CD Rates Hold Above 4% APYs as the Federal Reserve Pauses

CD rates at the country’s largest banks cluster around 1.65% APY, the FDIC’s June 2026 national average for a 12-month CD. At the top of the market, two credit unions are paying 4.25% APY on the same term, with the highest 9- and 60-month offers clearing 4.10% to 4.20%. The Federal Reserve left its benchmark rate unchanged at 3.50% to 3.75% on June 17, 2026, the fourth consecutive hold, and the median policymaker now expects a quarter-point increase by year-end. Top yields have held steady through the pause, leaving savers to decide whether today’s offers are the ceiling or the floor.

The Spread That Keeps Pulling Savers In

The FDIC’s National Rate and Rate Cap table posted June 15, 2026, lists the 12-month CD at 1.65% APY, the 24-month at 1.53%, and the 36-month at 1.33%. Those averages reflect what a saver earns when a generic deposit product is the default, and they pull in thousands of banks with thin rates. At the top of the market, Investopedia’s daily tracker of more than 200 banks and credit unions had the highest nationally available 1-year CD at 4.25% APY on July 6, 2026. First National Bank of America sits at 4.25% APY on a 120-month term with a $1,000 minimum, and E*TRADE from Morgan Stanley posts 4.10% APY on a 9-month CD with no minimum deposit.

The gap is wider at the long end of the curve. TAB Bank pays 4.20% APY on a 60-month CD. CBS News’s June 2 roundup of CD Valet data set the top end of the market at 4.10% to 4.15% APY across the most generous institutions. Each of those offers runs more than double the FDIC’s 12-month average, a spread the average itself cannot capture.

That split reflects the cost structure of how each institution gathers deposits. Large banks can fund themselves through checking accounts, consumer loans, and corporate deposits, so the marginal cost of a new CD is low. Smaller players and digital-only banks have to outbid the giants to win deposits they cannot pull in through branch convenience.

• $250,000: FDIC and NCUA insurance cap per depositor per institution.
• 4.10% to 4.15%: Top end of the CD market cited by CBS News in early June 2026.
• 57% to 43%: Split between recent CD rate increases and cuts, per CD Valet.
• Three months: Typical early-withdrawal penalty on a 12-month CD.
• $0: Minimum deposit on E*TRADE from Morgan Stanley’s 9-month CD.

Why the Federal Reserve Stopped Cutting Rates

The Federal Reserve left its benchmark rate unchanged at 3.50% to 3.75% on June 17, 2026, the fourth consecutive meeting at which the Federal Open Market Committee has voted to hold. The unanimous decision came after May inflation data hit a three-year high. The Fed’s quarterly Summary of Economic Projections now shows a median expectation of a quarter-point increase by the end of 2026. New Fed Chair Kevin Warsh, who took office as chairman of the Board of Governors of the Federal Reserve in May 2026, declined at his first press conference to offer any forward projection of his own, citing his long-held skepticism about how the SEP is constructed.

CD rates now respond more to bank competition for deposits than to the Fed’s headline rate. About 57% of the CD rate changes tallied by CD Valet were increases, while 43% were cuts, a tilt that held through the late spring of 2026. Mary Grace Roske, head of marketing at CD Valet, told CBS News that after trending downward earlier in the year, rates have started to level off as banks respond to mixed economic signals and a lack of movement in rate changes by the Federal Open Market Committee.

The Penalty Most Shoppers Underestimate

The trade for a higher headline rate is restricted access. Pull money from a 12-month CD before it matures and the bank keeps roughly three months of interest. For a two-year CD the typical penalty is six months of interest, and for a five-year CD about 8.5 months, the schedules documented in a UCLA Anderson Review analysis of nearly 17,000 bank CD lineups. Yet the same research, by Matthias Fleckenstein and Francis Longstaff, found that even after paying the listed penalty, savers who picked longer-term CDs at more than half the banks in the study netted more interest than customers who stayed short. The penalty was rarely severe enough to undo the rate advantage.

Penalties also take different forms at different institutions: a fixed number of months of interest at most banks, and a forfeit of all earned interest at a smaller group that hits harder if cash is pulled early in the term. Among the leaders on Investopedia’s 1-year board, early-withdrawal penalties range from three months of interest up to all earned interest, with credit unions and online banks tending to sit on the steeper end of the spectrum. The penalty is the one number that the headline rate sheet often obscures, and it shows up only in the disclosure a saver signs at account opening.

For shoppers who need access before the term ends, the penalty is the reason a no-penalty CD or a high-yield savings account belongs on the same comparison list, with the rates on each side priced against the cost of cashing out early.

By locking in rates now, savers buy insurance against future rate declines, protecting their yields if the Fed resumes rate cuts later this year.

Alastair Wood, CEO of Raisin, made that case to CBS News. The federal funds rate has not been cut since late 2025, and the Fed’s June projections point to a possible quarter-point hike by year-end rather than a cut, leaving the lock-in case resting on what the bank pays for the term versus what the FOMC does next.

