Top 5 States With the Highest CD Rates in 2023 — Can You Capitalize in 2024?
Written by
Vance Cariaga
Edited by
Cory Dudak
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Interest rates are at their highest point in years thanks to a series of rate hikes by the Federal Reserve, and bank customers are reaping the benefits with a spike in savings account rates. That extends to certificates of deposit, which have seen average annual percentage yields reach their highest point in nearly 20 years.
The best CD rates this month are at 5.5% and above for terms of 24 months and less. But even certain long-term CDs of 36 to 60 months are paying APYs at around 5% — something that would have seemed unimaginable only a few years ago.
Because of promotions and special offers, some CD customers get even higher rates. Certain states are more likely than others to see the highest CD rates, according to a recent report from CD Valet, a marketplace that provides CD rates and promotions from financial institutions.
CD Valet pulled its database archives and picked some of the highest rates offered and the states they were located in. Here are the five states that had the highest CD rates in 2023:
- Michigan: 7.19%
- California: 6.50%
- North Carolina: 6.25%
- Connecticut: 6.17%
- Maryland: 6.09
Other highlights from the CD Valet report, which was shared with GOBankingRates, include the following:
- In 2023, the number of promo CDs (CDs outside of the standard 12-, 24-, 36-, 48-, and 60-month terms) available on CD Valet grew by 150%.
- Standard rates (those with 12-, 24-, 36-, 48-, and 60-month terms) saw a 35% growth in available rates.
If you’re thinking about investing in a CD, now might be a good time to start. A recent slowdown in rate hikes by the Fed could translate into lower savings account rates in 2024.
Many financial experts expect the central bank to end its policy of aggressive rate hikes that went into effect a couple of years ago as a way of taming inflation. There were even signs that the Fed might start cutting rates, though this month’s strong jobs report lowered the likelihood that cuts are on the table.
“Stock and bond markets had been rallying last year on the assumption that the Fed was done raising rates and in fact would be cutting them sooner rather than later and this [jobs] report throws cold water on those assumptions,” Chris Zaccarelli, chief investment officer at Charlotte-based Independent Advisor Alliance, wrote in email comments shared with GOBankingRates.
But even if the Fed doesn’t cut rates, it likely won’t keep raising them, either. As a result, most professional investors believe banks will start reducing savings rates in 2024 — or at least hold them steady.
“Rates will likely top out where they are today,” Jason Steeno, president of CoreCap Investments in Southfield, Michigan, told The Wall Street Journal in November.
What this all means is that you should consider locking in CD rates now before they begin to move lower.
If you want to lock in rates on a CD or savings account, be sure to shop around to find the best ones. You’ll usually find the highest rates at online banks because they don’t face the same operating costs as traditional brick-and-mortar banks, meaning they have more wiggle room to pay high rates without cutting into their margins.
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