Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Updated on Monday, March 1, 2021
If you have some extra cash and are looking for a quick return, a 3-month certificate of deposit (CD) could be the handy savings tool you’ve been looking for. CDs with a 3-month term are typically the shortest CD offerings available. Because they’re such brief investments, 3-month CDs also tend to earn at pretty low interest rates. In fact, the average return on a 3-month CD in January is only 0.16% APY.
However, low 3-month CD rates are far from being an inescapable destiny. In order to compete for customers, some banks end up offering really great rates on short-term CDs. This competition can be a big advantage if you know where to look. And we know where to look: Read on to see the best CD rates for 3-month terms.
We ranked the following products by highest APY available nationwide, using data from DepositAccounts.com, another LendingTree-owned company. We also took minimum deposit requirements into consideration to ensure wider availability for customers. Finally, we checked each account’s early withdrawal penalty, as 3-month CD penalties can take a larger chunk of your earnings out than other terms.
The best 3-month CD rates
1. Spectrum Credit Union — 0.50% APY, $500 minimum deposit
Spectrum Credit Union offers a high-yield rate with its 3-month share certificate, which requires a $500 minimum deposit. After that, all balances can earn at the given rate. Making an early withdrawal from the 3-month share certificate will result in a penalty of three months’ worth of dividends.
Spectrum Credit Union was founded in 1973 as Bechtel Employees Federal Credit Union. In 2012, it became a division of Chevron Federal Credit Union (CFCU), aiming to serve communities that Chevron’s membership does not reach. Spectrum membership is available to a variety of customers, including employees of select companies and residents of select San Francisco and Maryland neighborhoods. You can also become eligible by joining one of its partner nonprofit associations.
2. Service Credit Union — 0.40% APY, $500 minimum deposit
Dividends are compounded monthly on this 3-month CD from Service Credit Union and credited every month. At the end of the term, you can take out your funds or roll them over. The minimum to open an account is $500.
Service Credit Union was originally formed in 1957 to provide financial services to military members and their families. Active military and veterans are still welcome to join, as are community members of select Massachusetts areas. If you don’t fall under these categories, you can also join Service Credit Union through the American Consumer Council. Use the code “Service” to score a membership at no cost.
3. NexBank — 0.50% APY, $10,000 minimum deposit
NexBank certificates of deposit earn at some great rates, especially its 3-month CD. NexBank requires a pretty high opening deposit of $10,000 for its CDs, and balances max out at $240,000. The penalty for an early withdrawal will equal one month’s worth of interest.
In addition to its CDs and other personal deposit accounts, NexBank focuses largely on commercial banking, mortgage banking and institutional services. It was established in 1934 and is based in Dallas.
4. Hiway Federal Credit Union — 0.40% APY, $25,000 minimum deposit
Dividends are calculated daily on this 3-month CD from Hiway Federal Credit Union, which requires a substantial opening balance of $25,000. But investing only $10,000 will still get you a rate that just misses the top 10. Withdrawing before maturity will cost you 30 days’ dividends. The certificate automatically renews for the same term if you don’t make any changes within the 14-day, post-maturity grace period.
Minnesota-based Hiway Federal Credit Union opens its membership outside the Metro Community area to employees of partner organizations. You can also qualify if you become a member of the Minnesota Recreation and Park Foundation or the Association of the United States Army for a small donation.
5. Bethpage Federal Credit Union — 0.40% APY, $50 minimum deposit
With competitive rates on all its Certificates, the Bethpage Federal Credit Union 3-Month Certificate is no exception. Plus, you only need $50 to open an account, so it’s easier to get started. The penalty for an early withdrawal from this account is 90 days’ worth of dividends on the principal amount withdrawn.
Bethpage FCU first opened in 1941 to serve Grumman employees. Based in Bethpage, N.Y., the credit union also offers customers access to thousands more branches and ATMs throughout the country through the CO-OP Network. Bethpage FCU opens membership up to anyone; you just need to open a Bethpage savings account and fund it with $5 to become a member.
6. Affinity Plus Credit Union — 0.40% APY, $500 minimum deposit
The APY listed here is for a 3-month Affinity Plus Basic Certificate. Dividends are compounded and credited monthly. Withdrawing money before the three months is up carries a stiff penalty of 90 days’ interest, essentially wiping out any benefit, so be sure you can leave your money untouched until the CD matures.
There are many avenues of eligibility for membership in Affinity Plus, most centering around your employer or participation in select Minnesota areas. But anyone can join by making a one-time $25 payment to the Affinity Plus Foundation.
