Is a 3% CD Worth It Right Now? (2024)

As the U.S. economy continues to try to ease inflation, money expert Clark Howard says a notable rise in interest rates points toward a promising trend:

Is a 3% CD Worth It Right Now? (1)“You can actually earn money on your money again,” Clark says.

Savings rates have been in the dumps for the past several years, but things are starting to change. Clark says that one of the best ways to earn a higher rate of interest on your money right now is to park it in a certificate of deposit (CD). These are deposits that you have to leave in the bank for a fixed term, anywhere from one month to five years. Your money will make more than it would sitting in a savings account, usually at a fixed rate but sometimes at a variable rate.

If you want a return on your hard-earned money, Clark suggests you take action: “Don’t let inertia be your enemy. Move that money!”

This article will tell you about CDs and other savings vehicles where you can earn a decent return right now.

How You Can Get 3% Interest on a CD Right Now

Clark says he was recently at his credit union when the teller said, “You know, we have a special coming next week. We’re paying 3.3% on CDs up to 33 months.” “I was like, ‘Really?'” says Clark. “And so I put some money into a CD there.”

Team Clark member Anthony Hazzard has a 3.20% CD with American Airlines Federal Credit Union (AAFCU).

Below we’ve included some CDs with current annual percentage yields (APYs) that are 3% or better.

Ally Bank

  • 3-year term: 3.00%

Capital One

  • 2-year term: 3.00%
  • 5-year term: 3.25%

Discover Bank

  • 3-year term: 3.00%
  • 4-year term: 3.05%
  • 5-year term: 3.25%

Each of these institutions makes Team Clark’s list of best online banks. But just as Clark and Anthony found, your local credit union may have even better interest rates.

Should You Open a 3% CD Right Now?

One of the major distinguishing factors of a CD is that it takes time to “mature,” or come to tern. Without being penalized, you typically won’t be able to touch your money for one to five years depending on a CD.

So, is a 3% CD worth it right now?


Clark’s general rule is that when a CD is earning substantially more interest than a savings account or when interest rates are falling and it looks like they’re going to continue to fall, then it makes sense to put your money in a CD.

The average interest rate for savings accounts is 0.13%, according to Bankrate’s Aug. 17 weekly survey. Sounds like a CD makes perfect sense right about now.

Before you open a CD, make sure that you understand the varieties and what they offer at your respective financial institution. Pay particular attention to:

  • Whether the term of the CD matches your savings goal
  • Whether there’s a minimum deposit to open an account
  • Whether there’s a penalty for early withdrawal

More Ways To Get Good Returns on Your Money Right Now

Higher rates are not just limited to CDs. Savings accounts, money market accounts and Series I savings bonds, which Clark has been talking about for a while now, are all giving decent returns.

Series I Savings Bonds

The initial interest rate on new Series I savings bonds is 9.62% and can be purchased at that rate through October 2022.

  • How to buy: Visit TreasuryDirect.
  • Limit: $10,000 maximum purchase per year.
  • Withdrawal terms: Minus the last three months of interest if cashed out before five years.

Clark says that he has owned Series I savings bonds for around 25 years. He plans to hold them for all 30 years which is the amount of time it takes for a bond to fully mature.

Read our guide on Series I savings bonds.

Money Market Accounts

“If you do business with Fidelity Investments or Charles Schwab, they’re both paying over 2% right now on money market,” Clark says. “They’ve got a ton of different ones you’ll see,” he says.

Read our review of Charles Schwab.

  • How to buy: Visit or to open a money market account.
  • Limit: There is no limit on a money market account, although there may be a charge if the balance falls before a specific minimum.
  • Withdrawal terms: There may also be a fee if too many withdrawals are made within a month.

Read our review on Fidelity Investments.


Savings Accounts

Many online banks currently have competitive rates on their savings accounts. For example, Ally Bank, one of’s best online banks, is offering 1.75% on its savings account as of August 22, 2022.

Clark recommends keeping your money in an online bank because they typically:

  • Offer 24/7 access to your money
  • Charge fewer fees
  • Pay higher interest

It’s that last point that Clark really loves. “Because they’re online only, they don’t have all the normal bank overhead, so they can pay you much better deals,” he says.

Read our guide on the best high-yield savings accounts.

Final Thoughts

The current market offers a great opportunity to capitalize on some great interest rates that typically beat traditional banks. Clark says he expects us to continue to see decent rates of earnings on the Series I savings and more for a while to come.

How can you take advantage? You’ve got to leave that “giant monster mega-bank,” as Clark calls them.

Is a 3% CD Worth It Right Now? (2)“The most important thing is to do not. Do not. Do not. Let yourmoney sit and rot at a traditional bricks-and-mortar bank, again, unless you don’t like your money,” he says.

Is a 3% CD Worth It Right Now? (2024)


Is it worth putting money in a CD right now? ›

If you don't need access to your money right away, a CD might be a good savings tool for you in 2024 while average interest rates remain high. CD interest rates are high in 2024 — higher nationally, on average, than they've been in more than a decade, according to Forbes Advisor.

