Top CD Rates
Certificates of deposit (CDs) are a unique banking product. In exchange for locking up your money for a set period, you can also lock in a relatively risk-free interest rate on your deposit.
CDs can have maturities ranging from as little as 30 days to as much as 10 years, though most banks and credit unions typically offer between one and five years, which means they’re generally best if you have money you don’t need for the life of the account. While you may be tempted to open a CD account with the bank or credit union that you already bank with, you may end up getting a subpar rate in return.
Synchrony Bank CDs
Synchrony Bank offers a lot of flexibility with no minimum opening balance, and the online bank also offers a couple of other options. Its no-penalty CD allows you to withdraw your money before maturity without incurring a penalty, and its bump-up CD allows you to request a rate increase once during its 24-month term if market interest rates go up.
Capital One 360 CDs
Capital One’s no minimum balance makes its CDs accessible to anyone who wants to set aside some cash for the future. Also, its penalties for early withdrawal aren’t as punitive as some of the other CDs on our list.
Discover Bank CDs
Discover offers the widest range of maturities on our list, with options as short as three months and as long as 10 years. This spread makes it easier to take advantage of CD laddering, which involves spreading your deposits across accounts with varying maturities, so you can enjoy the higher rates with longer terms without locking up all of your money for so long.
That said, the interest rate doesn’t get higher once you reach five years. As a result, it might not make sense to go for a longer maturity if you’re not getting compensated for it, especially because the longest maturities have the most punitive early withdrawal penalties. Finally, Discover has one of the largest minimum balance requirements on our list.
Marcus by Goldman Sachs High-Yield CDs
One feature that sets Marcus apart from the competition is its 10-day rate guarantee. As long as you have the minimum opening deposit in the account within 10 days, you’ll receive the highest published rate during that period for your CD’s maturity.
CIT Bank Term CDs
Anyone looking for a secure way to earn interest on their money in the short-term should consider CIT Bank’s certificates of deposit. While many banks require customers to keep their funds deposited for multiple years in order to earn the highest interest rate possible, CIT Bank takes the opposite approach by incentivizing customers to open short-term CDs with high rates.
While CIT Bank’s CD rates drop off significantly at the 2-year term mark, its 13-month CD earns 4.65% APY, which is better than many of the best 3-year CD rates on the market.
CIT Bank’s term CDs are a good choice if you have at least $1,000 to deposit and you don’t need to access your money for at least 12 months. Anyone who’s saving up for a vacation, down payment or other goal that isn’t right around the corner will do well to consider keeping their money in a CD.
Quontic Bank CDs
Quontic Bank’s CD rates are competitive, and the minimum deposit required is slightly lower than some of its top competitors. However, you should only consider Quontic CDs if you’re sure you can keep the money in your account until it reaches maturity. If not, you’ll be faced with hash penalties, such as having to pay 12 months worth of interest for a 1-year CD you opened less than a year prior.
What to Look for in a Certificate of Deposit
Reviewing the highest CD interest rates can help you determine where to stash your money for the long term. However, finding the best APY available is just one piece of the puzzle. And remember, different CD terms often equate to different rates. One-year CDs typically offer lower rates than five-year CDs, for example. But even then, they’re not always linear, growing the longer you lock in your funds.
When you’re looking to find the best CD, keep these other features in mind:
- Term flexibility: If a bank or credit union only offers one or two term options, you’ll have less flexibility to find a term length that matches your needs for your money. Look for institutions with a variety of CD options. This can also make it possible to climb the CD ladder.
- Fees: None of the CDs we reviewed have recurring monthly maintenance fees, but they may have fees for other account activities. As you shop around, make sure you look at fee schedules to avoid unnecessary costs.
- Minimum deposit: Just because you have enough money to fund a CD doesn’t mean you want to lock up that much cash. This is especially true if you’re using the laddering strategy and want to spread out your funds across multiple CDs. Look for CDs with low or no minimum deposits to make sure you keep your options open.
- Other CD features: Some CDs offer specific features, like bump-up CDs or 10-day rate guarantees. If these are critical for your finances, you’ll want to narrow down your list of options to banks and credit unions that offer what you’re looking for.
