Are 10-Year CD Rates Worth It?

In the current economic landscape, investors are seeking stable, low-risk investment options to grow their wealth. One such option is a certificate of deposit (CD), particularly a 10-year CD. However, with interest rates fluctuating and other investment alternatives available, the question remains: are 10-year CD rates worth it? Let's delve into the current CD rates, their historical context, and how they compare to other low-risk investment options.



As of January 2025, the top 10-year CD rates offered by major banks and credit unions are as follows:

* Discover Bank: 3.40% APY; No minimum deposit to open
* Vio Bank: 2.75% APY; $500 minimum deposit to open
* EmigrantDirect: 2.00% APY; $1,000 minimum deposit to open
* MySavingsDirect: 2.00% APY; $1,000 minimum deposit to open

These rates are lower than the historical average for 10-year CDs. According to data from the Federal Reserve Bank of St. Louis, the average 10-year CD rate has fluctuated over the past four decades, peaking in the 1980s and then falling to very low levels for much of the 2010s and early 2020s. Rates have recently become more attractive again as the Federal Reserve took steps to help tame high inflation.

When comparing 10-year CD rates to other low-risk investment options, it becomes clear that CDs may not be the most attractive option for investors seeking higher yields or more liquidity. As of January 2025, the yield on the 10-year Treasury note is around 3.50%, which is slightly higher than the current 10-year CD rate. Additionally, high-yield savings accounts typically offer higher interest rates than traditional savings accounts, with APYs ranging from 3.50% to 4.00%. These rates are comparable to or even higher than the current 10-year CD rate, making high-yield savings accounts a competitive alternative for those who want liquidity and a higher yield.

Investing in 10-year CDs can offer both potential benefits and risks, which can align with a user's investment philosophy depending on their risk tolerance and financial goals. The guaranteed returns and low risk associated with CDs make them an appealing option for conservative investors seeking steady, guaranteed returns. However, the lack of liquidity and potential for missing out on higher yields in the market are significant drawbacks to consider.

In conclusion, while 10-year CDs can provide a stable, low-risk investment option, other alternatives like Treasury bonds and high-yield savings accounts may offer higher yields or more liquidity, depending on your investment goals and risk tolerance. It is essential to consider the potential risks and benefits of investing in 10-year CDs and align them with your investment philosophy before making a decision.