Should I lock in a CD now or wait? ›

Unlike traditional or high-yield savings accounts, which have variable APYs, most CDs lock your money into a fixed interest rate the day you open the account. That's why if you suspect that interest rates will soon drop, it can be a good idea to put money in a CD to preserve the high APY you would earn.

Is anyone paying 5% on CDs? ›

With interest rates at a record high, some of the best CDs offer rates that top 5%. By signing up for a certificate of deposit (CD) or share certificate, you can earn extra cash without extra risk.

What is a good percentage on a CD? ›

Generally, 1-year terms have the highest rates. The average 1-year term pays 1.86% APY, but the best 1-year CD rates offer well over 5% APY.

What is the biggest negative of putting your money in a CD? ›

Banks and credit unions often charge an early withdrawal penalty for taking funds from a CD ahead of its maturity date. This penalty can be a flat fee or a percentage of the interest earned. In some cases, it could even be all the interest earned, negating your efforts to use a CD for savings.

Why am I losing money in a CD? ›

Early withdrawal penalties are equal to several months of interest. The most common way you can lose money is by breaking a CD contract before you earn enough interest to pay the penalty.

Should I close a CD early to get a better rate? ›

While you'll miss out on interest for the remainder of the term, if you can lock in a higher rate, this is probably beneficial. But consider if your CD has an early withdrawal penalty, and how much interest you'll need to pay, to see if a new CD rate can help you earn a big enough return to justify paying the penalty.

Can you get 6% on a CD? ›

Right now, the only financial institution offering a 6% CD is Financial Partners Credit Union. To become a member of the credit union, you must live, work or go to school in Orange County, San Diego County, Riverside County, Los Angeles County, the city of South San Francisco or the city of Alameda.

Do you pay taxes on CD interest? ›

Key takeaways. Interest earned on CDs is considered taxable income by the IRS, regardless of whether the money is received in cash or reinvested. Interest earned on CDs with terms longer than one year must be reported and taxed every year, even if the CD cannot be cashed in until maturity.

Where can I get 7% interest on my money? ›

7% Interest Savings Accounts: What You Need To Know
  • As of June 2024, no banks are offering 7% interest rates on savings accounts.
  • Two credit unions have high-interest checking accounts: Landmark Credit Union Premium Checking with 7.50% APY and OnPath Credit Union High Yield Checking with 7.00% APY.

Are CDs worth it Dave Ramsey? ›

Ramsey has referred to certificates of deposit as "nothing more than glorified savings accounts with slightly higher interest rates." Ramsey warned that you shouldn't invest in CDs because average rates won't keep pace with inflation and because they aren't a good place to grow your money.

How much does a $10,000 CD make in a year? ›

Earnings on a $10,000 CD Over Different Terms
Term LengthAverage APYInterest earned on $10,000 at maturity
1 year2.61%$264.14
18 months2.22%$338.29
2 years2.08%$424.40
3 years1.95%$601.95
3 more rows
Jun 14, 2024

What is the best rate for a CD right now? ›

Here are Bankrate's top picks for banks with the best CD rates.
  • Capital One — 6 months - 5 years, 3.90% – 5.00% APY, no minimum deposit.
  • Barclays Bank — 6 months - 5 years, 3.50% – 5.00% APY, no minimum deposit.
  • Citizens Access — 1 year - 5 years, 3.35% – 5.00% APY, $5,000 minimum deposit.

How high will CD rates go in 2024? ›

Key takeaways. The national average rate for one-year CD rates will be at 1.15 percent APY by the end of 2024, McBride forecasts, while predicting top-yielding one-year CDs to pay a significantly higher rate of 4.25 percent APY at that time.

What is considered a good 6 month CD rate right now? ›

Compare the best 6-month CDs
Popular Direct certificates of deposit4.815.35%
Marcus by Goldman Sachs High-Yield certificates of deposit4.805.10%
Bask Bank Certificates of Deposit4.765.35%
Synchrony Bank certificates of deposit4.754.80%
7 more rows

Why should you put $15000 into a 1-year CD now? ›

In summary, a certificate of deposit gives you steady and safe returns. Investing $15,000 in a CD could lead to substantial gains, regardless of the CD's length. However, make sure you won't need that money while the CD is active because withdrawing early usually incurs hefty penalties.

Are CDs still worth buying? ›

CDs are a safe investment that can net you a higher return than most savings and money market accounts. Since rates have increased over the past year, they're more appealing to some savers. But with some banks already dropping rates, it's best to lock in a rate soon.

Is it better to put money in a CD or savings? ›

If your goal is to lock in a high rate of interest on funds you don't need to access for a period of time, a CD might be your best option. However, a high-yield savings account may be the better choice if you want to earn solid interest on your savings while still keeping the money relatively accessible.

What is the catch with putting your money in a CD? ›

If interest rates fall before the CD expires, the bank is out of luck and must give you the rate it quoted. If rates climb, you're stuck with the lower rate you agreed to when you opened the account. And if you take your money out before a CD matures, you'll pay a penalty -- typically three months of interest.


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