A Certificate of Deposit (CD) is a safe and easy way to store cash that you won’t need for awhile. You’ll earn a higher interest rate with a CD than you would with most normal savings accounts. It’s important to make sure you can leave the money untouched for a period of time, though. If you make a withdrawal before the CD’s term is up you may have to pay surrender charges. That means you lose the advantage of a higher interest rate.
CD rates fluctuate over time, but you’ll get the highest rates from online banks. Here are the eight best bank CD rates. Before you commit to a CD’s terms, shop around to make sure you are getting the highest possible interest rate.
CIT Bank No-Penalty 11-Month CD
You can only get the CD with an 11-month term. Unlike other CDs, you can withdraw your money just 7 days from opening the account without paying a penalty and you get to keep the interest earned. This is a unique feature among CDs offered by other banks. You’ll get 0.35% APY, which is higher than most rates for a regular savings account.
This is an excellent choice if you want to store your cash in a CD, but aren’t 100% sure that you’ll be able to leave the money untouched for the entire term.
Ally Bank 5-year CD
Ally Bank automatically renews your CD at maturity unless you choose to close your account or move the money. If you want one of the best possible interest rates on a 5-year CD, Ally Bank is a great option. You’ll earn 1.0% APY plus a 0.05% loyalty reward if you choose to renew your CD when the term ends. There’s no minimum amount required to open an account and start earning excellent interest rates on an Ally Bank CD.
Synchrony 5-year CD
You can purchase a CD with Synchrony bank with a term of just three months. That CD earns 0.25% APY. Synchrony’s five-year CD earns 0.90% APY with a $2,000 opening deposit. Their 12-month CD pays 0.60% APY.
Synchrony offers a 15-day Best Rate Guarantee that allows you to get even higher rates if the bank raises CD rates within a couple of weeks of the day you open your CD. You also have the option of choosing an IRA CD that offers the same APY with the tax advantages of a retirement account.
Fidelity 5-year CD
The main advantage of purchasing a Fidelity 5-year brokered CD is the option to join their Auto Roll Program. Your money is automatically invested when your CD term is up unless you take action. You can purchase brokered CDs from other banks and put them into a single account with Fidelity.
Your best bet with Fidelity is their 5-year CD, which earns 0.50% APY. If you set up your investment with Auto Roll, you can automatically invest maturing principal into another CD so you can continue to earn interest.
Capital One 360 3-year online CD
With the Capital One 360 CD, you can choose when you get an interest payment. Whether it works for you to receive your interest monthly, annually, or at the end of the term – it’s up to you.
There are no minimum balance requirements to open an account, and their three-year CD has a decent rate without venturing into the range of longer CD terms.
Barclays 12-month CD
Choose a CD term between three months and five years. You won’t need to save up to open a CD with Barclays; they are one of the online banks that offer a CD without a minimum opening deposit requirement. The 12-month CD offers 0.40% APY, which is the highest interest rate on CDs offered by this bank. There’s no rate bump for signing up for a longer term, although you can get up to a 60-month CD at 0.40% APY.
Barclays offers a CD that is straightforward. They consistently offer great CD rates, so if you want to roll over your investments, you may be able to hang onto a high interest rate.
Discover Bank is an excellent choice if you want a long-term CD. They offer terms of three months to ten years. Their highest-paying tier is in the five to ten-year range, where your money earns .80% APY. You can open a short-term CD with Discover Bank, as well. Their terms start at just 3 months, where you’ll earn 0.25% APY. A 12-month CD earns 0.60% APY.
You need $2,500 to open an account. Discover Bank has a stiff early withdrawal penalty of 18 to 24 months of simple interest on CD terms between five and ten years.
BBVA Bank 12-month CD
This CD earns 0.15% APY during the 12-month term. You’ll need $500 to open the account. There are no maintenance fees with BBVA Bank’s CDs. Their 36-month CD earns 0.20% APY. Read the fine print with these CDs, though. The advertised APYs are only good for the initial term. BBVA also says that they charge a “substantial penalty” for early withdrawal.
BBVA’s CD could be a good choice if you are new to CDs and want to open an account with a low minimum requirement.
Frequently Asked Questions about CDs
What is a CD?
A Certificate of Deposit (CD) is an account you can open with a bank or credit union that offers a higher interest rate in exchange for your agreement to leave the balance of the account untouched for a predetermined amount of time.
Each bank has its own rules and interest rates for CDs. You’ll get a better interest rate with a CD than you would with a savings account, checking account, or money market account at your financial institution. If you open a CD and decide to withdraw the money before it’s date of maturity, you’ll pay a penalty.
Are CDs safe?
CDs are one of the safest ways to invest your money. You can’t lose money on a CD, no matter how the market changes over time. You can incur penalties for making a withdrawal before the maturity date of the CD, however. If you think you may need to access the money you put into a CD before the maturity date, consider choosing another savings or investment for your cash.
CDs are FDIC insured up to $250,000, making them an ultra-safe place to put your money.
What if you need your money after you open a CD?
You may have to pay a penalty if you withdraw money from your CD before its maturity date. Before you agree to open a CD with a specific bank, look up their penalty policy so you understand exactly how much an early withdrawal may cost.
You can get the benefits of a CD without risking an early withdrawal penalty if you choose to invest with CIT Bank’s no-penalty 11-month CD.
How much interest does a CD earn?
CD rates vary from one bank to the next, which is why it’s important to check the most current rates and shop around. The amount of interest you earn depends on how much money you deposit and the length of your CD term.
So, if you deposit $2,500 into a five-year CD with Ally Bank, you’ll earn a total of $127.53 and end up with a $2,627.53 balance when the CD term ends.
Can I add money to my CD after I open the account?
In general, you can’t add to your opening deposit when you sign up for a CD. If you want to continue to invest, you can open additional CDs. With Capital One 360 CDs, you can have as many as 50 separate CDs at once.
How can I get the best CD rates?
There is a wide range of CD rates available, depending on the bank or credit union’s offerings. You can open a CD at a different bank than the one where you have your regular checking and savings accounts if you find a great rate. Shopping around is important because every bank offers a different range of CD rates and interest rates for this product. Online banks tend to pay much higher interest rates on CDs than regular brick-and-mortar banks and credit unions.
To get the best CD rates, watch for promotional offers with special durations.
Can I assign a beneficiary to my CD?
Your beneficiary is the person you leave your CD funds to in the event of your death. In general, the person must be over the age of 18 and a U.S. citizen. It’s smart to assign a beneficiary when you open a CD. They won’t be able to access your money while you are alive, but if something happens to you, they can make the decision to close the account and withdraw the money or leave it alone until the term is up.
The bottom line
Adding CDs to your overall savings plan is a smart move. You can earn more money with a CD than with a regular savings account, so you’ll see your money grow even faster. While CDs are a safe place to park your cash, you can’t access the money before the end of the CD term without incurring penalties. If you think you may need access to the money short-term, opt for a high-yield savings account or check out the no-penalty CD option offered by BBVA Bank.