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If you have some extra cash 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 September is only 0.499% 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
Minimum deposit amount
|First Internet Bank||1.92%||$1,000|
|Spectrum Credit Union||1.85%||$500|
TotalDirectBank — 2.20% APY, $25,000 minimum deposit
You can earn the top 3-month CD rate if you have $25,000 to spare. If you make an early withdrawal from this account, TotalDirectBank will charge a penalty of one month of the simple interest earned, based on a 360 day year.
TotalDirect Bank is the online division of City National Bank of Florida, which was founded in 1946.
Virtual Bank — 2.15% APY, $10,000 minimum deposit
To snag the highest 3-month CD rate, you’ll need at least $10,000 as an opening deposit for a Virtual Bank 3-Month eCD. The penalty for making an early withdrawal from a 3-Month eCDis 100% of the interest earned on the amount withdrawn, negating any earnings you may have received.
Virtual Bank is a digital division of IBERIABANK, which was founded in New Iberia, La. way back in 1887.
MapleMark Bank — 2.05% APY, $25,000 minimum deposit
To earn the better rate on MapleMark Bank’s 90 Days CD, you’ll want to deposit at least $25,000. Otherwise, you’ll earn at a much lower rate. The early withdrawal penalty on this account will equal
Founded in 1909, MapleMark Bank has two branches, one each in Texas and Oklahoma.
Advancial — 2.04% APY, $25,000 minimum deposit
While a regular Advancial Savings Certificate requires $1,000 to open, you’ll need at least $25,000 to snag this competitive rate as a junior jumbo certificate. Advancial will allow you to use your certificate as collateral to secure a loan. The early withdrawal penalty from a 3-month Savings Certificate will equal 90 days worth of interest earned on the amount withdrawn.
Advancial was founded in 1937 and is based in Dallas. Advancial membership eligibility is open to employees and members of one of Advancial’s Select Employer Groups or Associations, an immediate family or household member of a qualified individual or individuals who live, work, worship or attend school select Louisiana parishes.
TIAA Bank — 1.95% APY, $5,000 minimum deposit
If you have at least $5,000 to set aside, you can benefit from TIAA Bank’s high-rate 3-month Yield Pledge CD. The penalty for an early withdrawal from this account equals 22 days of simple interest.
TIAA was founded in 1918 and is headquartered in Jacksonville, Fla. It operates entirely online, however.
CD Bank — 2.00% APY, $10,000 minimum deposit
As is the case with all its accounts, CD Bank also offers a pretty competitive rate on its 3-Month CD. You’ll need at least $10,000 to open and start earning interest, which is credited semi-annually. Making a withdrawal from this CD before maturity will cost you three months’ worth of interest on the amount withdrawn.
CD Bank offers only CD accounts. It is an online division of Dallas-based TBK Bank, which is a subsidiary of Triumph Bancorp, Inc.
First Internet Bank — 1.92% APY, $1,000 minimum deposit
You can get started with a First Internet Bank 3-Month CD with $1,000. The early withdrawal penalty associated with this account will equal 90 days’ interest.
Like its name suggests, First Internet Bank was the first FDIC-insured institution to operate entirely online from its founding in 1999.
Spectrum Credit Union — 1.85% APY, $500 minimum deposit
To open a Spectrum Credit Union 3-month Share Certificate, you’ll need at least $500 to deposit. After that, all balances can earn at the given rate. Making an early withdrawal from the 3-month Share Certificate will charge a penalty of three months’ worth of dividends.
Spectrum Credit Union was founded in 1973 originally as Bechtel Employees Federal Credit Union. It is a division of Chevron Federal Credit Union (CFCU), a California-based credit union that was established in 1935. Spectrum membership is available to a variety of customers including employees of select companies, residents of select San Francisco and Maryland neighborhoods. You can also become eligible for Spectrum Credit Union membership by joining one of its partner nonprofit associations.
Popular Direct — 1.90% APY, $10,000 minimum deposit
Closing out the list is Popular Direct’s 3 Month CD, which requires a minimum $10,000 deposit. Making an early withdrawal from this account will take out a chunk of your savings, as it will cost you 89 days simple interest.
Popular Direct online products are offered by its parent bank, Popular Bank, the U.S. banking subsidiary of Popular, Inc.
NexBank — 1.85% 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. CD balances must 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.
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.