Short-Term CDs (3-6 Months): Flexibility with Top Rates
In 2025 the 6-month CD offers 5.15% APY — the highest of any standard term. Short-term CDs let you lock in near-peak rates without committing money for years. If rates stay high you reinvest at current rates. If rates fall you have only lost 6 months before gaining flexibility.
CD term comparison: rates and earnings on $15,000
| CD Term | Top APY June 2025 | $15K Interest at Maturity | Annualized Rate | Lock-Up Duration |
|---|---|---|---|---|
| 3-month | 5.00% | $187 | 5.00% | 90 days |
| 6-month | 5.15% | $385 | 5.15% | 180 days |
| 12-month | 5.10% | $765 | 5.10% | 365 days |
| 24-month | 4.75% | $1,462 | 4.75%/yr | 730 days |
| 60-month | 4.40% | $3,705 | 4.40%/yr | 1,825 days |
Long-Term CDs: The Rate Lock Argument
A 2-year or 5-year CD today locks in 4.40%-4.75% APY regardless of Fed cuts. If HYSA rates fall to 3.00% over the next 2 years, your locked CD earns 4.75% the entire time. The longer the term the more you benefit from rate protection in a declining rate environment — and the more you lose if rates rise.
Ask: am I confident I will not need this money before the maturity date? Do I believe rates will fall? If yes to both, longer terms win. If no to either, shorter terms or HYSA win.
CD term choice by expected rate direction
| If You Believe Rates Will... | Recommended CD Term | Reason |
|---|---|---|
| Rise significantly | 3 months max or HYSA | Stay flexible to capture higher rates |
| Stay stable | 6-12 months | Capture current top rates with reasonable flexibility |
| Fall moderately (<1%) | 12-18 months | Lock in most of current advantage |
| Fall significantly (>1%) | 24-36 months | Maximize rate protection period |
| Fall sharply (>2%) | 48-60 months | Lock in maximum rate protection |
The Early Withdrawal Penalty by Term
Longer-term CDs carry larger early withdrawal penalties. A 5-year CD might penalize 12 months of interest for early withdrawal. If you break it after 6 months you could actually lose principal in addition to forfeiting all interest earned. Match your term carefully to your timeline.
- 3-month CD: typically 1 month interest penalty if broken early
- 6-month CD: typically 3 months interest penalty
- 12-month CD: typically 6 months interest penalty
- 24-month CD: typically 6 months interest penalty
- 60-month CD: typically 12-18 months interest penalty
Compare Returns Across All CD Terms
Enter your deposit to see side-by-side earnings from 3-month through 5-year CDs at today top rates.