The highest CD rate in history was roughly 17% APY in 1981, driven by Federal Reserve rate hikes to crush double-digit inflation. Today’s best CD rates sit around 4.30%–4.44% APY on 1-year terms — still well above the near-zero rates savers endured from 2009 to 2022, but far below those historic peaks.
Understanding how CD rates have moved over decades helps you put today’s rates in context and decide whether now is a good time to lock in a certificate of deposit.
CD Rate History by Decade
The table below shows approximate average annual 1-year CD rates by decade, based on Federal Reserve and FDIC data. Peak rates occurred in the early 1980s; the trough came during the post-2008 and COVID-era periods.
| Decade | Approximate Average 1-Year CD Rate | Key Driver |
|---|---|---|
| 1960s | 4%–6% | Stable post-war economy |
| 1970s | 6%–10% | Rising inflation, oil shocks |
| 1980s | 8%–17% | Fed’s fight against inflation |
| 1990s | 4%–8% | Gradual normalisation |
| 2000s | 2%–5% | Dot-com bust, 2008 financial crisis |
| 2010s | 0.10%–2.50% | Near-zero Fed policy (post-GFC) |
| 2020–2021 | 0.10%–0.50% | COVID-19 emergency rate cuts |
| 2022–2023 | 0.50%–5.50% | Fed tightening cycle |
| 2024–2025 | 4.30%–5.65% (declining through the period) | Fed easing cycle |
| 2026 (through Sept) | ~4.30%–4.44% (top rates) | Fed holding at 3.50%–3.75% |
Year-by-Year CD Rate Snapshots
1981 — The All-Time Peak
The Federal Reserve, led by chair Paul Volcker, raised the federal funds rate above 19% in June 1981 to break the back of 13.5% inflation. Average 1-year CD rates hit roughly 17% that year. A $10,000 CD earned $1,700 in interest in 12 months.
The cost: mortgage rates also hit 18%, making home buying nearly impossible for most Americans.
1990–2001 — Steady Decline to Normalcy
After the Fed tamed inflation, rates fell steadily through the 1990s. The average 1-year CD rate was approximately:
- 1990: 8.0% APY
- 1995: 5.7% APY
- 2000: 6.4% APY (briefly up amid the dot-com boom)
- 2001: 3.5% APY (Fed cuts after dot-com bust and 9/11)
2004–2007 — A Brief Recovery
The Fed raised rates from 1% in 2004 to 5.25% by 2006 to cool a booming economy. This pushed 1-year CD rates back above 5% APY, giving savers a brief window of decent returns before the 2008 financial crisis ended it.
2008–2015 — The Lost Decade for Savers
The 2008 financial crisis prompted emergency rate cuts. The Fed dropped the federal funds rate to 0%–0.25% in December 2008 and held it there for seven years. Average 1-year CD rates collapsed:
| Year | Avg 1-Year CD Rate |
|---|---|
| 2008 | 3.20% |
| 2009 | 1.50% |
| 2010 | 0.60% |
| 2012 | 0.30% |
| 2015 | 0.25% |
Savers who locked money in a 5-year CD in 2008 earned good rates for a few years — those who waited lost nearly a decade of meaningful interest income.
2016–2019 — Gradual Recovery
The Fed slowly raised rates from 2015 to 2018, reaching 2.25%–2.50% by December 2018. Top CD rates climbed back toward 2.75%–3.50% APY before the Fed reversed course in 2019.
2020–2021 — COVID Lows
In March 2020, the Fed cut rates back to 0%–0.25% in response to the COVID-19 pandemic. Average 1-year CD rates fell below 0.20% APY — among the worst returns for savers in recorded US history.
The national average 1-year CD rate per the FDIC:
- April 2020: 0.47% APY
- December 2020: 0.20% APY
- December 2021: 0.13% APY
2022–2023 — The Fastest Rate Cycle in 40 Years
Inflation hit 9.1% in June 2022 — a 40-year high. The Fed responded with 11 rate hikes between March 2022 and July 2023, taking the federal funds rate from 0%–0.25% to 5.25%–5.50%. CD rates surged:
| Month | Top 1-Year CD Rate (Online Banks) |
|---|---|
| Jan 2022 | 0.60% APY |
| Jul 2022 | 1.75% APY |
| Jan 2023 | 4.50% APY |
| Jul 2023 | 5.25% APY |
| Dec 2023 | 5.40% APY |
For the first time since 2007, CD rates exceeded the inflation rate, meaning savers finally earned real positive returns.
