Top CD Rates in December 2022: Rates Climb with Fed’s 0.50% Hike

On December 14, 2022, the Federal Reserve implemented a 0.50% increase in the federal funds rate, marking the seventh rate hike this year. This move has triggered a rise in interest rates offered on deposit accounts, including Certificates of Deposit (CDs), with notable gains in the 3-month, 18-month, and 3-year terms.

Following four consecutive 0.75% hikes earlier in the year, the Fed’s decision to raise rates by a smaller margin reflects signs that inflation is beginning to moderate. Despite this, deposit rates have surged dramatically, with many top CD yields now exceeding four times the rates offered at the start of 2021. For example, the highest national 3-year CD rate has jumped from 1.11% in December 2021 to an impressive 4.86% today.

According to the FDIC’s latest monthly report, average CD rates across all major terms have increased substantially over the past month, with some terms seeing growth between 20% and 40%. This upward trend offers savers more attractive options to grow their funds safely.

Key Highlights for CD Rates in December 2022

• Top 3-year CD rates approaching 4.86%
• 3-month and 18-month CDs also showing significant rate improvements
• Federal Reserve rate hikes continue to influence deposit rates

It's important to note that the highest CD rates featured here represent the best offers available nationwide, often much higher than national averages which include all banks, including those with minimal rates. Savvy shoppers can find rates 10 to 15 times greater than average by comparing offers.

Understanding the Federal Reserve’s Impact on CD Rates

The federal funds rate, the interest rate at which banks lend reserves to each other overnight, indirectly influences the rates banks offer to customers on CDs and savings accounts. When the Fed raises this rate, banks typically respond by increasing deposit rates to attract more consumer funds.

Since the pandemic began, the Fed maintained near-zero rates to support the economy, but has shifted to a tightening stance in 2022 with multiple rate hikes aimed at curbing inflation. The December 14 increase signals ongoing vigilance, with expectations for further hikes in 2023 depending on economic conditions.

What to Expect for CD Rates Moving Forward

With inflation still elevated, the Federal Reserve is likely to continue raising rates, which suggests that CD rates will keep climbing into 2023. This environment encourages considering shorter-term CDs or those with rate adjustment features, such as "step-up" CDs, allowing investors to benefit from future rate increases without locking in long-term commitments at current rates.

How We Track CD Rates

Our data is updated daily by monitoring over 200 federally insured banks and credit unions nationwide. We focus on CDs requiring a minimum initial deposit of $25,000 or less to provide accurate rankings of the most competitive rates available.

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