- Early withdrawal penalty: If you plan on depositing funds into a CD, be sure you won’t need the cash until the account matures. For this reason, banks typically offer higher rates on CDs as opposed to savings accounts. But in the event you need access to your money early, whether because of an emergency or other unforeseen circumstance, it’s important to understand how much the early withdrawal penalty will cost you. In some cases, early withdrawal penalty can even eat into your principal balance. If you’re not 100% sure you won’t need your money for your desired CD’s term length, you may be better off considering a no-penalty CD. Although those tend to offer lower rates over shorter periods of time, you won’t have to worry about incurring extra charges in the event of an emergency. Note that you can generally get the early withdrawal penalty waived if the account owner dies or is determined to be mentally incapacitated.
And if you’re the kind of person who values convenience and having everything under one roof, check out what other products and services the bank or other financial institution offers. Depending on what you’re looking for, you may be able to find a bank or credit union that serves all your financial needs, not just a high-yield CD.
Certificate of Deposit FAQs
Before you open a certificate of deposit account, it’s important to consider whether a CD is the right financial tool for your needs. Unlike in decades past, today there are a wide variety of high-yield savings accounts that offer rates competitive with short-term CDs rates. Plus, with high-yield savings accounts you can more freely access your money without worrying about being penalized.
It’s important to take a close look at your financial situation before committing to a longer-term CD. If you are reasonably sure you will need access to that money before the CD matures, then It doesn’t make sense to save money in a CD account. Those terms are best for large balances that you want to hold in a relatively risk-free account, but really don’t need for everyday or even emergency expenses. Depending on your situation, take some time to consider all of your options before opening a certificate of deposit. CDs aren’t the only relatively safe options out there. If you’re looking for places for your money to grow that don’t ask for such a long-term commitment, consider Treasury Bonds, municipal bonds, savings bonds, high-yield savings accounts and high-interest checking accounts.
Certificates of deposit (CDs) are relatively risk-free deposit accounts that can offer a higher rate than some other savings accounts. Unlike investment accounts, once your money is in a CD, it won’t rise or fall with the rates of the market. Instead, it accrues a certain annual percentage yield (APY) over a pre-set term based on interest rate and other factors. In exchange for a higher-than-average interest rate, you’ll agree to hold your deposit in the account until it matures, which can take three months to five years in most cases.
With most CDs, you’ll be penalized if you withdraw your money before the account matures. The penalty can amount to several months’ worth of accrued interest, and in some cases can even decrease your principal deposit. Remember: banks are offering you a higher rate with a CD on the promise that they will be able to hold on to your money for a set amount of time. They really don’t want you moving it around. As a result, these accounts aren’t great for people who anticipate needing their money before the maturity date.
However, some institutions now offer no-penalty CDs. As the name suggests, these accounts let you withdraw your money for free. No-penalty CDs can give you some additional flexibility, but most still have some restrictions on withdrawals, which can make them less appealing than other savings accounts with competitive rates. And, as a rule of thumb, no-penalty CDs offer lower interest rates than traditional CDs.
A CD ladder is a savings strategy that involves spreading money across multiple CDs instead of putting all of it into one. If you have $10,000 to save, instead of putting it all in a five-year CD, you might put $2,000 in a one-year CD, $3,000 in a three-year CD, and $5,000 in a five-year CD.
This way, you can take advantage of higher yields with long-term CDs without needing to lock up all of your money for a longer period of time.
If you have a CD with a bank that’s a member of the Federal Deposit Insurance Corporation (FDIC), then your funds are FDIC insured. This means that if the bank fails, your funds are insured by the federal government for up to $250,000 per depositor, per insured bank, per account ownership category. If the federal government fails, well, we’ll probably all have some more immediate problems to solve.
CDs offered by federal and state-chartered credit unions are not covered by the FDIC, but they receive the same insurance coverage through the National Credit Union Administration.
The interest you earn depends on a few factors, including the APY, the term of the CD and how often the bank or credit union compounds the interest, such as daily, monthly or quarterly.
If you’re thinking about getting a CD, search for an online CD interest calculator to get an idea of how much money you can earn during the period. And make sure that the interest rate offered is significantly higher than competing high-yield savings accounts, otherwise the CD you’re looking at may not be worth it.
There are both fixed- and variable-rate CDs available. With a fixed option, your rate stays the same until the CD matures. With a variable rate, it can fluctuate over time.