Why CDs Are Back in the Spotlight
In a financial world dominated by stocks, ETFs, and digital investments, certificates of deposit (CDs) are making a comeback. With interest rates climbing in 2024 and easing slightly in 2025, savers are searching for secure, predictable ways to grow their money. That’s where CDs stand out: they combine safety with guaranteed returns, something investors crave during uncertain economic cycles.
As of August 2025, the best CD rates range from 3.7% to 4.4% APY, depending on term length and bank choice. If you’ve been considering parking your cash in a fixed-rate account, this is an ideal moment to lock in.
Best CD Rates Available Right Now (August 2025)
Here are some of the standout offers across 6-month, 1-year, and 18-month terms:
6-Month CD Rates
- Marcus by Goldman Sachs – offers an attractive 4.4% APY with a minimum deposit requirement of $500. Plus, enjoy the benefits of daily compounding.
- Bank5Connect – 4.4% APY, $500 minimum, monthly compounding.
America First Credit Union offers a member-exclusive account with an attractive 4.35% APY and a minimum deposit of $500.
1-Year CD Rates
- Bask Bank – 4.3% APY, $1,000 minimum.
- Marcus from Goldman Sachs – offers a competitive 4.2% APY with a minimum deposit of $500.
- TAB Bank – 4.1% APY, $1,000 minimum.
18-Month CD Rates
- Popular Direct – 4.16% APY, $10,000 minimum.
- Bank5Connect – 4.15% APY, $500 minimum.
Marcus by Goldman Sachs offers a competitive 4.1% annual percentage yield (APY) with a minimum deposit requirement of $500.
Pro Tip: If you’re just starting, Ally Bank and Barclays are excellent beginner-friendly options since they require no minimum deposit.
What Makes a CD Worth It?
When considering the top CD accounts, remember that APY isn’t everything.
- Savvy savers also pay attention to minimum deposit requirements, which can range from $0 to around $1,000 or more.
- Compounding frequency (daily compounding grows your money faster).
- Withdrawing funds early can result in penalties that may amount to as much as a year’s worth of interest.
- Customer support can vary significantly; while online-only banks may provide higher APYs, they often have limited assistance available.
Short-Term vs Long-Term CD Rates: Which Should You Choose?
- Short-Term CD Rates (6 months – 1 year): Great if you want flexibility or expect interest rates to rise further.
- Longer-Term CD Rates (18 months+): Better if you want to lock in today’s higher APYs before they decline with falling Fed rates.
Currently, 6-month and 1-year CD Rates offer the highest APYs, making them the sweet spot for 2025 savers.
How to Maximize Your Earnings with CD Laddering
A CD ladder is a strategy where you split your savings across different maturity terms. For example:
- $2,000 in a 6-month CD
- $2,000 in a 1-year CD
- $2,000 in an 18-month CD
As each CD matures, you can either reinvest at the new prevailing rate or use the funds for expenses. This approach balances liquidity with higher long-term returns.
Pros and Cons of CD Rates
Pros
- Guaranteed, fixed returns.
- FDIC or NCUA insurance up to $250,000.
- Great for risk-averse savers.
Cons
- Early withdrawal penalties can eat into earnings.
- Minimum deposits may be a barrier for new savers.
- Returns are lower than stocks or mutual funds.
Who Should Open a CD in 2025?
CDs are best suited for:
- Retirees and conservative investors who value stability.
- Short-term savers saving for a down payment or vacation fund.
- Parents and grandparents looking to gift children safe financial products like custodial
Final Thoughts
In 2025, CDs offer an attractive low-risk savings choice with rates reaching as high as 4.4% APY. If you’re not sure whether to commit to a single term, consider building a ladder. And always compare APYs, deposit requirements, and penalties before committing.
Locking in the right CD now could help you ride out the Fed’s rate adjustments while keeping your money safe. CDs.
Frequently Asked Questions About CDs in 2025
1. What happens if I withdraw from a CD early?
If you take money out of a CD before it matures, you’ll face an early withdrawal penalty. This usually means losing several months of earned interest—sometimes up to a year’s worth for longer-term CDs. To avoid penalties, only invest funds you won’t need until the CD’s maturity date.
2. Are CDs better than savings accounts?
Certificates of deposit (CDs) typically provide better fixed annual percentage yields (APYs) than regular savings accounts. However, savings accounts provide more flexibility since you can access your funds anytime. If you’re looking for quick access to your funds, a savings account is the way to go. If you can lock money away safely, CDs typically yield stronger returns.
3. How safe are CDs in 2025?
CDs are considered one of the safest investments because they are FDIC-insured (for banks) or NCUA-insured (for credit unions) up to $250,000 per depositor, per bank. This means even if the bank fails, your money is protected within the insurance limits.
4. Should I choose a short-term or long-term CD?
It depends on your goals. Short-term CDs (6–12 months) are great if you want flexibility or expect interest rates to rise. Long-term CDs (18 months+) lock in today’s APY, which is valuable if rates drop in the future. Many savers use a CD ladder to balance both.
5. Can I lose money in a CD?
No, as long as your deposit is within the FDIC/NCUA insurance limit, your principal is safe. The only way you could “lose” money is by paying early withdrawal penalties if you cash out before maturity.
6. How do I pick the best CD for me?
* Compare these factors before choosing:
* APY (higher is better)
* Minimum deposit requirement
* Term length vs your savings goal
* Early withdrawal penalties
* Compounding frequency (daily beats monthly)
About the Author
