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Updated on Thursday, May 13, 2021
Five-year CDs offer some of the highest savings interest rates available. In exchange for keeping your money on deposit for half a decade, banks are willing to dole out higher returns on these long-term accounts. For example, in May, the average 1-year CD interest rate is 0.346% APY and the average 3-year CD rate was 0.542% APY, compared to the average 5-year CD rate of 0.713% APY in the same month.
Longer term CDs do exist, but even their yields don’t often exceed 5-year CD rates. The highest yield on a nationally available CD of six or more years is 1.26% APY.
To make sure you’re getting the best CD rates, MagnifyMoney has uncovered the highest 5-year CD rates available nationwide. Using data from DepositAccounts.com, we found that the best 5-year CD rates earned well above the national average interest rate for 5-year CDs. We also took minimum deposit requirements into consideration, to check for wider customer availability.
The 10 best 5-year CD rates in May 2021
1. Abound Credit Union — 1.30% APY, $500 minimum deposit to earn APY
Abound Credit Union’s 59-month CD rate easily tops our list for the smallest of deposits. Interest is compounded and paid quarterly, but if you invest $10,000 or more, you could be paid monthly. If you withdraw early, you’ll lose out on 365 days’ interest, whether or not you’ve earned it.
Abound, which opened in 1950, is Kentucky’s largest credit union with more than 100,000 members. Membership to Abound is open to members of the military or civil service as well as employees of partner organizations and people who live in certain Kentucky counties. But the credit union will help you find a way to sign up even if you don’t meet those qualifications.
2. Superior Choice Credit Union — 1.30% APY, $25,000 minimum deposit to earn APY
While you need only $2,500 to open a Superior Choice Credit Union 5-year share certificate, you’ll need at least $25,000 to earn this rate. All other balances will earn at a lower APY but would still not only make our list, but also come in near the top. According to Superior Choice Credit Union customer service, making an early withdrawal from this account will result in a percentage of your balance being charged as a penalty, including accrued interest.
Established in 1932, Superior Choice Credit Union has a handful of branches near its Superior, Wisc., headquarters. You can also access over 30,000 fee-free ATMs and 5,000 branches nationwide and in Canada through the CO-OP Network. The easiest way to qualify for membership to Superior Choice, especially for those who don’t live in Minnesota or Wisconsin, is by joining the American Consumer Council.
3. Lafayette Federal Credit Union — 1.26% APY, $500 minimum deposit to earn APY
Lafayette Federal Credit Union offers a variety of certificates, but it’s the 5-year fixed-rate certificate you’ll want to turn to for competitive savings. It earns 1.26% APY and requires only $500 to open. You’ll lose 600 days’ worth of dividends if you make a withdrawal from the 5-year term fixed rate certificate.
There are several ways you can become an LFCU member: You can live or work in its serviced areas; work at partner institutions; be an immediate family member of a current credit union member; or be a member of the Home Ownership Financial Literacy Council.
LFCU was founded in 1935 and is based in Rockville, Md. Members can take advantage of its branches throughout Maryland, Virginia and Washington, D.C., as well as CO-OP Shared Branches and ATMs nationwide.
4. Affinity Plus Federal Credit Union — 1.25% APY, $500 minimum deposit to earn APY
To start earning at Affinity Plus Federal Credit Union’s competitive rate on a 60-month basic certificate, you’ll need an opening deposit of at least $500. Early withdrawals from this account may trigger a penalty of 365 days’ worth of dividends.
Affinity Plus Federal Credit Union membership extends to employees and volunteers of select organizations; those who live, work or worship in certain Minnesota cities; and relatives and roommates of current members. You can also easily join by making a one-time $25 donation to the Affinity Plus Foundation. Affinity Plus Federal Credit Union was founded in 1930 and is currently headquartered in St. Paul, Minn.
5. Wheelhouse Credit Union — 1.15% APY, $10,000 minimum deposit to earn APY
You’ll need to make a fairly substantial investment to earn this high APY, but if you have as little as $500, you can still get a rate that would land on this list. Dividends are calculated daily and compounded and paid quarterly.
If you live or work in San Diego — where Wheelhouse Credit Union is based — or someone in your family is already a member of the credit union, you qualify for membership. If these stipulations don’t apply to you, you can also join by becoming a member of the San Diego Automotive Museum.
6. Hiway Federal Credit Union — 1.15% APY, $25,000 minimum deposit to earn APY
Typically, Hiway Federal Credit Union Certificates require a $500 minimum deposit, but you’ll need to deposit at least $25,000 to unlock the highest rate available on this 60-month certificate. For a $10,000 deposit you’ll still get an APY that makes the list. The penalty for an early withdrawal from this account will equal 365 days’ worth of dividends.
Hiway Federal Credit Union was founded in 1931 to serve employees of the Minnesota Department of Transportation. Today, it is based in St. Paul, Minn., and opens up membership to employees of qualifying companies or government agencies; members of Minnesota Recreation & Park Foundation; members of the Association of the U.S. Army; members of the Hiway Credit Union Foundation; and those who live, work, worship or attend school in the Metro Community Area. You may also qualify through a current member or household member.
