And in the wake of the COVID-19 pandemic, the yields for all CD-terms, including 5-year CDs, plunged below 1 percent APY. The average annual percentage yield (APY) on a one-year CD was over 11 percent.īut starting in 2009, in the aftermath of the Great Recession, average rates on shorter-term CDs were middling below 1 percent APY. Nearly 40 years ago, certificates of deposit (CDs) were considered great investments. Top CDs and savings accounts are actually outpacing inflation. “Even once the Fed is done raising interest rates, their inclination is to leave rates at an elevated level for a period of time in order to get inflation down to 2 percent, so savers should enjoy competitive returns for some time.” “The Federal Reserve has raised interest rates at the fastest pace in 40 years in the ongoing battle against inflation, with savers seeing the best returns on savings accounts and CDs in more than a decade,” says Greg McBride, CFA, Bankrate chief financial analyst.
After 11 Federal Reserve rate increases and declining inflation, CDs are once again an investment to consider in 2023.
