The Federal Reserve Hasn't Changed Rates—But the Highest CD Rate Now Surpasses What It Was Earlier This Month

Main Insights

• Although the Federal Reserve reduced rates three times late last year, the highest CD rate has actually increased from 4.30% to 4.50% this month.

• Banks and credit unions are constantly vying for deposits, and a single attractive offer can quickly set a new benchmark for CD rates.

• Comparing rates is crucial to ensure your savings outpace the current high inflation environment.

Today, the Federal Reserve opted to keep its key interest rate steady, following a series of three rate reductions at the end of last year. Despite this pause since December, the leading certificate of deposit (CD) rate has risen—a surprising development for those who expect CD yields to mirror the Fed’s actions.

Why This Is Important

CD rates don’t always move in direct response to the Fed’s decisions, meaning opportunities for higher returns can arise—or disappear—between official rate changes. By comparing offers from various banks and credit unions, you can avoid missing out on better yields.

Understanding the Recent Rise in Top CD Rates

While the Fed’s benchmark rate typically influences CD rates, they don’t always move in perfect sync. When the Fed aggressively increased rates in 2022 and 2023 to fight inflation, CD yields soared. As the central bank began lowering rates in late 2024 and again last fall, CD returns started to decline.

This makes the recent uptick in the top CD rate particularly notable. Even after three rate cuts in late 2025 and a subsequent pause, the highest national CD rate is now higher than it was just a few weeks ago—rising from 4.30% at the start of January to 4.50% today.

This unexpected increase highlights the competitive nature of banks and credit unions as they seek to attract deposits. Smaller institutions, in particular, may offer standout rates to draw attention. Since it only takes one bank to set a new high, top rates can shift even when the Fed is on hold.

Are Smaller Banks and Credit Unions Secure?

Smaller banks and credit unions are protected by the same federal insurance as larger institutions. As long as the bank or credit union is FDIC- or NCUA-insured, your deposits are covered up to $250,000, regardless of the institution’s size.

The Advantages of CDs in the Current Rate Landscape

CDs remain attractive because they allow savers to lock in yields that are still near historic highs. Even after last year’s rate cuts, the best CD rates are above 4%, giving you the chance to secure a solid return before rates potentially fall further.

By opening a CD now, you eliminate uncertainty about your future earnings and avoid the risk of lower returns down the road. CDs guarantee their APY for the entire term, regardless of future Fed actions. Waiting could mean missing out on today’s higher rates.

Keep Inflation in Mind

With inflation running at about 2.7% in December, cash earning less than that is losing value over time. Seeking out competitive rates can help your savings at least keep pace with, or even outstrip, inflation.

However, most CDs charge an early withdrawal penalty if you take out your money before the term ends. It’s important to choose a CD term that fits your financial plans.

Whether you’re considering a short-term CD of six months, a mid-term option of one to two years, or a long-term CD lasting three to five years, comparing rates is essential. The best CDs nationwide often pay three to five times the national average, with current top rates between 4.00% and 4.50%. To help, we publish the latest leading CD rates every business day.

When a High-Yield Savings Account Might Be Better

If you need easy access to your funds, a high-yield savings account may be more suitable. Unlike CDs, these accounts let you deposit and withdraw money at any time, making them ideal for emergency savings or cash you might need quickly.

However, savings account rates can change at any time, especially if the Fed resumes rate cuts later this year. Still, the best high-yield savings accounts currently offer returns in the 4–5% range—significantly higher than the national average of 0.39% APY (as of Jan. 20, 2026).

For some, a blended approach works best: keep some funds in a high-yield savings account for flexibility, while locking in a CD rate for money you can set aside. This strategy helps balance accessibility with the opportunity to benefit from today’s elevated yields.

No Need to Switch Your Main Bank

You don’t have to move your primary banking relationship to take advantage of top CD or savings account rates. Many people open high-yield accounts at different institutions and manage transfers easily through online banking.