7. Michigan State University Federal Credit Union — 1.10% APY, $500 minimum deposit to earn APY
Lock in this 5-year certificate rate at Michigan State University Federal Credit Union with a deposit of at least $500. If you withdraw your money early, you’ll be charged a penalty of 180 days’ interest on the amount withdrawn, which will come out of your principal if your interest doesn’t cover it.
MSU Federal Credit Union was founded in 1937. Membership is open to the Michigan State University community; select employee and community groups; and those who live, work, worship, go to school, or own a business in any of five Michigan counties. You can also join through a $10 donation to the Desk Drawer Fund.
8. Financial Partners Credit Union — 1.10% APY, $1,000 minimum deposit to earn APY
Place your money in one of the top 5-year CD rates with Financial Partners Credit Union. Its 60-month savings certificate requires just $1,000 to get started saving at its competitive 1.10% APY. The penalty for an early withdrawal equals 180 days’ interest.
Financial Partners Credit Union was founded in 1937 by a handful of aviation workers. Today, it has branches throughout California, with its headquarters located in Downey, Calif. Financial Partners Credit Union membership is open to select California community members and employees of a wide range of employer groups or the American Consumer Council.
9. California Coast Credit Union — 1.10% APY, $10,000 minimum deposit to earn APY
You’ll need to deposit $10,000 to earn at this 60-month CD rate from California Coast Credit Union, but even a deposit as small as $1,000 carries an APY that would barely miss this list. You’ll also be required to maintain a savings account with them. If you withdraw your money early, you’ll forfeit 365 days’ dividends, which will be deducted from the principal if there isn’t enough interest in your account to cover it.
California Coast Credit Union was started in San Diego by educators in 1929 to support fellow teachers and local schools. Membership is geared toward people who live or work in San Diego or Riverside counties, but it’s OK if you live outside of those areas. A $5 membership fee may apply.
10. Evansville Teachers Federal Credit Union — 1.05% APY, $1,000 minimum deposit to earn APY
You can open any fixed-rate certificate at Evansville Teachers Federal Credit Union with only $1,000 — including this 5-year certificate. You will earn this rate until the certificate matures. To gain access to the credit union’s certificates, however, you will also need to open a regular share account with at least $5.
Evansville Teachers FCU was formed to help teachers in Indiana after the Great Depression, but today anyone can join by making a charitable contribution of as little as $5 to the Mater Dei Friends and Alumni Association. Membership may also extend to you through your employer, organization or family or household member.
5-year CDs vs. savings accounts
If you’re simply looking for the highest rates available, 5-year CDs are going to seem much more appealing than a savings account. Even the best savings accounts can’t quite reach the 5-year CD rates you’ll find above. Plus, 5-year CDs lock in their rates at opening for the term of the investment, guaranteeing your rate of return. This can make for a great savings vehicle for conservative investors, who don’t want to ride the waves of an ever-changing economy.
Looking at the numbers, a $5,000 deposit into a 5-year CD at 3.25% APY would result in $881 of extra savings at maturity. Meanwhile, making a $5,000 deposit into one of the best savings accounts at 2.25% APY lands you with nearly $595 in savings after five years.
Savings accounts do provide easier access to your money, though. If you find yourself in a pinch suddenly, you can make a quick ACH transfer online or a withdrawal at a branch or ATM. Withdrawing from CDs isn’t as easy, especially when you account for the money you’ll lose to early withdrawal penalties. As you can see from the accounts above, early withdrawals from a 5-year CD can result in the loss of six months’ to two years’ worth of interest.
5-year CDs vs. other investment options
Investing in individual bonds — Treasury, municipal, or corporate — can be a solid alternative to saving with 5-year CDs. Non-Treasury bonds do have some risk by default as they don’t have the FDIC/NCUA insurance coverage limits. You can use these bonds to build a ladder similar to a CD ladder, so each bond matures a year or so apart.
An alternative to creating a bond ladder is to invest in a mutual fund or ETF of bonds. Unlike a ladder, however, the value of a bond mutual fund or ETF does fluctuate with interest rates. So when interest rates go up, the value of those investments will drop and vice versa.
The best way to maximize your 5-year CD investment
If you’re putting away money for five years, you’re going to want to make it worthwhile. For starters, CDs are best for those who have already maxed out their other savings accounts and have their emergency savings in a liquid savings account for easy access. They’re also better if you have a higher deposit to stash away. That will earn more interest in the long term for more tangible savings.
For example, placing $1,000 in a 5 year CD with a 3.25% APY will yield about $176 in savings by the end. Making a $10,000 deposit, on the other hand, lands you with a little over $1,764 in interest. That $176 is a good chunk of change, but you should make sure it’s enough to justify stashing away $1,000 now instead of perhaps waiting to make a larger deposit.
A great way to utilize a 5-year CD is to include it in a CD ladder. A 5-year, five-CD ladder is a standard and easy-to-track method of saving. You open five CDs, each maturing a year apart. Once a CD matures, you renew it as a new 5-year CD. Eventually, all your CDs will be 5-year accounts, maturing a year apart. You can also choose to withdraw your money whenever an account matures if you need to use those funds. This allows you to take advantage of the longer terms’ higher rates and bigger savings.