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Updated on Monday, October 11, 2021
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. 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 October 2021
1. Hughes Federal Credit Union (29-month) — 1.01% APY, $1,000 minimum deposit
You can get this number-one-spot rate from Hughes Federal Credit Union by waiting just a bit longer for your 29-Month Certificate to mature. If you opt for a traditional 24-month CD, you’ll earn an APY that would still make our top 3. You’ll need a $1,000 minimum balance to get started. Making an early withdrawal from this account will result in a loss of $50 or 180 days’ dividends on a term. Hughes FCU does not allow partial withdrawals, either, so you’ll have to withdraw all your funds and pay the penalty.
Founded in 1952, Hughes Federal Credit Union is based in Tucson, Ariz. Originally founded to serve Hughes Aircraft Company employees and their families, Hughes Federal Credit Union now opens membership up to select employee groups and anyone who lives, works, worships or attends school in Tucson as well as to anyone who makes a minimum $10 donation to one of five organizations.
2. Lafayette Federal Credit Union — 0.90% APY, $500 minimum deposit
Lafayette Federal Credit Union offers a handful of certificates, including its 2-Year Fixed Rate Certificate, which requires $500 to open. Interest is compounded and paid quarterly. An early withdrawal from this account will trigger a penalty equal to 270 days’ worth of dividends.
Chartered in 1935, Lafayette is headquartered in Rockville, Md. It has branches in Maryland, Virginia and the District of Columbia, in addition to CO-OP Shared Branches throughout the country. Membership is open to those who live or work in its serviced areas, are employed by approved agencies or companies or are an immediate family member of a current member. You can also join Lafayette if you are an existing member of or become a member of the Home Ownership Financial Literacy Council.
3. Interior Federal Credit Union — 0.81%, $500 minimum deposit
You can take advantage of this 2-year CD rate when you open an Interior FCU Certificate with a minimum deposit of just $500. Early withdrawal penalties from this 24-month account will depend on how much you’re taking out and how far along in the term you are.
Interior Federal Credit Union was founded in 1935. Interior FCU membership is open to Department of the Interior employees, contractors and volunteers; National Parks volunteers; and employees and volunteers of select groups. You may also join through the New Mexico Wildlife Federation.
4. Evansville Teachers Federal Credit Union — 0.80% 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. CommunityWide Federal Credit Union — 0.80% APY, $1,000 minimum deposit
CommunityWide Federal Credit Union offers a 0.80% 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. Members of three charities — Michiana Goodwill Boosters, Marine Corps League of St. Joseph Valley, and Habitat for Humanity Helpers — are also eligible.
6. Merrick Bank — 0.80% APY, $25,000 minimum deposit
Merrick Bank’s 24-month CD earns a competitive rate, but it requires a hefty minimum investment of $25,000, which must be deposited in a single transaction. Interest is compounded daily and credited monthly. Making an early withdrawal from this account will trigger a penalty equal to 180 days’ interest. There’s a 10-day grace period at maturity where you can decide to cash out your CD or change any terms or amount before it automatically renews.
Merrick Bank was founded in 1997. They are headquartered in Draper, Utah.
7. Quontic Bank — 0.75% 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 two years’ 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. If you haven’t accrued enough interest to cover the penalty, the rest will come out of your principal.
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.
8. USALLIANCE Financial — 0.75% APY, $500 minimum deposit
Among USALLIANCE Financial’s wide spread of account options is this high-rate, low-deposit 24-month CD. Dividends are compounded daily and credited monthly, and you only need $500 to open an account. But try not to make an early withdrawal from this account, as it’ll cost you 360 days of interest on the amount withdrawn.
USALLIANCE Financial was founded in 1966 by IBM employees. Today, USALLIANCE Financial membership depends on your employer, residence, place of worship, school or organizational membership. You also qualify for membership if you join an organization out of the few they offer, which is free for you and set up by USALLIANCE.
9. First National Bank of America — 0.75% APY, $1,000 minimum deposit
First National Bank of America offers a wide range of CD terms from one to 84 months, each with a competitive rate. These CDs require a starting minimum deposit of $1,000. Interest is compounded quarterly, but withdrawing any money before maturity will result in a penalty of 360 days’ interest.
First National Bank of America first opened in 1955 and is based in Michigan, with three branches in the state in addition to its headquarters.
10. Live Oak Bank — 0.75% APY, $2,500 minimum deposit
Among Live Oak Bank’s high-yield short- and long-term certificates, the 2-year CD offers a great rate on midterm savings goals. Live Oak Certificates of Deposit can only be opened online and need at least $2,500 to open. The penalty for an early withdrawal equals 180 days of simple interest.
Live Oak Bank was founded in 2008 and has only one office — its headquarters — in Wilmington, North Carolina.
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 0.43% APY, as of October 2021.
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.