Banks are offering varying CD rates, with some online banks providing rates of 4% APY and up. The highest CD rate currently stands at 4.2% APY, offered by United Fidelity Bank for a 2-year CD. The Federal Reserve has cut its target rate three times in late 2024, leading to a decrease in CD rates.

The Fed recently announced its third rate cut of 2025, and more cuts could be on the way in 2026. While the federal funds rate doesn’t directly impact deposit interest rates, they are correlated. As the Fed lowers rates, financial institutions tend to follow suit, causing CD rates to fall again.

When opening a CD account, research competitive rates, consider account terms, and gather necessary documents like your SSN and ID. Complete the application, which can often be done online, and fund the account by transferring money from another account or mailing a check.

Read more at Yahoo Finance: Best CD rates today, December 25, 2025 (lock in up to 4.2% APY)