How a CD Ladder Balances Rate and Access

A CD ladder spreads a single deposit across several maturities, so one slice becomes available every few months while the rest stay locked at higher rates.

Right now, shorter- to mid-term CDs are particularly competitive. A smart strategy is to use a CD ladder, which spreads funds across different terms to balance strong yields with flexibility.

Amanda Erebia, director of retail banking at Amegy Bank, made that case to CBS News. CD Valet’s data sets the most competitive rates of the last month on 12-, 24-, and 36-month terms, the same maturities most ladder strategies lean on. A standard ladder might split a $30,000 deposit across a 6-month, 12-month, and 18-month CD. As each rung matures, the saver rolls that piece into a fresh long-term CD if rates have risen, or back into liquid savings if the Fed’s path has reversed. The mechanic keeps a saver from betting the entire stack on a single rate call.

The Best CD Rates by Term

The national rate tables are led by online banks and digital-first credit unions; the brick-and-mortar giants trail. Branch networks cost money, and the savings get passed back to the saver. Credit unions post some of the highest rates because they are non-profits, but membership rules typically apply, often a one-time donation to an affiliated foundation plus a nominal savings balance.

CoVantage Credit Union of Antigo, Wisconsin, and Abound Credit Union, formerly Fort Knox Civilian Employees Federal Credit Union, both sit at 4.25% APY on the 1-year term. CoVantage requires a $10 fee to join the CoVantage Cares Foundation and a $10 minimum in a member savings account. Abound asks for a $20 combined membership donation and a $5 savings balance. Both are NCUA-insured up to $250,000 per depositor, the same federal backstop that FDIC-insured banks carry on their CDs. For shorter terms, CDs paying above 4 percent at smaller institutions can be easy to find, but the rates shift at every monthly rate-cap update. For the deposit insurance picture behind those yields, the walkthrough on whether bank deposits are still safe in 2026 covers the FDIC and NCUA limits in detail.

The offers above come from Fortune’s July 2026 roundup of the best CDs, reviewed May 29, 2026. The FDIC’s monthly rate cap refresh lands on the third Monday of every month, with the next update arriving July 20, 2026, and the 1-year line on that table will set the bar for the national average as the summer unfolds.

Three Signals That Could Move CD Rates

The FDIC reports new national rates on the third Monday of each month. The line to watch is the 12-month CD column, since most savers land on that term.

Three signals will move CD rates between now and the end of 2026: the next FOMC meeting’s signal on cuts versus hikes, the inflation prints that follow it, and the rate-change data CD Valet publishes weekly. The Fed currently holds at 3.50% to 3.75%, the median SEP points to a quarter-point hike rather than a cut, and the CD rate-change tilt runs 57% up to 43% down. For shoppers weighing a CD against savings, money market accounts pushing yields higher are the parallel option when access matters more than term.

Frequently Asked Questions

How much do CDs pay in 2026?

The FDIC national average for a 12-month CD was 1.65% APY as of June 15, 2026. The highest nationally available 1-year CD paid 4.25% APY on July 6, 2026, with top 9-month and 60-month offers clearing 4.00% to 4.20% APY.

Are CDs safe if the bank fails?

Yes. CDs at FDIC-insured banks and NCUA-insured credit unions are federally protected up to $250,000 per depositor per institution, per account ownership category. Coverage beyond that requires splitting funds across different ownership categories or different institutions.

What happens if I withdraw from a CD early?

Most banks charge a penalty of roughly three months of interest on a 12-month CD, six months on a 2-year CD, and about 8.5 months on a 5-year CD. No-penalty CDs waive the fee in exchange for a slightly lower headline rate, and they often require an initial minimum deposit of $1,000 or more.

Should I open a CD now or wait?

With the Federal Reserve on pause at 3.50% to 3.75% and the median FOMC projection pointing to a quarter-point increase by year-end, current top offers of 4.10% to 4.25% APY remain competitive. Locking in now buys protection against any cut that could come in late 2026 if inflation cools faster than projected. Waiting accepts the risk that top offers ease back as deposit competition cools.

What is the difference between a CD and a high-yield savings account?

A high-yield savings account lets you withdraw at any time and pays a variable rate that tracks the bank’s response to the Fed. A CD locks both the rate and the term in exchange for a higher APY, with early access costing a months-of-interest penalty at most institutions.

How does a CD ladder work?

A ladder splits a deposit across several CDs with staggered maturities, such as 6, 12, and 18 months. As each CD matures, the saver either rolls the principal and interest into a new long-term CD or moves it to a liquid account, preserving access while smoothing rate exposure.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. CD rates, federal funds rate decisions, and FDIC/NCUA insurance terms change over time. Verify current details directly with the issuing institution before opening an account. Figures cited are accurate as of publication.