With potential rate cuts on the horizon, here’s what pros say you’ll need to know before opting for a certificate of deposit.

Despite nods towards interest rate cuts from the Federal Reserve in 2024, certificates of deposit (CDs) are still delivering high-earning potential to qualified depositors in the third month of the year. All of the highest-earning accounts in March 2024 promise rates of more than 5.5% annual percentage yield (APY), with the top two exceeding 6% APY (see below for details).

But Bankrate Chief Financial Analyst Greg McBride says the end of these eye-popping interest rates may soon be near. “We’ll see further declines as the year progresses and at an accelerating pace as we get closer to the timetable of a Fed rate cut,” McBride says, adding that “there is no sense holding out expecting to get a better yield later.”  (You can see some of the highest-paying CDs you may get now here.)

What’s ahead for CDs? 

In the past two years, CD’s have recorded steady rate increases to levels not seen in decades. To be sure, the average CD with a 12-month term carries a rate of 1.83%, according to Federal Deposit Insurance Corp. (FDIC) data through Feb. 20. This time in 2022, however, the same term lengths carried an average rate of just 0.14%. And while that change represents a roughly 1,200% increase over the period, some of today’s highest yielding CDs promise rates more than three-times that amount — at levels not seen since the 1990s, according to Forbes data.

And while the past two years have been indeed lucrative for those who locked in those rates, industry pundits generally point to declines at some point this year. To be sure, a recent poll from Reuters suggests the Federal Reserve will likely wait until the second quarter before making rate cuts this year, while a recent Bankrate survey found that 93% of experts expect the central bank will do so before the year’s end. J.P. Morgan Wealth Management’s 2024 outlook goes as far to predict as much as “125 basis points of cuts this year” starting as soon as June. 

Nerdwallet finance expert Elizabeth Ayoola adds that although many of the leading offers are still touting well above 5% APY, many financial institutions have already dialed back their rates. “Fed conversations have shifted from rate increases to race cuts over the past couple of months,” Ayoola says. “If cuts do happen at some point this year, consumers could see CD rates trend downwards, something we’re already noticing with online banks and credit unions.”

How to choose the right CD (and avoid interest-depleting penalties)

For those who can afford to lock their money away for the entirety of a top-earning CD’s promised term length, McBride says now might very well be one of the last chances to earn these high rates. (You can see some of the highest-paying CDs you may get now here.)

“CDs are great for cash needs at a specific point in the future, for generating predictable interest income, or as a way to diversify and reduce risk in a broader portfolio,” McBride says, adding, however, “if you lack sufficient emergency savings or aren’t sure if you can tie money up for any length of time in a CD, opt for a high-yield savings account or money market account where you can earn competitive returns while maintaining access to cash when you need it.”

Like with most savings products, earning the highest rates does not come without risks. The biggest consideration, says Michael Most, principal wealth manager at Savvy Advisors, are potential interest-depleting early withdrawal penalties. “This becomes crucial in unforeseen circumstances where access to funds before the maturity date becomes necessary,” Most says.

To be sure, most CDs with terms of two years or less carry early withdrawal penalties equal to 90 days of simple interest earned on the amount you take out, according to a report from The Motley Fool. Those with terms that are greater than 24 months, however can be much more: on average, these penalties are often around 180 days of simple interest. 

10 of the best CDs rates of March 2024

Here are the 10 best rates for CDs in March 2024. All of these accounts are protected by either the Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA), unless otherwise noted. It’s critical to read all of the fine print before opening an account to learn about any potential restrictions or hurdles. 

And since nearly all of the leading rates are found at credit unions with membership requirements that render most readers ineligible, we’ve also included a ranking of the five most accessible CD rates this month below.  

Financial Partners Credit Union: 6.50% APY 

The eight-month promotional certificate at Financial Partners Credit Union is the reigning interest-rate leader this month. That said, its high 6.5% APY only applies to balances from $1,000 to $5,000 for new members in the counties of Los Angeles, Orange, Riverside, or San Diego; the city of South San Francisco; and the city of Alameda, Calif.

Resource One Credit Union: 6.17% APY

You’ll need at least $500 to open this 12-month CD at Resource One. Like with most certificates, you will not be able to make additional deposits throughout the term and stand to face early withdrawal penalties for taking out your money early. Like with most credit unions, you’ll also need to become a member, which means either living or working in Dallas or Northwest Harris counties in Texas, or within a 10-mile radius of its Carrollton, Texas branch. Other ways to gain access is by working for one of its select employer groups or if a family member is already a member.

Merchants Bank of Indiana: 5.92%

Make the $1,000 account minimum deposit and maintain that amount every day to earn one of the highest available rates on either a 12-, 24- or 36-month flex index CD at Merchants Bank of Indiana. At 5.92% APY, these accounts are based on the prime rate index and could potentially increase if the Fed were to raise rates in the future. Like with traditional CDs, though, these accounts will also charge a penalty for early withdrawals. 

