Interest rates, including CDs (certificates of deposit), mortgages, and credit cards have all been on the rise in 2023 and look poised to continue to do so through the remainder of the year.

With 3 more Fed meetings left in 2023 (September, November and December) there’s a chance the Fed will lift rates again in at least one of them.

And even if the Fed keeps rates where they stand now – between 5.25% and 5.50% – banks and credit unions may still lift their CD and savings rates throughout the remainder of the year as they continue to absorb the new high rate environment.

CD Rate Trends Following Last Fed Meeting

The last Fed meeting was held on July 26 and 27 where they raised rates by 0.25% to the current 5.25% to 5.50% level. The next Fed meeting is going to be held on September 20th and 21st where there is a 97% chance the Fed keeps rates the same and a 3% chance they lift them by another 0.25% [source]. Following the Fed’s September meeting, is the November 1st meeting where the odds of a 0.25% rate hike climb to 35.3% before rising to 37% in the final Fed meeting of the year on December 14th.

To get an idea of how much CD rates could rise throughout the remainder of 2023, let’s take a look and see how much they have risen following the most recent rate hike by the Fed on July 27th of 0.25%.

The table below shows a number of well known institutions offering federally insured CDs (certificates of deposit) along with the changes in their best CD rates following the Fed’s most recent rate hike on July 27th to the time of this writing on September 14, 2023.

To put these CD rates into perspective, below is the national average for CDs terms 6 months to 5 years according to FDIC data pulled September 14, 2023:

• 6 month CD rates – 1.34%
• 12 month CD rates – 1.76%
• 24 month CD rates – 1.50%
• 36 month CD rates – 1.40%
• 48 month CD rates – 1.34%
• 60 month CD rates – 1.41%

To get an idea of how fast these averages have been climbing, here are the national averages for 12 month CDs and 60 month CDs every month since the start of 2022 to the end of September, 2023:

Will Savings Account Rates Go Up in 2023

Variable rate, online savings accounts and money market rates have been on the rise this year as well.

To get a better sense of how these rates have been trending, here are some popular FDIC-insured, online bank accounts and their APY (annual percentage yield) movements since the Fed’s latest rate hike on July 27th to the time of this writing.

A Look at Certificates of Deposit

Certificates of Deposit (CDs) are deposit accounts held at banks or credit unions that provide fixed interest rates for a specific period of time. CDs differ from savings accounts in two primary ways:

• CDs are time deposits – that is, the money put into a CD is set to remain invested for a specified period of time, such as six months, a year, three years, or five years. Investors can withdraw their funds early, but incur an early withdrawal interest rate penalty for doing so.
• The interest rate earned with a CD is usually a fixed rate, while the interest rate paid on a regular savings account is commonly a variable rate. There are variable rate CDs available, but the vast majority are fixed rate.

CDs are favored by investors with a low risk tolerance, as they are considered one of the safest types of investments, being insured by the Federal Deposit Insurance Corporation (FDIC) just like other deposit accounts at a bank.

One of the downsides to CDs is that their real rate of return doesn’t always keep up with the pace of inflation. When the rate of inflation is higher than the best CD rates, you’re left with a negative ‘real rate of return.’

The good news for savers, however, is that the current rate of inflation is 3.70%, while the top CD rates on the market are closing in on 5.75% APY – putting the real rate of return in positive territory for savers, which hasn’t happened in quite some time.

Past Trends for CD Rates

Back in 2021 when inflation started to pick up, CD rates were still dropping. By the end of that year, the average rate for one-year CDs had dropped from 0.21% to 0.14% and the average rate for five-year CDs had fallen from 0.36% to 0.26%.

In 2022, however, the Fed became much more aggressive in their fight against an unrelenting rate of inflation and completely reversed their stance on rates making a total of 7 historic rate hikes unseen in decades.

This pushed CDs up in a major way, albeit it took quite a while for them (especially the large banks) to raise their rates for savers.

For example, while the average 12 month CD has yet to hit 2.00% even after 10 straight rate hikes by the Fed, top yields from online banks are already creeping over the 5.00% APY mark for ~12 month terms.

Why is this?

Bigger banks and older traditional banks are normally the slowest to raise rates for savers.

Bankrate’s chief financial analyst, Greg McBride, cautions that banks may be a bit stingy with interest rate increases. According to McBride, “Most banks, and big banks in particular, are sitting on a pile of deposits and will be very hesitant to pass along higher yields to savers if they don’t need more deposits.” That fact may further dampen the direct effect of increases in the fed funds rate on CD yields.

