Most of the time, the longer a person is willing to commit to leaving money in a certificate of deposit, the higher the interest rate they will receive.

In 2022, interest rates increased dramatically, raising the cost of borrowing money and also raising the interest rates banks offered on savings and time-deposit accounts. The Federal Reserve has raised benchmark rates nine times since the first quarter of 2022.

Rates on certificates of deposit increased so rapidly last year that I paid early-withdrawal penalties to close older CDs and open new ones. But an interesting thing happened toward the end of the year.

Instead of offering the highest interest rates for the longest-term CDs, banks started offering the highest rates for CDs of less than two years, and lower interest rates for longer-term CDs. 

For example, online bank Ally currently offers 4.5 percent interest (annual percentage yield) on a 12-month CD and 4.8 percent on an 18-month CD, but only 4.25 percent interest on a 3-year CD. Capitol One offers 4.3 percent on a two-year CD, but less for a four-year or five-year term. And Citi offers 4.05 percent on CDs with terms from nine to 18 months, but just 2.5 percent for longer terms.

Wells Fargo offers 2.5 percent on a 6-month CD, but only 1.5 percent on a 12-month. The highest CD rate offered by Chase, 3.5 percent, is for a 3-month CD and rates fall after that. Navy Federal Credit Union is offering 4.5 percent on an 18-month CD, but just 4 percent on a 5-year. 

This is not typical. Simply put, banks are telegraphing that they expect interest rates to peak in the near term and then decline.

Banks offer CDs with redemption periods ranging from as little as three months to as much as five years. The interest rate shift from the familiar longer-term/higher-rate scenario could change the way savers allocate their money and the expectations of borrowers.

Financial institutions are not always correct, of course, when they make projections for future months or years, but it can be instructive to know what they expect. 

For borrowers, this suggests that loan rates could be lower in the months ahead or next year than they are today.

For savers, and particularly those interested in certificates of deposit, the logical conclusion is to lock in the best interest rates. In January, Bankrate chief financial analyst Greg McBride predicted that “long-term CD yields will peak early in 2023” and we’re already watching that take place.

One bank I patronize is offering slightly lower interest rates on CDs now than they did a month ago, when they were the highest I’ve seen in years.

Nerdwallet’s most recent list of current rates shows that across multiple banks, one-year CDs are paying higher interest than three-year CDs, and three-year CDs are paying more than five-year CDs.

There are also dramatic rate differences between banking institutions, with credit unions and online banks generally paying the highest rates by a substantial amount.

According to a Bankrate.com survey, the national average rate for one-year CDs was just 1.69 percent, the week of April 19. But it’s not hard to find CDs — or even savings accounts — paying much higher interest than that.

Marcus by Goldman Sachs is now (through Sept. 15) offering 10-month CDs with an annual rate of 5.05 percent. Ally’s 18-month CD rate is 4.8 percent. Bread Financial is offering 5.1 percent on two-year CDs.

So, if you’re looking for a CD shop around and consider the terms that make sense for you. Withdrawing funds before the end of a CD term will bring a financial penalty.

Reach David Slade at 843-937-5552. Follow him on Twitter @DSladeNews.