Number Calculators

2023 CD Rates Increasing

January 2024 - Between March 2022 and July 2023, in its efforts to ease inflation, the US Federal Reserve raised the Fed Funds Rate 11 times, for a total of 5.25 percentage points, the largest increase in decades. After each of the Fed Funds Rate increases, Certificate of Deposit (CD) rates continued to rise, likewise putting CD rates at the highest in many years. In the remaining Federal Reserve meetings in 2023, which were on September 20, 2023, November 1, 2023, and December 13, 2023, there was no rate change;

However, as each of these late 2023 meetings approached, CD rates fluctuated often higher for shorter term CDs (1 year or less). In early 2024, where many anticipate there likely will be no further increases, longer term CDs (particularly 2 and 3 year non-callable CDs), are starting to decline. However, at many financial institutions, CDs for all terms are still generally significantly above rates in early 2022 or before.

The new high rates can clearly cause consternation for those holding longer term CDs opened prior to 2022's rate increases, where rates were generally extremely low, sometimes 10 to 50 times (or more) less than current 2024 rates. At some banks, 2 to 4 year CDs, opened in 2021 or even in early 2022, could have APYs of .05%. To be clear, that is not a half percent, that translates to .0005 percent, meaning if you invested $10,000, your first year interest yield would be $5.00 (USD)! If it were a half percent, the yield would be $50, still very low, especially compared to early 2024, where 4% APY on 2 and 3 year CDs is now attainable: on that same 10,000, the 1 year interest is $400.

Even if you opened 1, 2, 3 year or longer term CDs in mid-2022, when rates were already on the rise, just 6 months later, many of those same termed Certificate of Deposits had APYs that had tripled or more.

CDs are considered long term investment vehicles where you lock up your money for a specific term (e.g. 6 months, 1 year, 5 years), earning a set interest rate, the Aannual Percentage Rate (APY). If you can close the CD early*, also referred to as breaking the CD, there's usually a penalty to do so*.

* See "What is the Interest Penalty for CD Early Widthdrawal?" and "Is Early Withdrawal Always Possible?" on our Early Withdrawal Calculator for further discussion on these topics.

Close old CD and pay penalty for new higher rate CD?

When CD rates are rising, as they did eleven times between 2022 and 2023, the obvious question for CD holders is should you break a CD you are holding and pay the early close penalty in order to reinvest in a higher yielding Certificate of Deposit. The best way to help decide that is to:

Once you know these numbers, you can easily compare if it is worth it to break the lower paying CD, even with the penalty, for the new higher paying CD.

Our early withdrawal penalty calculator for CDs calculates all of the above: penalty to close CD early, including where the penalty comes from; how much you would make on the original CD if held to full term; and, how much you would make on the new CD.