Will CD Rates Ever Be 5% Again?

Just a few months ago, it wasn't hard to find certificates of deposit (CDs) offering 5% or more. For savers, it felt like a return to the good old days -- safe, steady returns with zero risk.

But as of spring 2025, those rates are starting to fade. Many banks have pulled back, and top CDs are now hovering around 4.00% to 4.50%, depending on the term.

So will we see 5% CD rates again anytime soon? Here's what you need to know.

Why did CD rates hit 5% in the first place?

The 5% CD phenomenon wasn't random -- it was tied directly to the Federal Reserve's aggressive interest rate hikes throughout 2022 and 2023. In an effort to fight inflation, the Fed pushed its rate to the highest level in over 20 years.

When the Fed raises interest rates, banks often follow suit by increasing what they offer on savings products like CDs to stay competitive. That's how 5% and higher CD rates entered the scene.

But those days may be behind us -- for now.

Where CD rates stand now

As of April 2025, most top CDs are offering between 4.00% and 4.50% APY.

Here's a quick snapshot of what you might find today:

• 1-Year CD: ~4.30% APY
• 3-Year CD: ~4.10% APY
• 5-Year CD: ~4.00% APY

CD rate ranges vary by CD term. Check out our list of the best available CD rates to make sure you're getting the best rate for the term you seek.

Will CD rates go back up?

To get back to 5%, we'd likely need to see the Fed raise rates again. But right now, the opposite appears more likely.

Inflation has been cooling steadily, and many economists expect the Fed to begin cutting interest rates in the second half of 2025. If that happens, CD rates will almost certainly slide lower as well.

Bottom line? While 5% CD rates could return in the future, it would likely take a spike in inflation or a new economic crisis -- neither of which are things we'd root for.

Could tariffs push CD rates back up?

There's one wildcard that could shake things up: President Donald Trump's new round of tariffs. In April 2025, the administration announced broad tariffs aimed at reshaping the global trade landscape. While the goal is to boost American manufacturing, tariffs often lead to higher prices on consumer goods -- which can fuel inflation.

If inflation ticks back up, the Federal Reserve may be forced to pause or reverse expected rate cuts. And if rates rise, banks could once again raise CD yields to stay competitive.

This makes the outlook a bit more uncertain. While 5% CD rates aren't the baseline expectation, they aren't off the table, especially if tariffs keep inflation hotter than expected.

What should savers do now?

If you've been waiting to lock in a CD until rates hit 5% again, it might be time to adjust your strategy.

Rather than chasing a rate that may not come back soon, consider these moves:

• Grab a solid 1-year CD now while rates are still elevated. Even if it's not 5%, 4.25% or more is still historically strong.
• Ladder your CDs: Spread out your money across different terms so you're always taking advantage of the best available rates.
• Check out high-yield savings accounts: High-yield savings accounts currently offer rates similar to CDs and you don't lose access to your money.