All that to be said, in Q1 of 2023, even the largest banks in the country like Bank of America, Wells Fargo and Citibank had competitive CD rates on the menu for at least a couple of terms (mostly promotional options) with Citibank leading the way offering an 18 month IRA CD yielding 5.84% APY. Wells Fargo’s best CD rate is a 13 month promotional offer yielding 4.76% APY and Bank of America’s top rate is a “Featured CD” with an APY up to 4.60%.

Alternatives to CDs

You may be able to earn higher returns while still holding investments that are considered very safe by making investments in alternatives to CDs.

One such alternative is a money market account. Some money market accounts pay higher interest rates than most CDs. They also offer the flexibility that CDs lack, as you can withdraw your money any time without suffering any interest rate penalty.

Another alternative investment is a tax-free municipal bond. Being tax-free already gives such an investment an advantage over a CD. You can also get a much higher return on investment (ROI) with municipal bonds, many of which are currently paying interest rates above 5%. Municipal bonds are not quite as safe an investment as CDs, but while the possibility of the bond issuer defaulting on interest rate payments does exist, such defaults have, historically, been very rare.

One often overlooked alternative investment, one that’s perfectly safe and tax-free, is, instead of depositing money in a certificate of deposit, using the money to pay down high interest rate debt, such as credit cards. Paying off the balance on a credit card that charges 19% annual interest has the same net effect on your finances as earning a 19% return on investment – with the added benefit that making such a move doesn’t incur any tax liability, thus, making for a 19% tax-free return on investment.

Treasury Yields

The best CD rates have caught up with short-term US Treasury Yields. Below are current US treasury yields available as of market close on September 13, 2023 (source).

This table shows an inverted yield curve – where short term interest rates are greater than long term interest rates, but it has leveled out some since our last update in early February.

In the past, this has been a successful indicator of a recession.

CD rates have also aligned with this trend as 12 month CD rates have been higher than 5 year CD rates since December of last year.

CD Rates Moving Forward – Summary

The short and sweet of it is that, given the Federal Reserve’s current stance on interest rates, the best CD rates may already be here. If the Fed raises rates in September as is currently expected then we could see CD rates tick upward again by another ~0.25%, inching the best CD rates up to the 6.00% APY mark, but likely not past it.

FAQs

Below are frequently asked questions by consumers.

Will CD Rates hit 6.00% APY?

There are currently no FDIC-insured CDs on the market providing an APY (annual percentage yield) of 6.00% on any term. However, given the Fed’s current stance on interest rates, if they decide to increase rates by another 0.25% before the year is over, then we may see the very best CD rates on the market hit 6.00% APY or within a few BPS of it.

The closest CD rates we’ve seen to the 6.00% APY mark are the brokered CDs at Vanguard which provide a yield of 5.75% APY for 13-18 month terms and a 5.65% APY CD from Nasa Federal Credit Union that comes with a 9 month term and requires a minimum deposit of $10,000 in ‘new money’ to the credit union.

Do CD Rates Go Up with Inflation?

Generally speaking CD rates are not directly correlated with the rate of inflation.

That said, the measures the Fed tends to use to address inflation – like quantitative tightening and raising prime rates – does put upward pressure on CD rates.

Do CD Rates Go Up with the Prime Rate?

The prime rate set by the Fed is the primary factor banks and credit unions use when determining the rate to charge on a loan to consumers. It also impacts the rates they provide on deposit accounts such as CDs and savings accounts.

Banks and credit unions use this prime rate because it is the rate they are charged by The Federal Reserve to fund their loan products.

Do CD Rates Go Up During a Recession?

Usually no. The Federal Reserve’s primary lever used to deal with a recession is lowering prime rates. This happened in the 1980’s and more recently with the 2008 recession where rates dropped from over 5% to historic near zero lows. CD rates followed suit in both instances.

That said, consumers still tend to flock to CDs more so in uncertain economic times.

APY GUY tracks and publishes noteworthy APYs (annual percentage yields) on both fixed and variable rate deposit products from hundreds of banks and credit unions nationwide.

