Best CD rates today, December 25, 2025 (lock in up to 4.2% APY)

Core Insights - CD rates are currently higher than historical averages, with the highest rate at 4.2% APY offered by United Fidelity Bank for a 2-year CD [2] - The Federal Reserve has been cutting its target rate, leading to a decline in CD rates since last year [2][5] - Online banks are particularly competitive, offering rates of 4% APY and above [2] Group 1: Current CD Rates - CD rates are relatively high compared to historical averages, but have been declining since the Federal Reserve began cutting rates [2] - The highest CD rate available today is 4.2% APY from United Fidelity Bank on a 2-year CD [2] - Several financial institutions are offering competitive rates of 4% APY and up, especially among online banks [2] Group 2: Federal Reserve Actions - The Federal Reserve has cut its target rate three times in late 2024 by a total of one percentage point due to slowing inflation and an improved economic outlook [3] - The Fed announced its third rate cut of 2025, with potential additional cuts anticipated in 2026, though the timing and number of cuts remain uncertain [4] - The federal funds rate does not directly impact deposit interest rates, but they are correlated; typically, when the Fed lowers rates, financial institutions follow suit [5] Group 3: Opening a CD - The process for opening a CD account varies by institution but generally includes researching rates, choosing an account that meets financial needs, and preparing necessary documents [6] - Important factors to consider when opening a CD include competitive rates, term length, minimum deposit requirements, and potential fees [6] - The application process is typically quick, often allowing for online applications, and funding the account can be done through transfers or checks [6]