Finding the Best CD Rates
MoneyRates.com can help you quickly narrow your search for the best CD rates available.
Certificates of deposit (CDs) can be an important part of your saving and investment strategy. CDs can help savers earn more money by offering higher interest rates than most savings accounts and they rarely charge fees.
MoneyRates.com uses a careful methodology to track more than 500 CD products so you can find the best CD rate today.
Finding the highest yield on a CD is critical. Rates can vary greatly from bank to bank, even among CDs of the same length.
What is a certificate of deposit?
Certificates of deposit (CDs) are low-risk investment vehicles where financial institutions pledge to pay a certain interest rate in exchange for depositing money into an account for a given time period.
Compared to savings and money market accounts, CDs usually require that your money is deposited for a longer period of time in order to receive a favorable interest rate. CD accounts are typically insured by the Federal Deposit Insurance Corporation (FDIC,) depending on whether or not the institution is an FDIC member, making them low-risk investments for savers.
Who has the best CD rates now?
There are a large number of banks offering CDs and many compete to have the best CD rates so shop around using the money-rates.com tool to get the right CD for your financial situation and goals. Consider seven factors as you shop for the best CD rates.
7 steps to finding the best CD
- Determine how much you can invest
If you have a tax refund, bonus, or simply a higher than necessary savings account balance, you may want to invest all or part of those funds in a CD. If you have an emergency fund and factor in expected near-term bills such as those for property taxes, insurance and/or tuition, you should be able to assess the remaining amount that might reasonably be invested in a CD or CD ladder. The annual percentage yield (APY) is likely to vary depending upon how much you deposit, as shown below. Example APY amounts are illustrated for a one-year CD term.
Less than $5,000
$25,000 or more
- Choose a CD term
A CD’s term is the period of time investors must leave their funds on deposit. Long-term CD rates tend to be higher than short-term CD rates. However, depositors must decide how long they can comfortably go without withdrawing their money to avoid early withdrawal fees. When investors deposit funds into several CDs with different term lengths, they build a “CD ladder,” explained below.
Common CD terms
- 1 month
- 2 months
- 3 months
- 6 months
- 9 months
- 1 year
- 1.5 years
- 2 years
- 2.5 years
- 3 years
- 4 years
- 5 years
- Consider CD interest rates and trends
The APY makes a big difference in money earned from a CD account. While average CD interest rates may be low, the highest available rates can optimize your savings’ growth.
Consider two 5-year CDs, each with $50,000 deposited in it. One has an APY of 2.35 percent, while the other has an APY of 1.80 percent. Here’s how much each CD should be worth at the end of five years:
CD value at end of 5-year term*
* not including any fees
There may be other differences to consider, such as fees or early withdrawal penalties, but evaluating interest rates only, the higher-yielding CD in this case would be worth nearly $1,500 more over five years. Be aware that banks tend to offer higher CD rates for jumbo CD accounts.
To help you get more for your money by shopping for better bank rates, MoneyRates has compiled a searchable database of different rates offered by banks around the country. Using the tool below, you can specify the type of account, desired CD length, and deposit amount. The results allow you to compare different rates on deposit accounts that meet your specifications.
- Understand early withdrawal fees
Generally speaking, the longer the CD term, the higher the yield. But rates can change. If you commit to a CD and interest rates stay the same or fall during the term, it’s no problem. If rates climb in the months or years after, you may wonder what your options are for taking advantage of higher rates.
For example: Imagine you open a 2-year CD with a 2% APY and an early withdrawal penalty of six months’ interest. Assume that after one year, CD interest rates climb to 5%.
If you withdraw the balance in your CD to open a new one with a higher rate, it would cost you half your interest to that point, effectively reducing your APY for the first year to about 1%. But, if you’re able to secure that 5 percent interest rate during the second year, your average APY for the two-year term would equal about 3%, or 1% more annually than you would have earned if you stuck with the original CD.
To make sure that an early withdrawal is viable to improve your earnings, review the potential penalties before you open a new CD. If you find two CDs that are identical in most ways, compare their early withdrawal penalties. The one with the smaller penalty may offer you more flexibility if you want or need to exit the account sometime during the term.
- Compare different CD types
While traditional CDs are by far the most popular type, some banks offer their own twist on the usual product. Two additional types include:
- Unconventional CDs. A raise-your-rate CD is a special type of certificate that allows you to bump up your interest rate one or more times during the term (assuming rates have in fact risen), and indexed CDs forgo a fixed interest rate in favor of a variable rate that moves in accordance with a benchmark indicator.
- Foreign CD investments. Even more exotic, CDs that are denominated in foreign currencies allow investors to effectively gamble on the relative values of a nation’s currency. These vehicles may come with more risk than a typical CD though, as they may allow a loss in principal if the chosen currency loses value over the course of the term.
If you’re curious about other CD types, review our article on 8 types of CD accounts.
- Maximize earnings with a CD ladder
If you’d like your savings to earn maximum interest while still maintaining some regular liquidity, a CD ladder may be the way to go.
What is laddering a CD?
A CD ladder consists of multiple CDs with staggered maturity dates, which allows you regular, penalty-free access to a portion of your savings while still earning higher interest rates overall.
This is a great option if you intend to use or reinvest some portion of your savings on a regular basis, but don’t anticipate needing the whole of it at any given time. When done correctly, you can end up with a stable of long-term CDs in which at least one account reaches maturity every few months, offering you the option to access it or simply push it ahead to reach maturity at a chosen point in the future. After reviewing your options, narrow down your list for the best long term CD rates.
- Confirm FDIC insurance coverage for CDs
If safety and stability are paramount to you, a conventional CD may be your best choice – so long as you ensure that the bank you choose is insured by the FDIC. This insurance coverage is designed to protect funds up to $250,000 per depositor, per institution in the event of a bank failure, and it has never failed to cover insured deposits since the FDIC’s inception in 1933.
FDIC-insured banks must display the FDIC emblem in their branches or, in the case of online-based banks, on their website. Credit unions also have deposit insurance and are considered just as safe as traditional banks.
What is the average interest rate for a CD?
Interest rates change on a daily basis, so it’s essential to shop carefully to obtain the best CD rates and maximize earnings. According to the FDIC--as of this publication date, average CD rates for deposits less than $100,000 are:
- 1 month CD: 0.07%
- 3 month CD: 0.11%
- 6 month CD: 0.18%
- 1 year CD: 0.31%
- 2 year CD: 0.47%
- 3 year CD: 0.62%
- 4 year CD: 0.73%
- 5 year CD: 0.92%
Be sure to understand the how APR and APY differ. Review our article on The Difference between APY and APY.
While CDs are low-risk, they do come with some risk. Learn how to manage that risk in How Risky are Certificates of Deposit?
Best CD rates found by users like you
Have you been able to find even better CD rates than the ones displayed above? If yes, please share them with us and other MoneyRates users! Please include the details: the name of the bank, APY, term of the CD, when you opened the account, and whether the account can be opened online or only in the branch (if the latter, please include the location of the branch). Thank you!