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Updated on Tuesday, September 15, 2020
When it comes to saving and growing your money, you want to make sure you’re doing it efficiently. This is especially true if you’re building a CD ladder, where every component should be optimized for your savings goals. CD ladders are typically built from accounts that mature within a year of each other. For many savers, that means finding the best 1-year CD rates, the best 2-year CD rates, the best 3-year CD rates, and so on.
To help you find the best CD rates on 2-year accounts, we sifted through data from DepositAccounts.com, a LendingTree-owned site. To start, we sorted by highest APY on 2-year CDs APY. We also took into consideration the minimum deposit requirement for each account.
The 10 best 2-year CD rates in September 2020
1. Pen Air Federal Credit Union — 1.05% APY, $500 minimum deposit
Deposit just $500 to a Pen Air Federal Credit Union 24-month Certificate for some solid savings at 1.05% APY. Early withdrawals from a 24-month Certificate will trigger a penalty equal 180 days dividends.
Founded in 1936, Pen Air FCU has 15 locations in Northwest Florida and Southeast Alabama. Its membership is open to you if you are active duty or retired military, a civil service employee, a partnering select employer group employee or an immediate family member of the previous options. You may also join by becoming a member of the Friends of the Navy-Marine Corps Relief Society, Inc.with a one-time $3 donation, which Pen Air will make on your behalf.
2. Quorum Federal Credit Union — 1.10% APY, $1,000 minimum deposit
Quorum’s CD terms range from 3 months to 5 years, each with a minimum deposit of $1,000. As with most CDs, the longer you put your money away for, the more it will earn, but it’s worth noting that from 12 months on, their CD rates are not drastically different. So if you can’t do a full 2 years, you’ll still earn a respectable APY.
Membership is open to employees of Quorum and its partner companies or through a referral from a family member or friend of the credit union. If neither of these applies to you, you can also become a member as Select Saver, which requires a basic savings account with a minimum deposit of $5. If your application to open an account is accepted, Quorum will fund that for you.
3. CommunityWide Federal Credit Union — 1.05% APY, $1,000 minimum deposit
CommunityWide Federal Credit Union offers a 1.05% APY on its 24-month term share certificate. You’ll need at least $1,000 to get started. CommunityWide term share certificates do not renew automatically. Withdrawing any part of the principal amount before maturity will trigger a penalty equal to the amount of the withdrawal times the remaining term (in days) of this certificate at the rate of two times the current APR (divided by 365) paid on this certificate. The penalty amount will be deducted from the amount withdrawn.
CommunityWide Federal Credit Union was founded in 1967 as the West Washington Association Federal Credit Union, assuming its current name in 1985. CommunityWide is based in South Bend, Ind., and opens up membership to members, employees and retirees of select organizations; spouses of persons who died while within the credit union’s field of membership; and immediate family household members.
4. Evansville Teachers Federal Credit Union — 1.04% APY, $1,000 minimum deposit
This 2-year certificate from Evansville Teachers Federal Credit Union offers a high APY at a relatively low minimum opening deposit. As with all the credit union certificates, this is a fixed rate for the length of the term.
Evansville Teachers Federal Credit Union was started by a group of Evansville, Ind., teachers in 1936 as a way of generating loans for fellow teachers post-Depression. You no longer need to be an educator in the district to take advantage of the credit union; joining the credit union is as easy as making a $5 donation to the Mater Dei Friends and Alumni Association.
5. Quontic Bank — 1.11% APY, $500 minimum deposit
You’ll need to fund this CD with a minimum of $500 and also maintain that amount to earn this rate. A penalty of one year’s worth of interest will be assessed if you make a withdrawal before the CD matures, so make sure you fund this with money you can afford to not touch for two years.
Founded in 2005, Quontic is a largely digital bank with headquarters in New York City and a few branches in New York and Florida. Quontic Bank is a designated Community Development Financial Institution (CDFI), which means it serves low-income communities and receives federal funding to continue providing banking products and services to those communities.
