(Updated 11/6) I’ve been keeping a list of the best CD rates for certificates of deposit in the 12-month to 18-month maturity range, figuring that’s typically the sweet spot for CD rates. If the CD maturity is too short, banks won’t give you a good rate because it’s such a short period of time. If the CD maturity is too long, the customer is taking on a lot more inflation risk than the bank is probably paying out for. However, short term certificates of deposit still have their place:
- You’re setting up a CD ladder and you need CDs to fill up those short period slots.
- You have funds in an account that currently isn’t earning the highest yield for savings, transferring the funds will take time and cut down on your interest earned… so you might as well throw it into a short term CD to get a better rate.
- You simply don’t want to rate chase and open up a new account with each new online bank that offers a high rate, so you might as well hit up a short term rate with the bank you’re worth just to get a little extra.