Top CD Rates in 2025 vs. S&P 500 Returns: Which Investment Yields More at $25,000?

In 2024, CDs offer their highest interest rates in over a decade. But can they keep pace with the S&P 500's market gains?

Thanks to the Federal Reserve's persistent rate hikes since early 2022, certificates of deposit (CDs) now feature interest rates above 5%, the best levels seen in 15 years. Savers locking in terms from three months up to three years can secure these attractive yields.

Despite these gains, the S&P 500 has historically outperformed CDs, averaging around 10.39% annual returns over the past decade. In fact, as of mid-June 2024, the S&P 500 has surged approximately 15.7% year-to-date, driven by powerhouse tech companies.

Comparing Leading CD Rates to S&P 500 Performance

CD interest rates closely follow the federal funds rate set by the Federal Reserve. Since rates climbed from near zero in early 2022 to over 5% today, CD yields have risen sharply. However, even the highest CD rates remain below the S&P 500’s stellar gains so far this year.

Tech giants like Apple, Microsoft, Amazon, Alphabet, Tesla, and NVIDIA—comprising about 26% of the S&P 500’s market value—have fueled the index’s rally. If these companies continue climbing, CDs will struggle to keep pace. Yet, this concentration also introduces risk; a downturn in these stocks could tilt the advantage back toward CDs.

Choosing Between CDs and the S&P 500 in 2024

While the S&P 500’s recent returns may tempt investors seeking higher growth, its volatility makes it a less predictable choice. CDs provide guaranteed returns with FDIC insurance up to $250,000, making them a secure option for conservative savers.

Moreover, Federal Reserve projections suggest potential further rate hikes to 5.5-5.75% later this year, possibly pushing CD yields even higher. Investors willing to lock funds away can benefit from these historically high rates before potential future cuts.

However, CDs typically impose penalties for early withdrawal, unlike the highly liquid S&P 500 index, which can be traded without fees or restrictions.

How We Track and Rank CD Rates

We monitor daily interest rates from over 200 federally insured banks and credit unions nationwide, focusing on CDs with initial deposits up to $25,000. Eligible institutions must operate in at least 40 states, and credit unions with donation requirements exceeding $40 are excluded to ensure accessibility.

Our methodology ensures you see the most competitive and accessible CD rates available today. For full details, please review our comprehensive rate selection process.

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