Historical CD Rates: How Yields Have Changed Over Time

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In the past 40 years, certificate of deposit (CD) rates have ranged from 0.01% up to 18%. Here’s a look at historical CD rates from 1965 to 2024 to see how they’ve changed and whether now is a good time to invest in a CD.

CD Rates Over the Decades

CD Rates in the 1980s: The Peak Era

If you were looking for a high CD rate, the 1980s were the right time to be an investor. Unfortunately, the tradeoff for those high rates was a crippling recession and an inflation rate north of 14%, according to the Federal Reserve.

• In December 1980, the average 3-month CD rate averaged 18.65% — the highest in history. 
• Short-term CD rates from 1980 to 1981 averaged around 15% to 18% APY. 
• Long-term CD rates also had double-digit returns, averaging 12% to 14% APY.
• Rates surged because inflation was over 13%. 

Rates in the 1990s: Gradual Decline

Inflation cooled in the 1990s. As a result, the CD rates declined. 

• The Federal Reserve lowered the interest rate in the 1990s. 
• One-year CDs averaged around 8% APY in 1990.
• Stable inflation, economic growth and lower Fed rates brought more moderate CD rates in the 1990s. 

CD Rates in the 2000s: Bookended by Crises

During the Dotcom boom in the 2000s, CD rates hovered around 4% to 6%.

• After the 2001 recession, CD rates fell below 2%.
• Rates began to climb again in the mid-2000s, peaking around 5.5% to 6%. 
• During the 2008 global crisis, the Federal Reserve cut its fund rates to 0%. CD rates plummeted to less than 1%. 

2010s: The Era of Low CD Rates

During most of the 2010s, CD rates were at a historical low.

• From 2009 to 2015, the Fed maintained near-zero interest rates.
• 1-year CD rates ranged between 0.20% and 1%.

2020 to 2021: Pandemic-Era Bottom

The COVID-19 pandemic caused a shift in CD rates.

• CD rates bottomed out at 0.10% to 0.50%, making CDs nearly irrelevant for many savers.
• Banks were flush with deposits and had little incentive to offer attractive CD rates.

2022 to 2023: Rapid Rise in CD Rates

During this time, there was a rise in inflation that caused a hike in CD rates. 

• Online banks offered aggressive CD rates.
• One-year CD rates were around 4.50% to 5.50%.
• Five-year CD rates were typically 4.00% to 5.00%

2024 to 2025: Stabilization and Slight Declines

When inflation cooled, CD rates showed slight declines.

• 1-year CD averages hover around 2% to 3%.
• Some of the best rates are still in the 4% to 5% range.
• Long-term CDs, ones with terms of 3 to 5 years, offer rates of 3% to 4% APY.

What Drives CD Rate Changes?

There are several key drivers behind CD rate changes. Some of those factors include:

• Market competition: Banks and credit unions, in order to stay competitive, will increase CD rates.
• Federal Reserve shifts: When the Fed raises and lowers interest rates, it impacts CD APYs.
• Economic outlook: Recession fears can push banks to adjust CD rates accordingly.
• High inflation: A rise in inflation causes CD rates to increase.

Will CD Rates Reach High Levels Again?

In the 1980s, extreme inflation drove the high CD rates. It would be unrealistic to see those rates again.

In the modern era, ultra-high CD rates were seen in mid-2024 at around 5%, but rates have decreased since then. In spite of the rate decrease, you can currently receive a rate around 4%, which is still an appealing rate.

Well-chosen CDs still will be a hedge against inflation and outperform interest rates on a traditional savings account.

What Should You Do When CD Rates Are Low?

Consider these options when CD rates are low. 

High-Yield Savings Account (HYSA)

A HYSA typically offers a higher interest rate than a traditional savings account. These accounts give you the flexibility to access your cash while still helping you grow your savings. Current rates often range between 4% and 5%.

Treasury Bills

Treasury bills are conservative government-backed investments that have slightly higher yields than savings accounts. Treasury bills are exempt from local and state taxes. The yields are just as competitive as short-term CDs. 

CD Laddering

CD laddering allows you to split your investment across multiple CDs. The maturity dates are generally staggered.

With this strategy, you have access to cash at different times without paying an early withdrawal penalty. It also allows you to access higher long-term rates with some flexibility to withdraw cash. 

The Big Picture on CD Rates

From double-digit highs to near-zero lows, here’s what to remember about historical CD rates:

• In the last 40 years, CD rates have ranged from 0.01% to over 18%. The top rates were during the mid-1980s.
• CD rates are driven by the Federal Reserve’s policies and economic trends. High inflation and rising interest rates tend to push CD APYs higher, while a recession will drive APYs down.
• In 2010, CD rates hit a historical low. The same lows were experienced during the pandemic.
• Between 2022 and 2023, CD rates rebounded as inflation surged. It was common to find APYs hitting between 4.50% to 5.50%.
• In periods where CD APYs are low, investors can look to treasury bills, HYSA and CD laddering as a possibility for investing.
• Currently, CD rates have stabilized. It is common to find CD rates between 4% and 5%.

Chris Ozarowski and John Csiszar contributed to the reporting of this article.

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