Vast Bank: 5.75% 

Deposit and maintain a $2,500 balance and you can earn a high 5.75% APY for Vast Bank’s promotional 6-month CD. There is also a high $10 million deposit limit, so this option will also work well for high-net-worth individuals. Just be sure to keep an eye on the term because this account auto renews at market rate once it reaches maturity. 

Local Government FCU: 5.75% APY

There is a low $250 deposit minimum requirement to open a share term certificate at Local Government FCU. For accounts with 18-month maturity dates, one-time balances beyond that amount promise a high 5.75% APY. This rate, however, is only available to members of this Raleigh, N.C.-based institution. Depositors or their family members here must be an employee or volunteer of North Carolina’s local government, including both elected and appointed officials. 

Andrews Federal Credit Union: 5.75%

Come with just $1,000 and you might be eligible for one of the highest available CD rates on the market today. That’s because the six-month share certificate for new members at Andrews FCU is delivering a 5.75% APY for the term. To become a new member, this credit union only admits those who work for one of a dozen eligible employer groups based in either Maryland, Washington D.C., Virginia or New Jersey, as per the credit union’s membership requirements. However, if you are not employed by one of the listed groups here, the credit union says anyone can qualify through the American Consumer Council.

Hughes Federal Credit Union: 5.65%

A 17-month jumbo certificate at Hughes FCU delivers a high 5.65% APY for sticking to the full term. Like most jumbo certificates, you’ll need to deposit the minimum $99,000 to get started. Because it’s a credit union, you’ll also need to meet the restrictive eligibility requirements. That means living, working, worshiping or attending school in Tucson, Ariz. You can also join if you work for an eligible employer or if your immediate family members are already members. 

Newtek Bank: 5.63%

Open a 24-month variable rate CD and you can start earning 5.63% APY at Newtek bank. What’s the catch? First, you must have at least $50,000 ready to deposit into your new account. Also, unlike a traditional CD, the rates attached to this variable rate product may fluctuate based on future market conditions after the account is open.

Space Coast Credit Union: 5.61% APY

With a low $500 required opening deposit, the 12-month CD at Space Coast CU earns a high 5.61% APY. Whether you plan on opening an account for yourself or for a child, like with most credit unions, you will have to become a member. That means either living or working in one of several select counties in Florida, or if you have a family member who is already a member.

Lafayette Federal Credit Union: 5.61% APY

If you have a larger amount to deposit into a certificate account, this jumbo one-year term can earn a high 5.61% APY. You’ll just need to meet the minimum $100,000 requirement and become a member. Lafayette FCU is available to those who live, work or worship in the Potomac, Md. region, or in select parts of Washington D.C. You can also join if you work for one of the credit union’s select employer group businesses, if you’re a member of the American Consumer Council living in Maryland, Virginia or Washington D.C., or if you have a family member who is already a member. If you don’t meet those region-specific requirements, however, you can also join if you become a member of the non-profit Home Ownership Financial Literacy Council anywhere in the U.S.

5 most accessible CDs rates of March 2024

OK, so any of the rates associated with those top offers come with highly restrictive membership requirements. That’s why we’ve also pulled together some of the highest earning, and most accessible CDs of the month, as well. The top five accounts below sidestep regional restrictions, membership requirements, and all include attainable opening balance requirements of $1,000 or less. 

BMO Alto: 5.50% APY

There are no minimum balance requirements to open this high-earning 6-month CD at BMO Alto. Just sign on and fund your account within the 10-day grace period and earn a high 5.50% APY fixed rate. For a longer term certificate, the bank’s 12-month CD also offers a high 5.30% APY with the same terms. 

SkyOne Federal Credit Union, powered by Raisin: 5.40% APY

If you’re looking for a short-term CD, the 5-month option from SkyOne Federal Credit Union might just be what you’re looking for. Since this is powered through savings platform Raisin.com, there are no membership restrictions or deposit minimums to get started. 

First Internet Bank of Indiana: 5.36% APY

If you have at least $1,000 available to deposit, this 12-month CD from First Internet Bank of Indiana might just be one of the best options out there right now. That’s because deposits here that meet that minimum threshold earn 5.36% APY for a 12-month term.

Western Alliance Bank, powered by Raisin: 5.36% APY

Like most CDs offered through Raisin.com, the 3-month CD at Western Alliance Bank requires just $1 to get started and comes with no membership requirements or hidden strings. Just join online and you’re set.

BrioDirect: 5.35% APY

Bring as little as $500 and you’re eligible for this promotional 12-month high-yielding CD at BrioDirect. That’s because balances here earn 5.36% APY, one of the highest rates on the market today. Just be sure to watch your terms because this one automatically renews at maturity.

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