6. State Department Federal Credit Union — 1.00% APY, $500 minimum deposit
With just $500, open a State Department Federal Credit Union 24-monthsCD to snag its competitive 1.00% APY. Interest is compounded daily and credited quarterly. There’s no service charge on the account, but watch out for the early withdrawal penalty. It will equal either 180 days of dividends on the amount withdrawn or the amount of dividends earned since the date of issuance, whichever is less.
SDFCU was originally chartered in 1935 by eight employees of the United States Department of State. Membership is open to Department of State employees, employees or members of select partner organizations and immediate family members of current members. You may also become eligible by joining the American Consumer Council.
7. Primary Bank — 1.00% APY, $1,000 minimum deposit
Primary Bank’s 2-year CD may just be joining this list, but its products have made many of our top 10 lists across a range of products. The minimum for this particular CD is $1,000. Can’t keep your money locked up for two years? Check out the bank’s 12- and 15-month CDs, which still come in at a very competitive APY compared to the 2-year interest rates on our list.
Based in New Hampshire, Primary Bank is focused on business accounts, but offers a wide range of personal checking and savings options, too. Its savings accounts come with free online banking, electronic statements and no-fee withdrawals at any SUM Network ATM.
8. Matadors Community Credit Union — 0.95% APY, $1,000 minimum deposit
With a minimum opening deposit of $1,000, you can open a Matadors Community Credit Union certificate, including its high-yield 24-month certificate. Platinum Members of the credit union can earn an additional 0.15% on a certificate of 12 months or longer.
MCCU was founded in 1963 and opens its membership up to employees at select employer groups throughout the San Fernando, Simi and Santa Clarita Valleys in California.
9. BankDirect — 1.00% APY, $10,000 minimum deposit
If you have thousands of extra dollars to stash away, consider opening a BankDirect 24-month CD. It requires at least $10,000 to open. The early withdrawal penalty on this account is 180 days’ worth of interest on the principal amount withdrawn.
BankDirect, which went live in 1999, is a branchless division of Texas Capital Bank, N.A.
10. California Coast Credit Union — 1.00% APY, $10,000 minimum deposit
California Coast Credit Union offers certificate terms from 3 months to 5 years. The 24-month certificate sits in the middle of the pack in terms of length and APY offered. If you don’t have $10,000 to drop, a balance up to that amount still gets you a rate that just misses our top 10 by a few spots.
California Coast has been around since 1929 and directly serves the California counties of San Diego and Riverside. Even if you don’t live or work in those counties, you can still join California Coast Credit Union by paying a one-time, non-refundable membership fee of $5.
The best 2-year CD rates vs. the national average 2-year CD rate
As we’ve said, the key to maximizing your savings is finding the right accounts for stashing your money with the highest CD rates. Luckily, the best 2-year CD rates above all earn at substantially higher interest rates than the average 2-year CD rate. On average, 2-year CD rates earn just 0.64% APY, as of September 2020.
Let’s say you deposit $5,000 into a CD earning at the national average. At the end of your 24-month CD, you’ll have earned $74 in interest. Boost that APY to 3.00%, and your earned interest grows to $305, a much better return on your cash.
It’s also helpful to check out how often a bank compounds interest. Most often, you’ll see CDs with monthly or daily compounding interest. In basic terms, compounded interest is the interest you earn on already-earned interest. For example, with daily compounding, your balance earns interest today. Then tomorrow, that new, higher balance will earn even more interest, and so on. It’s a simple change that can grow your savings a little bit more efficiently.
Using the above example, a $5,000 deposit into a 24-month CD at 3% APY grows by $309 with interest compounded daily. If you compound it monthly, you’ll earn $308 instead, while quarterly compounding drops that amount by nearly another dollar, and so on. While that might not seem like much, it can prove useful if you’re looking to maximize your savings down to every last dollar.