Best CD Rates for November 2023

A CD’s rate is the annual interest you’ll earn, which is usually expressed as an annual percentage yield (APY). Your CD rate is heavily influenced by the Federal Reserve’s national deposit rates, which increased throughout 2022. Within the first two months of 2023, the upward trend is continuing.

The national average interest rate for CDs, also known as the national deposit rate, is 1.36% for a one-year CD, 1.22% for a three-year CD and 1.26% for a five-year CD. These are the average rates as of Feb. 21, 2023, and are subject to change regularly.

Most issuers competitively offer above the national average interest rate. And typically, the longer your term length, the higher your interest rate.

The type of CD you choose will also influence your rate. There are different CD types, each with unique features to cater to your retirement goals.

For example, with most CDs, you’ll face a penalty if you try to access your money before it’s maturity date. But if you purchase a no-penalty CD, you’ll be able to tap into your funds without facing the penalty.

However, since this CD is less risky than a traditional CD, you should expect a lower interest rate. Generally, the safer the investment, the lower the interest rate.

Below is a table comparing average interest rates with several different CD types. Remember that these are general projections, so the average interest rates will likely vary by issuer.

You shouldn’t try to force a CD into your retirement portfolio if it doesn’t fit. While CDs are a safe and secure investment, they don’t offer as high of returns compared to other options, such as stocks.

You also can’t typically tap into your money once it’s invested in the CD. If you predict you might need your money before the CD reaches maturity, it would be best to consider a more liquid option.

However, if you find a specific CD type that fits your needs, there is little to no risk of adding a CD to your investment portfolio. Learn how CDs work within your retirement plan to determine if it’s right for you.

CD rates act as a secure anchor with little to no risk for your retirement plan. With most CDs, the rate is locked in until it reaches maturity, which means you have guaranteed interest to rely on. Your initial investment and interest are also protected by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 if issued by a bank. If you get your CD from a credit union, your deposit is insured up to $250,000 by the National Credit Union Administration.

On the other hand, there are many high-risk, high-reward investments you can add to your portfolio, such as stocks and cryptocurrency. While these options can add a hefty boost to your retirement funds, they also risk losing money.

Your CD can help you combat high inflation by allowing your money to grow at a set rate. Keep in mind that some CDs, like bump-up or step-up CDs, allow you to adjust your interest rate during your term.

Bump-up CDs allow you one chance to bump up your interest rate, while step-up CDs have a predetermined schedule of multiple increases throughout the term. If you want flexible rates as a feature within your retirement plan, you could consider a bump-up or step-up CD.

The term length, potential penalty fees and type are all factors to consider when selecting a CD. Your term length and CD type determine your CD’s rate. Typically, the longer your CD’s term length is, the higher your interest rate is. The longer you commit to leaving your money untouched, the more risk you take, which is why you receive the higher rate.

Barbara O’Neill, CFP®, CEO of Money Talk and author of Flipping a Switch offered advice on which type of CDs offer the best rate. “Right now, the best rates available are through brokerage CDs. It’s not unusual to see brokerage CDs paying 4.5%, or even close to 5% interest. “

As for penalty fees, if you tap into your CD before it matures, you will face an early withdrawal penalty. Penalties vary depending on your issuer. For example, with Capital One Bank, the penalty will cost you three months of interest for a CD with a maturity of one year or less.

If you think you have a high chance of needing to access your money early, you could consider a no-penalty CD. Your initial rate will likely be lower than a traditional CD, but you won’t risk losing any of your interest due to a penalty.

You can maximize your certificate of deposit rates by laddering CDs, browsing competitor rates before opening a CD, and keeping track of maturity dates.

When asked for tips about finding a good CD rate, Valadez told RetireGuide, “Don’t just walk into your bank that you use for your checking or savings accounts. Due to advances in technology, you can open accounts with various banks online in a matter of minutes and purchase their CDs. You’ll want to shop around — but always read the fine print and understand penalty structure, withdrawal rules, etc.”

If you’re wary about CDs giving you the high rates you want for your retirement portfolio — you can always consider higher risk investment options. That being said, you shouldn’t choose only low-risk, or only high-risk investments for your portfolio. You could consider a mix of both low-risk and high-risk investments, so you retain some security with room for growth.