2024–2026 — Easing Cycle and a Flattening Curve
The Fed held rates at 5.25%–5.50% through most of 2024, then began cutting in September 2024. Cuts continued through 2025, including reductions in September and December 2025, bringing the federal funds rate to its current target range of 3.50%–3.75%. Through the FOMC meetings held so far in 2026, the Fed has held that range steady.
| Period | Federal Funds Rate | Top 1-Year CD Rate (approx.) |
|---|---|---|
| 2024 (start) | 5.25%–5.50% | ~5.40% APY |
| 2024 (end) | Cuts underway | ~4.85% APY |
| 2025 | Cuts continue, reaching 3.50%–3.75% by Dec 2025 | ~4.50–4.90% APY |
| 2026 (Sept) | 3.50%–3.75% (held) | ~4.30%–4.44% APY |
A notable feature of 2026: the gap between short-term and long-term CD rates has narrowed considerably. Earlier in the cutting cycle, 1-year CDs paid meaningfully more than 3-year or 5-year CDs. By September 2026, top rates across 1-to-5-year terms are clustered within roughly a 0.20-point band (about 4.30%–4.50% APY) — reflecting the Fed’s pause after its 2024–2025 cuts.
What Drives CD Rates
CD rates don’t move randomly — they track the federal funds rate with a short lag. Banks use deposits to fund loans, so when the Fed raises the cost of borrowing, banks compete harder for deposits and raise CD rates. When the Fed cuts, CD rates follow downward.
Three secondary factors also matter:
- Bank competition — online banks and credit unions consistently pay more than traditional big banks because they have lower overhead and actively compete for deposits
- CD term — longer terms don’t always pay more; the yield curve can invert (as it did through much of 2024–early 2026) or flatten (as it has by September 2026)
- Deposit supply — when banks have ample deposits, they don’t need to attract more and rates fall; when deposits are tight, rates rise
CD Rates vs. Inflation Over Time
A CD only grows your purchasing power in real terms if its rate exceeds inflation. Historical comparisons below use published average figures for illustration — check the current CPI release from bls.gov to see today’s precise real-return picture, since inflation moves month to month.
| Period | Approx. Avg CD Rate | Approx. Avg CPI Inflation | Approx. Real Return |
|---|---|---|---|
| 1981–1985 | ~12% | ~7% | +5% |
| 1990–2000 | ~5.5% | ~3% | +2.5% |
| 2009–2021 | ~0.50% | ~1.8% | −1.3% |
| 2023–2024 | ~4.8% | ~3.2% | +1.6% |
Today’s top CD rates have generally outpaced headline inflation since 2023 — for the current comparison, check the latest CPI figure from bls.gov against the top rates in the best CD rates guide.
When Was It Best to Buy a CD?
With hindsight, the best times to lock in a long-term CD were:
- 1980–1981 — rates near 15%–17%; locking a 5-year CD captured extraordinary returns for years
- 2006–2007 — rates above 5% before the crisis; long-term CDs held value through the zero-rate years
- 2023–2024 — rates above 5% before the Fed began cutting; savers who locked in 3–5 year CDs then are still earning those peak rates
The worst times to lock in a long-term CD:
- 2008–2009 — right after the crisis began, rates were falling fast; long-term CDs locked in falling rates
- 2021 — locking a 5-year CD at 0.40% in 2021 would have lost significant purchasing power as inflation surged
What Today’s Rates Mean in Historical Context
At roughly 4.30%–4.44% APY, today’s best 1-year CD rates are:
- Higher than any year from 2009 to 2022
- Similar to the mid-2000s peak (2006–2007)
- Far below the early 1980s peak of 17%
On a $10,000 deposit, a 4.35% APY 1-year CD earns approximately $435 in interest in 12 months. During the 2021 low (around 0.13%–0.20% APY), the same $10,000 in a 1-year CD earned roughly $13–$20.
If you’re deciding whether to open a CD today, compare current rates to the CD rate forecast for 2026 and consider a CD laddering strategy to avoid locking all your money at a single rate.
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