The interest rate offered on a Certificate of Deposit over its term.
A CD rate is the annual interest rate (APY) paid on a Certificate of Deposit. Rates vary based on CD term length (3-month CDs have lower rates than 5-year CDs, typically) and economic conditions. Banks raise CD rates to attract deposits when they need capital; they lower rates when they have sufficient deposits. CD rates are typically higher than savings account rates but lower than investment returns. When comparing CDs, always look at APY (which includes compounding), not just the stated rate. CD rates are currently 4–5% APY, significantly higher than the 0.01% typical savings accounts offered pre-2022.