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Rates for CD accounts (Certificate of Deposit accounts) greatly depend on the economy and current market trends, but no matter what’s going on with the economy—CD accounts offer a guaranteed return when invested at full maturity.  

Understanding how the rates work can help determine if and when you should open a CD account. We’ll review the current rates, how rates are determined, and how to use CD laddering to fight low-interest rates. 

Lastly, we’ll share how to receive advice on opening CD accounts with a lending expert from a nationally-recognized financial institution.  

Current rates for CDs 

CD account rates tend to be higher than most savings accounts because they’re ‘locked in’ with the investor for a set amount of time. 

The rates for CDs will vary by lender and depend on the economy.  

Currently, you can expect a .30-.40% rate range with a one to two-year CD account. Rates for a five-year term limit are trending around .55%. 

Compared to last year’s average rate for a 12-month CD, rates have increased by 1.37%.  

How do rates affect your CD account? 

CD accounts are a safe way to earn a substantial amount of money, interest included, which is accessible once the account reaches maturity. 

The Annual Percentage Yield (APY) is what makes CD accounts so reliable as you’ll know exactly how much you’ll earn once your account reaches maturity. 

If you’re considering a CD account, you may ask yourself upfront what your potential earnings could be.  

To know how to calculate that on your own you’ll take the minimum deposit amount “X” the APY rate being offered and divide that over the life of the CD account term you’re interested in. 

For example, suppose you deposit a minimum of $2,500 into a CD account with a .35% rate and APY for an 18-month term, you would earn $13.14 after the 18-month mark which gives you, the investor, access to a lump sum of $2,513.14.* 

How rates are determined and why they change 

Two primary factors determine rates: 

  • The length of the account term 
  • Current interest rates 

The length of the account term greatly impacts your rate. The longer you’re willing to invest your money with a CD account, the higher rates you’ll earn. Some banks and financial institutions have various term requirements. Ask your banker which types of terms are available. 

The economy also has a direct impact on CD rates. You can think of CD rates and the economy as doing the tango—when the economy moves, the rates move with it. 

When the economy is experiencing inflation, interest rates tend to be on the incline, which includes interest rates for CD accounts. 

Unbeknownst to some, this is the optimal time to take advantage of CD accounts because you can protect your investment while gaining a higher return on the interest. 

Another benefit of CD accounts? Once you’re locked into a fixed-rate CD account, your rates won’t change, no matter what happens with the economy. 

Additionally, you can still open a CD account when rates are low. Instead of a long-term account, you can opt for a shorter term and roll your account into a new account once rates are higher. 

How to use CD Laddering to fight low rates 

One of the significant advantages of CD accounts is that you can invest in multiple accounts with different terms and rates, also known as CD Laddering. The strategy helps maintain a consistent income source while earning interest when rates are low. 

CD laddering is when you invest in multiple CD accounts with staggered terms and rates that make sense for your financial goals and upcoming needs. For example, you could set up several accounts for one-year terms or every few months. 

Once one of the accounts reaches maturity, you can either withdraw your money or renew the funds into another CD account with better rates. Having both short-term and long-term accounts provides flexibility and security while maintaining access to your money.  

The market is continuously changing from one year to the next, so don’t let low-interest rates hold you back from opening a CD account. You’ll always have the option to reinvest once rates go up again. 

Tips for a good CD rate 

While you can’t control the market, there are some things you can do to receive a higher CD rate and get the most out of your investment.  

Do your research 

Explore financial organizations in your area and compare their rate offerings to see what would suit your needs. Speak with a banker to see if they have any requirements, such as a minimum starting deposit requirement, and how that might impact your rate. 

Keep track of the market trends 

As we’ve discussed, current market trends affect CD rates. If interest rates are trending low, discuss CD laddering with a banker and which rates and terms would align with your financial goals. 

Watch for promotions 

Some financial organizations will offer better rates with promotions to reel in clients or for a set period of time if there’s enough demand. For example, a banker may offer better rates to build a long-term relationship if they see you as a risk-averse investor, or if it seems like more and more investors are investing with CD accounts. 

Get started with CDs at The Federal Savings Bank  

If you’re ready to open a CD account, consider investing with The Federal Savings Bank.  

We offer CD accounts ranging from three months to five years with advantageous rates. 

We’ll work with you side-by-side to set up your financial plan with the right account, or accounts.  

Check out our current rates and get started with us for easy, simple banking today. 

*This example is not reflected in current APY rates or minimum deposit amounts offered by The Federal Savings Bank. To see our current offered rates visit  

This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to you individual situation.