In this September 2023 report, we’ve published what we’ve found to be the top CD rates available to residents in Florida looking for FDIC or NCUA insured, fixed-rate certificates of deposit. While we do our best to keep rates updated on a monthly basis at the minimum, we advise that you check with each financial institution individually to get updated CD and savings rates.

We should also note that although all of the CDs on this list are available to residents in the state of Florida, many are issued by institutions based outside of the state and/or without locations in the state.

According to FDIC state profile data (download here) there are 91 banks serving the state of Florida with combined assets of just over $287 billion.

There are also 129 credit unions with headquarters in Florida serving 7.17 million members with combined assets of nearly $111 billion according to CreditUnionsOnline.com.

The largest credit union in Florida by member size and assets held is Suncoast Credit Union, serving just over 1,100,000 members in the state and holding $16.31 billion in assets.

Credit unions and banks of all sizes within the state of Florida and throughout the country offer federally insured CDs with varying terms, generally ranging from a few months to 5 to 10 years. The FDIC insures bank deposits up to $250,000 per depositor and the NCUA insures credit union deposits up to $250,000 per depositor.

Generally speaking, with fixed-rate CDs, the longer you lock up your funds (i.e. the greater the term) the higher the APY you will earn.

That said, savings rates – both fixed and variable – at banks and credit unions are generally correlated to Federal Reserve rates which are now anchored between 5.25% and 5.50% following the Fed’s most recent rate hike.

Below is our report on the best CD Rates in Florida for the month of September, 2023.

Best 6 Month CD Rates

Below are the top three 6 month CD rates available to residents in Florida. These products may not be exclusive to Florida residents in all cases.

To put these yields into perspective, the national average for a 6 month CD sits at just 1.34% APY according to FDIC data.

There is just one institution on this list that is exclusive to Florida residents this month and that is Axiom Bank. Axiom Bank has just 7 locations throughout Central Florida.

Nasa Federal Credit Union has co-op locations in Florida that it shares with other credit unions. Their CDs can be opened online during the application process to join NFCU. The easiest way to join NFCU is to become a member of the National Space Society (NSS) which offers a complimentary membership.

Banesco USA is a state-chartered bank in Florida but offers their certificates of deposit online to consumers nationwide.

The Department of Commerce Federal Credit Union is based out of Washington D.C. and has just 3 locations in the area. Their deposit accounts, however, can be opened by anyone nationwide.

Best 12 Month CD Rates

Below are the top four 12 month CD rates available to residents in Florida.

Amerant Bank is based out of Coral Gables, Florida and has 17 locations throughout the state. Their CD accounts are only available to residents of Florida and Texas.

To give the offers above some context, the average APY on a 12 month CD sits at just 1.76%. The average 12 month CD rate in Florida is 2.32% APY according to Bankrate data.

Best 2 Year CD Rates

Below are the top four 2 year CD rates available to residents in Florida.

Florida Credit Union has 14 locations in the north central region of Florida, mostly in and around Gainesville. You must live within the 48 counties they serve to join and open a CD. Eligible metropolitan areas include Orlando, FL, Jacksonville, FL, and Tampa Fl. Miami-Dade County in the south and Pensacola in the northwest are not within their geographical footprint.

Popular Direct is the online-only division of Popular Bank, based out of New York. Their CDs can be opened by consumers in all 50 states.

To put these offers above in perspective, the average 2 year CD rate sits at just 1.50% APY, nationally. The average 2 year CD rate in Florida is 2.49% APY.

Bread Savings is an FDIC-insured online bank available to residents across the country.

Best 3 Year CD Rates

Below are the top five 3 year CD rates available to residents in Florida.

Bread Savings is another online bank that offers CDs to consumers across the country.

To put these offers above in perspective, the average 3 year CD rate sits at just 1.40% APY, nationally. The average 3 year CD rate in Florida is 2.63% APY.

Best 5 Year CD Rates

Below are the top five 5 year CD rates available to residents in Florida.

To put these offers above in perspective, the average 5 year CD rate currently sits at just 1.41% APY, nationally. The average 5 year CD rate in Florida is 2.75% APY.

Florida CD Rates VS National Average

Banks and credit unions operating in Florida and serving the residents therein, are currently featuring higher CD rates and APYs than what we find at the national level.

We’ve compiled a chart comparing average CD rates in Florida vs average CD rates in the US using both Bankrate and FDIC data. You can see the results below. These are accurate as of September, 2023.

Average CD Rates in Florida – vs – Average CD Rates Nationally: