Want to earn a guaranteed 4%-4.75% on your money? While this savings vehicle hasn’t been that popular in recent years, pros say it’s now worth another look

Looking for a safe place to park your money with a guaranteed return of sometimes 4.5% or more?  While certificates of deposit, or CDs, haven’t been a super popular investment recently — fewer than 1 in 5 respondents to a recent MagnifyMoney survey of 1,025 Americans had one — they might be a good option now. (CDs are savings vehicles that pay a fixed interest rate on a fixed sum for a set period of time — and recently we’re seeing them pay far more.)

“If you’re shopping around for the top-yielding CDs, you’re seeing yields of 4% to 4.75%, depending on maturity, that are available nationwide. These are levels unseen since the great financial crisis in 2008,” says Greg McBride, chief financial analyst at Bankrate. See some of the best rates you can get on CDs here.

Though some of the CDs you’ll find today have the best yields in nearly 15 years, if you’re not shopping around, you may be looking at a yield that isn’t all that different from pre-pandemic levels. “The reason for the disparity is that most banks, especially bigger banks, have been dragging their feet about raising CD yields in a meaningful way, but the most competitive banks and credit unions have kept pace as the Fed continually raised benchmark interest rates,” says McBride. 

The latest CD rates

Below are the latest average rates on CDs, according to data from Bankrate released on January 31, and then we chat with experts about when and how to use a CD. 

Account	Average rate paid
1 Year CD	2.33%
2 Year CD	2.43%
3 Year CD	2.61%
4 Year CD	2.52%
5 Year CD	2.72%
6 Month CD	1.80%
9 Month CD	2.46%

What should you use CDs for? 

When it comes to savings, experts say you likely have a few buckets to consider. You’ll need an emergency fund, which will contain 3-12 months of essential expenses. Put that somewhere safe, and easily accessible, like a high-yield savings account. These are now paying more than they have in a decade, and you can see some of the best rates you may get on a savings account now here.

Meanwhile, for other goals that are a few years away, like buying a home or taking a fabulous vacation, you may want to think about a CD.  “Cash needed in 2 to 5 years could be invested in something like a CD or Treasuries that could provide more yield than a savings account but maintain relative safety,” says certified financial planner Zack Hhubbard at Greenspring Advisors.

McBride says a CD may be the right move for you if you have a cash need at a specific time in the future, hope to generate some income in retirement, or need to diversify a broader investment portfolio, says McBride. See some of the best rates you can get on CDs here.

And for those with larger cash savings accounts who want to stay conservative, but wouldn’t mind earning a little more interest, Mamie Wheaton, financial planner with LearnLux, says it’s worth considering investing a portion of your money in CDs. “CD rates tend to be higher than high-yield savings accounts because you’re locking up your money for the term of the CD. Consider a CD ladder, where different amounts come due at different times,” says Wheaton.

“Shopping around for top rates on federally-insured CDs and savings accounts can at least minimize the impact of inflation,” says Ken Tumin, founder and editor of DepositAccounts.com. 

What to know before opening a CD

Before getting a CD, make sure you understand the terms of the deposit and that you’re okay with not being able to touch your money for whatever fixed time period you’ve agreed upon. It’s also wise to familiarize yourself with the early withdrawal penalty fee in case you find yourself needing to withdraw funds before the CD matures.

Risk-averse investors or anyone only looking to invest money for the short-term may also want to consider CDs, as they can be useful in terms of protecting principal, while still allowing for a little bit of interest to be earned. Indeed, CDs typically offer better interest rates than savings accounts, but it’s important to keep in mind that putting money into a CD really only makes sense if you’re able to keep it there until it reaches maturity, which is typically between a few months and five years — otherwise, you’ll be on the hook for a hefty penalty.

“Be sure to shop around for the best yielding CDs, get it directly from a federally insured bank or credit union and fully understand the penalties for early withdrawal,” says McBride. See some of the best rates you can get on CDs here.