Savings account rates have been sliding for months, but certificates of deposit are holding up better than most people realize.
According to recent data, the top nationally available one-year CD rates are still sitting above 4% APY, while the average savings account pays closer to 0.4%.
That gap is money most households are quietly leaving on the table.
The reason CDs haven't fallen as fast comes down to how banks compete for deposits.
When loan demand stays steady and banks need cash on hand, they keep CD offers attractive even as the Federal Reserve holds rates flat.
Online banks and credit unions tend to lead the pack because they don't carry the overhead of branch networks.
Here's what the landscape looks like right now.
One-year CDs from top online banks are clustered between 4.00% and 4.50% APY.
Two-year terms are running a bit lower, often 3.75% to 4.25%.
Five-year CDs have dropped the most, with many now under 3.50%.
In other words, the sweet spot for most savers is short.
At 4.25% for twelve months, you'd earn about $425 before taxes.
The same money in a typical big-bank savings account at 0.40% earns roughly $40.
That's nearly $400 you could redirect toward groceries, a car repair, or an emergency fund top-up.
There are trade-offs worth knowing before you lock anything in.
Most CDs charge an early withdrawal penalty, often three to six months of interest.
If there's any chance you'll need the cash sooner, a high-yield savings account or a no-penalty CD gives you more breathing room for a slightly lower rate.
Also check whether the rate is promotional.
Some banks advertise a headline APY that only applies to a limited deposit amount, or that resets after a few months.
Read the fine print on minimum balances, automatic renewal terms, and whether the rate is fixed for the full term.
Laddering is a simple strategy that works well in this kind of market.
Split your savings into a few CDs with staggered maturity dates — say six months, one year, and two years.
You capture today's higher short-term rates while keeping some money accessible every few months.
When each CD matures, you decide whether to roll it into a new one or use the cash.
One more thing: confirm your bank is FDIC-insured, or NCUA-insured if it's a credit union.
Coverage is $250,000 per depositor, per institution, per ownership category.
That protection is the main reason CDs make sense for money you can't afford to lose.
The window on 4% CDs won't stay open forever.
If the Fed eventually cuts rates, banks usually trim CD offers within weeks.
If you have cash sitting in a low-yield account and you won't need it for a year, moving a portion into a short-term CD is one of the simplest financial moves available right now.
Final Thoughts
Just don't lock up your entire emergency fund to chase an extra fraction of a percent.