7. Evansville Teachers Federal Credit Union — 0.40%APY, $1,000 minimum deposit
This 3-month certificate from Evansville Teachers Federal Credit Union earns a solid rate for such a short term. You’ll only need $1,000 to deposit to secure this rate.
Evansville Teachers Federal Credit Union was established in 1936 by a group of Indiana teachers in response to the Great Depression to help serve the financial needs of teachers at the time. Today, ETFCU membership is still open to teachers, but it also serves through other employers, organizations and family members. You can also join by donating as little as $5 to the Mater Dei Friends & Alumni Association.
8. Pen Air Federal Credit Union — 0.40% APY, $1,500 minimum deposit
You’ll need a minimum of $1,500 to open a 3-month certificate at Pen Air Federal Credit Union with this APY. There is a penalty worth 90 days’ dividends for withdrawing the principal amount early, so it’s best to wait the full three months to take full advantage of the competitive savings.
Pen Air FCU has locations in Alabama and Florida, plus the credit union participates with the CO-OP Shared Branch network. This credit union has been around for nearly 86 years. You can become a member if you are active duty or retired military; a civil service employee; an employee of a select employer group; or a family member of any of those. You can also join through the Friends of the Navy-Marine Corps Relief Society, Inc. with a onetime donation of $3, which Pen Air will contribute for you.
9. Garden Savings Federal Credit Union — 0.35% APY, $500 minimum deposit
This 3-month CD rate also applies to the credit union’s 4- and 5-month CDs, so you can take your pick if you want to let your savings sit for a bit longer. If you opt for a term longer than three months, make sure you can do without the money for that time frame because the penalty for early withdrawal is 90 days’ dividends earned.
Like most credit unions, you can qualify for Garden Savings FCU membership based on where you live or who you work for. Anyone can easily join by becoming a member of the American Consumer Council, and with the code “garden,” joining won’t even be at any cost to you.
10. Teachers Federal Credit Union — 0.35% APY, $1,000 minimum deposit
With at least $1,000, you can open a Teachers Federal Credit Union certificate account at a branch or over the phone. Early withdrawal carries a penalty of all dividends earned since you opened the CD or 180 days’ dividends, whichever is less. With the 3-month certificate specifically, principal withdrawn early is included in the amount subject to the penalty.
Teachers FCU was established in 1952 by Long Island teachers, and it has branches throughout the area. Today, anyone can join the credit union.
Short-term CDs vs. long-term CDs: Which are better investments?
Both short-term and long-term CDs are great investment tools, although they serve different purposes depending on your savings goals. Long-term CDs are better for saving for goals years in the future. They also help you lock in high rates for years to come to protect against a rate-dropping climate.
Short-term CDs, on the other hand, are better when you have some extra cash you need to stash away for a bit. You can take advantage of high rates, but there is the inherent risk that in three or six months, that rate may have gone down. On the flip side, a short-lived term allows you to take advantage of rising rates more quickly.
A CD alternative that would still allow you some flexibility in catching rising rates would be to open no-penalty CDs instead. Like their name suggests, no-penalty CDs allow you to avoid the typical early withdrawal penalty associated with CDs. That way, when you start to see higher available CD rates, you can close up one CD and deposit those funds in a new, higher rate account without losing money.
Because short-term CDs expire so quickly, it might make sense to open a more liquid savings product instead. “A reasonable alternative is to just keep that money in a savings or money market account for three or six months,” suggests Ken Tumin, founder of DepositAccounts.com, a LendingTree-owned company. “In fact, the savings account rates at many internet banks are actually quite a bit higher than their 3- and 6-month CD rates.”
However, there is always the chance of your variable savings account rate decreasing without notice. So if you can open one of the best 3-month CDs above, the returns could be worth locking away your money for a few months.
Starting off a mini CD ladder with a 3-month CD
Many CD ladder guides suggest building a ladder starting with a 1-year CD. That technique results in CDs that mature every year. But you can also just as easily kick off a CD ladder with 3-month CDs. That would allow for more frequent maturity dates. For example, you could start a ladder with 3-month, 6-month, 9-month and 12-month CDs. When the 3-month, 6-month and 9-month CDs mature, you would renew each one into a 12-month CD. The steady state of the ladder would then be just 12-month CDs that mature every three months.
You can also create a ladder with longer-term CDs that still mature every three months. In this case, it’s a little more complicated when starting the CD ladder. In sticking with the example above, you could also open a 24-month and 36-month CD at the outset. After several rollovers into various terms over the next few years, the ladder’s steady state would have a 36-month CD maturing every 3 months. This could be an ideal way to take advantage of high rates now while also leaving some room for higher rates in the future. It also offers opportunities for you to receive a payout every three months.