CD Rates Plummet After Federal Reserve Cuts

Certificates of deposit (CDs) have seen their fair share of ups and downs over the years, influenced by factors such as inflation, economic conditions, and Federal Reserve decisions.

The average annual percentage yield (APY) on a one-year CD peaked at 11% in 1984 but plummeted to below 1% after the global financial crisis. It wasn't until 2022 that CD rates started climbing back up with the onset of Fed rate hikes, reaching their current-cycle peak in late 2023 before declining as the Fed lowered its benchmark rate.

According to Bankrate data, the national average one-year CD yield is currently 1.96% APY, while the most competitive banks are offering APYs of up to 4.10% on one-year CDs.