Best CD Rates of April 2023

The best CD rates can help you earn more money than you could with a savings account, though there is a trade-off in accessibility. Most banks offer a variety of terms to choose from, with options typically ranging from six months to five years. Here's a look at which banks offer some of the best CD rates today for some of the most popular terms.

A certificate of deposit (CD) is a type of FDIC-insured deposit account offered by many banks and credit unions that usually has a fixed interest rate over a certain number of months or years. CD interest rates are often higher than what you find with most savings accounts, but they carry the stipulation that you must not touch the money until the CD term is over. If you withdraw the funds early, you pay a penalty, though some banks allow a CD loan (a loan secured by the money you already have in your CD).

You deposit a certain amount of money into a high-yield CD and agree not to touch it for the length of the CD term in exchange for a high rate of interest that's usually locked in for the full term. Your bank pays that interest monthly or quarterly, and when the CD term is up, you may withdraw the funds and spend them, place them in a savings account, or put them in another high-interest CD. 

Withdrawing your funds before the CD term ends results in a penalty -- usually several months' worth of interest. The earlier you withdraw the funds, the larger your penalty will be.

CDs are safe in the sense that you cannot lose money if you follow the rules. These accounts are backed by the FDIC insurance for up to $250,000 per person per bank, so your money is safe even if your bank goes under. 

The only time you can lose money is if you withdraw your funds before the CD term is up. Usually, this just costs you some of the interest you've earned. But if you haven't yet earned enough interest to cover the penalty, your bank may take some of your principal as well. So make sure you're comfortable leaving your money in the CD for the full term before committing to one.

RELATED: What Is CD Laddering? CD laddering can help you optimize your interest earnings. Head to our guide to see if this is the right strategy for your portfolio.

Online banks overwhelmingly offer the best CD interest rates when compared to larger brick-and-mortar traditional banks. In fact, some of our favorite online banks' current CD rates are multiples higher than what you'd find with a national bank.

We've rarely seen a reason to invest in CDs with a brick-and-mortar national bank, especially when online banks offer the same FDIC insurance protection.

If looking to compare CD rates, we suggest reviewing some of the current rates on CDs at the following financial institutions:

• Discover CD rates
• Capital One 360 CD rates
• Ally CD rates
• Marcus by Goldman Sachs CD rates

Pay attention to the following factors when comparing the best CD rates today to find the one that's right for you:

APY: The APY tells you how much you'll earn in interest.

CD term: The CD's term is the length of time you agree to not touch your money. It can range from one month on the short end to six years or more on the long end. Most range from six months to five years. You'll usually find the longer the CD term, the higher the interest rate.

Minimum deposit: While some of the highest CD rates have no minimum deposit, others may require a few hundred to a few thousand dollars. Some jumbo CDs may have five-figure minimum deposit requirements.

Fees: Fees with CDs aren't common, except for early withdrawal penalties, discussed below. But it's good practice with any bank account to look into its fees to see if there are any costs associated with the account.

Penalties: You'll pay a penalty -- usually several months' worth of interest -- to withdraw your funds ahead of schedule. The exact penalty will depend on how early you withdraw the funds. This should all be outlined in the CD's fee schedule.

When interest compounds: Some CD accounts compound interest monthly, but most compound daily. Daily compounding is better because it gives you more money in interest.

How interest is paid to you: Most CDs add the interest you earn to your account balance, but some give you the option to have your interest paid directly to you. If you go this route, you can reap some of the benefits of your CD immediately. But bear in mind that if you leave the money in your account instead, you can earn interest on your interest, which leads to more money overall.

What happens at the end of your CD term: Some banks automatically enroll you in a new CD of the same term length unless you specify that you want to do something different. It's usually a bad idea to let your bank open a new CD for you. Watch out for this and make sure you tell your bank what you want to do with your money instead.

FDIC or NCUA insurance: CD accounts offered by banks should carry FDIC insurance so your money is protected up to $250,000 per person per account. NCUA does the same thing for share certificates offered by credit unions. Most CDs will have the appropriate insurance, but it pays to be sure.

How often rates are raised: Step-up and bump-up CDs occasionally raise your rates. If you're interested in one of these, pay attention to how often you or the bank can increase the rate when you compare CD rates.

Whether it's callable: Some CDs are callable, which means the bank can call it back from you at some point and reissue you a new CD, possibly at a lower rate.

Fixed-rate CDs are the most popular offerings, and bump-up CDs are worth considering as well. If you're considering opening a CD, here's a scenario-based analysis of when it may be the right time to open one of these CD accounts:

It's best to wait to take action on opening a fixed-rate CD when interest rates are increasing to avoid locking in a low rate. Bump-up CDs have more flexibility, but they can still be the wrong choice if rates are rising rapidly because you can usually only request a rate increase once per term and might miss out on better rates later.

CDs are appealing if you're trying to earn a high rate on your savings, but the fact that you cannot touch your money for a set amount of time can be too constraining for some people. If you don't think a CD is a great fit for you, perhaps one of these accounts would work better.

High-yield savings accounts: These accounts offer interest rates that are comparable to the highest CD rates, and they have fewer restrictions on what you can do with the money. You're able to put money in and take it out whenever you want, though some banks may limit you to six withdrawals per month.

Below are some examples of high-yield savings accounts. For our top picks right now, head over to our Best Savings Accounts page.

Money market accounts: These are a hybrid of checking and savings accounts. They offer interest rates similar to high-yield savings accounts and certificate of deposit rates, but they also give you a debit card and check-writing capabilities so you can directly withdraw funds from your account. This might be a better option than a high-yield savings account or a CD if you anticipate needing to take money directly out of your account.

Below, we've listed some examples of money market accounts. You can find our top picks on our Best Money Market Accounts page.

CD rates will likely go up in 2023, but it's not guaranteed. If there are increases, expect them to be smaller than last year, when the Federal Reserve raised interest rates seven times. The Fed has signaled that it anticipates ongoing rate hikes in 2023, but some officials believe it will scale back on the size of these rate hikes.

Timing when to purchase a CD is always difficult. The best CD rates are high right now, but they could continue to go up. We suggest being cautious and potentially opting for a bump-up CD.

CDs are a flexible savings option in that the terms range from months up to 10 years, making them valuable for depositors with an array of short- and long-term needs. Here are the most common CD terms: