The average yield on a 1-year CD dropped below 1% in November 2009 and didn't hit that level again for roughly 13 years, until December 2022. It wasn't until the following month that rates on 1-year, 2-year, 3-year, 4-year, and 5-year CDs all exceeded 1%.
On average, long-term CDs aren't returning a rate above 2% yet, but higher rates can be found among the best CDs offered.
History of CD rates by year
CD rates: 2009 to 2014
Average CD rates plummeted heading into 2009 as the Federal Reserve dropped rates to close to zero in response to the 2008 Financial Crisis. CD rates stayed low amid a slow economic recovery and low-interest rate environment.
The average yield on a 1-year CD hovered below 0.5% for most of this period while the average rate on a 5-year CD swung from over 2% during 2009 to 0.75% in 2013.
CD rates: 2015 to 2020
CD yields began to pick up in 2017 following interest rate hikes by the Federal Reserve driven by a strengthening economy. That proved to be short lived, as rate cuts in 2019 led to a decline in the average national CD rate.
CD rates dropped rapidly in 2020 as the Federal Reserve slashed interest rates in response to the COVID-19 pandemic.
From 2015 to 2022, the average yield on a 1-year CD never exceeded 0.66%, which it hit in March 2019. The lowest average yield on a 1-year CD in that period was recorded 20 months later in December 2020 at just 0.16%.
The average rate for 5-year CDs experienced an even wilder swing during that time period, going from 1.26% in January 2019 to 0.34% in December 2020.
CD rates: 2021 to 2024
CD rates stayed near historic lows in 2021 as the Federal Reserve kept interest rates low. By the middle of 2022, yields on CDs began to rise as the Federal Reserve began to raise interest rates.
In January 2021, the average rate on a 1-year CD was 0.16%. By September 2024, the average rate was 1.88%. For 5-year CDs, the average rate grew from 0.33% to 1.42%.
Beginning in 2023, the 1-year and 2-year CD rates were on average higher than the average rates for longer-term CDs. This is a reflection of investors and financial institutions believing that interest rate cuts are likely to occur.
That expectation results in banks offering lower rates on multi-year CDs and investors willing to accept them under the assumption that those rates will still be higher than the federal funds rate years in the future. Higher-demand for longer-term CDs can also push those rates down, while leaving shorter-term rates unchanged.
A closer look at our top CD picks
The recent Sept. 18th Fed rate cut is likely the first of several rate cuts over the next year, meaning CD yields are unlikely to get any higher in the next few months. If you have cash sitting on the sidelines, now is a great time to lock into a high-yield CD. Here are some of our favorite options.
