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Historical CD interest rates: 1984-2022

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Decades ago, certificates of deposit were good investments, with average CD yields exceeding 10 percent APY. You won’t find returns remotely close to that today. For example, the average one-year CD has an annual percentage yield of just 0.19 percent, Bankrate’s March 16, 2022, survey shows.

“The Federal Reserve began cutting interest rates in the second half of 2019 to sustain an ongoing economic expansion,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “But when COVID-19 shook global economies, the Fed quickly brought benchmark rates to near zero levels to provide fuel for a recovery.”

The downside to high CD rates is that they’re often an indication that inflation is high, too, which means your savings loses value. Inflation is at a 40-year high of 7.9 percent, latest figures from the Bureau of Labor Statistics show.

High inflation might have CD savers expecting to see yields rise significantly and soon. But on March 16, the Federal Reserve raised its benchmark interest rate by just 25 basis points. McBride expects the central bank to be cautious about rate hikes.

“The balancing act the Federal Reserve has is to raise interest rates enough to tamp down inflation without tipping the economy into a recession,” he notes. “But the Fed can’t fix the supply chain issues or the commodity-priced inflation stemming from Russia’s invasion of Ukraine.

“I’m skeptical of just how high they’ll be able to push rates without bringing on a recession. That ceiling could be quite low, considering the Fed couldn’t get rates above 2.5 percent in 2018 before the economy slowed so much they had to reverse course and start cutting rates in 2019.”

Here’s a look at the historical ups and downs of CD rates and some background on why rates moved up or down through the decades. Compare current CD rates now to grow your savings.

CD rates in the 1980s

The U.S. faced two recessions in the early 1980s. That’s when CD yields peaked. On average, three-month CDs in early May 1981 paid about 18.3 percent APY, according to data from the St. Louis Federal Reserve.

The reason interest rates were so high in the 1980s was due to high inflation. With inflation, the cost of goods and services rises and your money doesn’t buy as much. And so, while savers enjoyed higher rates on their certificates of deposit, their spending power took a hit.

“Interest rates were significantly higher in the early 1980s as the Federal Reserve, led by Paul Volcker, used high rates to corral double-digit inflation,” McBride says.

Find out how much interest you could earn on a CD these days.

CD rates in the 1990s

Following another short recession in the early 1990s, conditions improved and inflation fell. Overall, the decade was marked by a solid economy.

“CD yields dropped in the early 1990s following a recession and on the heels of the Fed’s efforts a decade earlier to break inflation,” McBride says. “Yields stabilized in the second half of the decade amid a sustained economic expansion.”

In June 1993, rates started to look normal again, with the average one-year CD yield sinking to 3.1 percent APY, Bankrate survey data shows.

Find out how today’s rates on CDs and savings accounts stack up.

CD rates in the 2000s

In early 2000, after the dot-com boom began to lose steam, the economy started to slow and the Fed lowered interest rates to stimulate the economy.

The average yield on one-year CDs fell below 2 percent APY in 2002, Bankrate data shows.

In 2009, following the global financial crisis, the average one-year CD paid less than 1 percent APY. Average rates on five-year CDs were slightly higher (about 2.2 percent APY).

Other rates fell, too, as the central bank cut its key interest rate to the lowest point possible. As a result, rates declined overall.

“This decade was bookended by recessions, both of which brought about record-low interest rates for their time,” McBride says. “In the middle was a housing boom and 17 interest rate hikes by the Fed that produced a camelback look to the trend in CD yields.”

CD rates from 2010 to 2020

The Federal Reserve’s efforts to stimulate the economy following the Great Recession left many banks flush with cash. Banks held on to their extra funds, so they didn’t have to boost rates on certificates of deposit to obtain money for lending.

CD yields reached historic lows. In June 2013, average yields on one-year and five-year CDs were 0.24 percent APY and 0.78 percent APY, respectively, according to Bankrate data.

“CD yields continued to fall in the years following the Great Recession as the Federal Reserve kept benchmark interest rates at near zero amid a sluggish economic recovery,” McBride says.

Savers benefited from rising rates as the Fed gradually increased its benchmark interest rate between December 2015 and 2018. In the decade since the Great Recession, rates have been headed back down.

“The Fed raised interest rates nine times between 2015 and 2018 before beginning a reversal of course in the second half of 2019 in an effort to sustain what by then was a record-long economic expansion,” McBride says.

CD rates since 2020

In March 2020, the Fed made a couple of emergency rate cuts as a result of the economic lockdowns brought on by the COVID-19 pandemic.

Here’s how CD rates fell in the year after those emergency rate cuts of 2020 were made:

  • From June 2020 to June 2021, the average one-year CD dropped to 0.17 percent APY from 0.4 percent APY.
  • From June 2020 to June 2021, the average five-year CD fell to 0.31 percent APY from 0.58 percent APY.

Average CD rates have climbed slightly since June 2021. Bankrate’s March 16, 2022, rates survey data shows:

  • The average one-year CD yield is 0.19 percent APY.
  • The average five-year CD yield is 0.36 percent APY.

“CD yields fell to new record lows when interest rates were slashed to near-zero levels in the early stages of the pandemic,” says McBride, who expects CD yields to improve slowly.

“The outlook for a series of interest rate hikes to combat inflation will mean improving yields in the weeks and months ahead,” he says, “but it will be a long road back from the record lows.”

Written by
Libby Wells
Contributing writer
Libby Wells covers banking and deposit products. She has more than 30 years’ experience as a writer and editor for newspapers, magazines and online publications.
Edited by
Wealth editor