Updated February 14, 2018
If you are looking for a better yield on your savings, a high rate CD (certificate of deposit) offered by an online bank could be a good option. Internet-only banks offer much better interest rates than traditional banks. For example, a 12-month CD at Bank of America would require a $10,000 minimum deposit and would pay only 0.07%. At an online bank, you could earn 1.85% with only a $2,000 minimum deposit. (If you would rather get a savings account or money market with no time restriction, look at the best savings accounts or best money market accounts).
This list is updated monthly, and competition continues to intensify. Here are the accounts with some of the best CD rates:
- 12-Month CD: Goldman Sachs Bank USA - 2.05% APY, $500 minimum deposit
- 2-year: 2.15% APY
- 3-year: 2.25% APY
- 5-year: 2.60% APY
- 6-year: 2.65% APY
- 1 year - 5 years: Barclays Bank - 2.00% - 2.55% APY, no minimum deposit
Barclays is one of the oldest banks in the world. Although they're based in London, they do have a U.S. presence and offer competitive rates on their CDs and savings account. Currently, they're offering some of the highest CD rates in the market, and they have an edge over the rest of the institutions on this list: they don't require a minimum balance to earn the APY or open an account. Deposit as little or as much as you'd like into a term of your choice and you can start earning interest as long as the account is funded within 14 days of opening the CD. Additionally, your funds are insured through the FDIC.
- 1-year: 2.00% APY
- 2-year: 2.10% APY
- 3-year: 2.20% APY
- 5-year: 2.55% APY
- 3 months - 5 years: Ally Bank - 1.00% APY - 2.50% APY; $0 minimum deposit (higher APY with higher deposit)
- 12-months: 1.75% APY (less than $5k); 1.85% APY ($5k minimum deposit) and 2.00% APY ($25k minimum deposit)
- 18-months: 1.80% APY (less than $5k); 1.95% APY ($5k minimum deposit) and 2.05% APY ($25k minimum deposit)
- 3-year: 1.85% APY (less than $5k); 2.00% APY ($5k minimum deposit) and 2.10% APY ($25k minimum deposit)
- 5-year: 2.25% APY (less than $5k); 2.40% APY ($5k minimum deposit) and 2.50% APY ($25k minimum deposit)
on Ally Bank’s secure website
- 3 months - 5 years: Synchrony Bank - 0.25% APY - 2.50% APY; $2,000 minimum deposit
- 12-months: 1.85% APY
- 18-months: 1.70% APY
- 2-year: 2.00% APY
- 3-year: 2.05% APY
- 5-year: 2.50% APY
- 1-Year CD: Live Oak Bank – 2.10% APY, $2,500 minimum deposit
Live Oak is a bank you’ll want to notice. With a minimum deposit amount of $2,500, you can earn an outstanding APY of 2.10%. They also offer an incredible rate on their online savings account. While they’re still a small bank when compared to Synchrony, Goldman Sachs, and Ally, they have quickly grown to have over $2 billion in assets. They do have a mobile banking app as well as the option to bank online. Although they have the capability to manage your account digitally, you will have to call one of their Customer Success Managers in order to withdraw your funds once the account matures.
- 2-Year CD: BankPurely – 2.35% APY, $1,000 minimum deposit
- 2-Year CD from a Credit Union: Latino Credit Union – 2.30% APY, $500 minimum deposit
Latino Credit Union is open to anyone who is willing to donate $10 to join the Latino Community Development Center (LCDC). You don’t have to be Latino to join the credit union or the organization. With a small deposit of $500, this credit union will reward you with a 2.30% APY. Accounts can be managed online or through their mobile app. Deposits made to Latino Credit Union are insured by the NCUA.
- 3-Year CD: Live Oak Bank – 2.40% APY, $2,500 minimum deposit
Live Oak proves themselves to be a bank with the best CD rates, once again. With the same minimum deposit amount as their 1-year CD, you’ll get a top APY of 2.40%. While opening the account can easily be done online, you’ll want to keep in mind that you’ll have to call the bank in order to withdraw your funds. If you don’t do this within 10 calendar days after the term ends, the CD will automatically renew with whatever rate is at the time of renewal.
- 3-Year CD from a Credit Union: Latino Credit Union, 2.40% APY, $500 minimum deposit
- 5-Year CD: Synchrony - 2.50% APY, $2,000 minimum deposit
- 5-Year CD from a Credit Union: Connexus Credit Union – 3.00% APY, $5,000 minimum deposit
If you’re able to deposit $5,000 into a CD, you’ll want to consider this 5-year CD with an incredible 3.00% APY. Anyone is able to join the credit union by making a donation of $5 to their organization called Connexus Association. This organization provides scholarships and assists educational institutions. They have a mobile banking app as well as an online banking platform.
3 Questions To Ask Before You Open A CD
1. Should I just open an online savings account instead?
With a CD, the saver and the bank make stronger commitments. The saver promises to keep the funds in the account for a specified period of time. In exchange, the bank guarantees the interest rate during the term of the CD. The longer the term, the higher the interest rate - and the higher the penalty for closing the CD early. With a savings account, there are few promises. You can empty the account without paying a penalty and the bank can change the interest rate at any time.
If you have a high level of confidence that you do not need to touch the money for a specified period of time, a CD is a much better deal. However, if you think you might need to use the money in the next couple of months, a savings account is a much better idea.
You can earn a lot more interest with a CD. Imagine you have $10,000 and know that you do not need to touch the money for two years. In a high-yield savings account earning 1.10%, you would earn $221 over two years. If you put that money into a 1.50% CD, you would earn $302. Given the ease of switching to an online CD, the extra interest income is easy money.
2. What term should I select?
The early withdrawal penalties on CDs can be significant. On a 1-year CD, 90 days is a typical penalty. And on 2 and 3 year CDs, a 6-month penalty is common. The impact of the penalty on your return can be significant. If you opened a one-year CD with a 1.25% APY and closed it after six months, you would forfeit half of the interest and earned only 0.63%. You would have been better off with a savings account paying 1.05%.
The worst case scenario is with the longest CDs. 5-year CDs usually have a one-year penalty for taking out funds early. If you open a 5-year CD and close it quickly, you could actually end up losing money.
Given the early penalties, you need complete confidence that you will not need to withdrawal the money early. Ask yourself this question: "do I have 90% confidence that I will not need access to the cash during the CD term?" If you don't have confidence, go for a shorter term or a savings account.
3. Should I consider my local bank or credit union?
The interest rates shown in this article are all from online banks that offer products nationally. Our product database includes traditional banks, community banks and credit unions. If traditional banks offered better rates, they would have been featured in this article. The internet-only banks have dramatically better interest rates. That should not be surprising. Because internet-only banks do not have branches, they are able to pass along their cost savings to you in the form of higher interest rates.
However, you can always visit your local bank or credit union and ask them to beat the rates listed in this article. The chance of getting a better deal is extremely low (remember that Bank of America is only paying 0.07%), but you can try.
How To Find The Best Account
If you don't find an account that meets your needs in this article, you can use the MagnifyMoney CD tool to find the best rate for your individual needs. Input your zip code, deposit amount and term. The tool will then provide you with CD options, from the highest APY to the lowest.
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Goldman Sachs Bank USA High-yield 12 Month CD
Synchrony Bank 12 Month CD
Synchrony Bank High Yield Savings
Barclays Online Savings Account
* All banks listed are a Member FDIC.