing in a CD.

Read more at Yahoo Finance: Lock in up to 4.1% APY today