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 May was only 0.49% 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
Third Federal Savings and Loan
First Internet Bank
Spectrum Credit Union
Bellco Credit Union
Virtual Bank — 2.16% 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 The penalty for making an early withdrawal from a 3-Month eCDis 100% of the interest earned on the amount withdrawn, negating any earnings you may have received.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.
Third Federal Savings and Loan — 2.15% APY, $500 minimum deposit
Third Federal Savings and Loan offers a great deal on its 3-Month Special CD. You can start growing your money at a competitive rate, comparable to many longer-term CDs, for a minimum deposit of only $500. Just be careful of making an early withdrawal from the account, as you’ll lose one month’s worth of interest.
Third Federal Savings and Loan Association first opened in Cleveland in 1938, where it is still based today.
First Internet Bank — 2.12% 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.
NexBank — 2.10% 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.
Popular Direct — 2.05% APY, $10,000 minimum deposit
Popular Direct offers another high rate for a 3-Month CD if you have $10,000 to deposit. Interest compounds daily on this account. Just be careful about making an early withdrawal, as you’ll lose almost all of the interest you earned; the early withdrawal penalty equals 89 days’ simple interest.
Popular Direct is a division of Popular Bank, which is a New York state-chartered bank and provides FDIC insurance for your Popular Direct deposits. Popular Direct is headquartered in New York City.
Bethpage FCU — 2.00% APY, $50 minimum deposit
With competitive rates on all its Certificates, the Bethpage FCU 3-Month Certificate is no exception. It’s the last rate on our list in the 2% range. 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.
Spectrum Credit Union — 1.95% 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.
CD Bank — 1.90% 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.
USALLIANCE Financial — 1.75% APY, $500 minimum deposit
USALLIANCE Financial’s 3-Month Certificate Account requires at least $500 to open for you to start earning at its solid interest rate. For such a short term, the penalty for an early withdrawal is pretty high, charging 180 days’ dividends on the amount withdrawn.
USALLIANCE Financial was founded in 1966 by IBM employees. No longer limited to IBM, USALLIANCE Financial membership is open to select companies and their employees, neighborhoods and locations, places of worship, schools and organizations.
Bellco Credit Union — 1.60% APY, $500 minimum deposit
Bellco Credit Union offers a handful of high-yield CDs, including its shortest term 3-Month Regular CD. It requires at least $500 to open. The penalty for an early withdrawal from this account equals 30 days’ interest on the amount withdrawn.
Bellco Credit Union was founded in 1936 and is based in Colorado. You are eligible for Bellco membership if you live in a select Colorado county, work for a Bellco Select Employee Group, are affiliated with Consumers United Association or have a family member who is a Bellco member. For out-of-state folks, you can also join the Bellco Foundation for $10.
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.