Northern Bank Direct Offers 4.50% APY on Six and Nine Month CDs

As of July 16, 2025, investors have the opportunity to secure attractive returns on certificates of deposit (CDs), with the best rates offering up to 4.50% annual percentage yield (APY). This comes at a time when the Federal Reserve has held interest rates steady, following three rate cuts in 2024. The current highest CD rate of 4.50% is available from Northern Bank Direct for its six- and nine-month CDs. This rate is part of a broader trend where CD rates have stabilized in 2025, although there is potential for further reductions later in the year.

CD rates remain competitive across various term lengths, with both shorter-term and longer-term certificates offering elevated APYs. While the APY is a crucial factor in selecting a CD, it is not the only consideration. Investors should also evaluate the financial institution's reputation, minimum deposit requirements, penalties for early withdrawal, and deposit insurance coverage. Online banks and smaller regional institutions often provide more competitive rates compared to larger national banks, which tend to focus more on loans and credit cards.

The Federal Reserve's policy decisions, particularly changes to the fed funds rate, significantly influence market rates for CDs. The Federal Open Market Committee (FOMC) held its first semi-annual meeting in January 2025, leaving the fed funds rate unchanged. The most recent FOMC meeting, held on June 17-18, also saw no changes to the federal funds rate. The next meeting is scheduled for July 29-30. The Fed's rate cuts in 2024, aimed at supporting the economy as inflation subsided, led to a decrease in CD rates from their recent highs. However, current CD rates are still close to their peak levels, providing investors with an opportunity to secure attractive returns on both short-term and long-term certificates.

Historically, CD rates have fluctuated significantly. In the early 1980s, rates surged into double digits, while by 2019, the APY for a 5-year CD had slightly exceeded 3%. Throughout the early 2020s, top rates typically remained below 1% APY. In recent years, rates saw a significant increase, with the best offerings surpassing 5% APY in 2024. In 2025, rates have begun to stabilize and drop below this threshold. Investors should consider factors such as term length, APY, minimum deposit, penalties, and deposit insurance when comparing CDs. Online banks and fintech companies generally offer more competitive rates due to lower overhead costs, making them an attractive option for savers.

For those hesitant to commit funds for extended periods, CD ladders offer a strategic solution. By diversifying savings across CDs with different maturity dates, investors can benefit from both short-term accessibility and higher long-term interest rates. For example, investing in three staggered CDs (1-year, 2-year, and 3-year) allows for annual access to funds along with the accrued interest. As each CD matures, the funds can be reinvested into a new 3-year CD, providing a balanced approach to savings and investment.