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 September, the average 1-year CD interest rate is 1.32% APY and the average 3-year CD rate is 1.73% APY, compared to the average 5-year CD rate of 2.08% APY.
Longer-term CDs do exist, but even their yields don’t often exceed 5-year CD rates these days. The highest yield on a CD of six or more years is 3.05% APY. 5-year CDs are also useful components to a CD ladder. When you build a ladder with CDs maturing a year apart, you can renew each one into a 5-year CD at maturity. This locks in the higher long-term rates for years to come.
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, similar to MagnifyMoney, a LendingTree owned company, 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 2019
|Institution||APY||Minimum deposit amount|
|United States Senate Federal Credit Union||3.05%||$20,000|
|Signature Federal Credit Union||3.00%||$500|
|Affinity Plus Federal Credit Union||3.00%||$500|
|Premier America Credit Union||3.00%||$1,000|
|Hiway Federal Credit Union||3.00%||$25,000|
|State Department Federal Credit Union||2.98%||$500|
|Pen Air Federal Credit Union||2.95%||$500|
|First National Bank of America||2.85%||$1,000|
|Dover Federal Credit Union||2.80%||$25,000|
|Prime Alliance Bank||2.75%||$500|
United States Federal Credit Union — 3.05% APY, $20,000 minimum deposit
Deposit at least $20,000 into a United States Federal Credit Union can get you an even better rate that the base level rate usually offered. Otherwise, you can open an account with just $1,000. The penalty for an early withdrawal will equal 360 days of dividends paid and accrued on the withdrawal.
USSFCU was created in 1935 by nine United States Senate employees, known then as United States Senate Employees Federal Credit Union until its name change in 1990. Membership is open to employees of Select Employee Groups, individuals sponsored by a family or household member, members of the American Consumer Council, Virginia Chapter (VACC) and members of the U.S. Capitol Historical Society (USCHS).
Signature Federal Credit Union — 3.00% APY, $500 minimum deposit
Open a 5 Year Share Certificate from Signature Federal Credit Union with just $500 to start earning at its competitive rate. Just don’t make an early withdrawal unless you’re willing to part with half the term’s worth of interest. In this case, you’d lose 2.5 years’ worth of interest. Partial withdrawals are also not allowed, so you’d have to withdraw all your funds and close the account as well.
Signature FCU was founded in 1970. You may be eligible for Signature FCU membership if you’re a USPS employee, employee or member of select associations and organizations or referred by current members. You can also enroll in American Consumer Council for free.
Affinity Plus Federal Credit Union — 3.00% APY, $500 minimum deposit
To start earning at Affinity Plus FCU’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.
Your Affinity Plus FCU membership eligibility depends on the organization where you’re employed or volunteer, your school or place of residence, work or worship or through eligible/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.
Premier America Credit Union — 3.00% APY, $1,000 minimum deposit
The 60-month certificate account from Premier America Credit Union earns its competitive rate on all balances of $1,000 and over. Dividends are compounded and paid monthly. Making an early withdrawal from this account will trigger a penalty of 180 days’ dividends, applied to the amount withdrawn.
Founded in 1957, Premier America Credit Union serves the Houston area. Family members of current members may also apply. You can also qualify for membership by joining Thousand Oaks Alliance for the Arts.
Hiway Federal Credit Union — 3.00% APY, $25,000 minimum deposit
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 the 60-month certificate. 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 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 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.
State Department Federal Credit Union — 2.98% APY, $500 minimum deposit
To snag a State Department Federal Credit Union 60 months Share Certificate, you’ll need only $500 to deposit. Dividends are compounded daily, which grows your money more efficiently. Early withdrawals from the account will cost either 180 days of dividends on the amount withdrawn or the amount of dividends earned since the date of issuance, whichever is smaller.
Of course, State Department FCU membership is open to employees of The U.S. Department of State. You may also be eligible through select organization membership, an immediate family member or the American Consumer Council. Groups may also apply for SDFCU membership.
Founded in 1935, SDFCU is headquartered in Alexandria, Va. It also offers its customers access to the CO-OP Shared Branch network for branches and ATMs.
Pen Air Federal Credit Union — 2.95% APY, $500 minimum deposit
Open a 60-month Pen Air Federal Credit Union Certificate Account with a $500 minimum deposit. The penalty for an early withdrawal will equal 180 days of dividends.
Founded in 1936, Pen Air is headquartered in Pensacola, Fla. and has 16 locations in Florida and Alabama. You qualify for Pen Air membership if you are active duty or retired military, a civil service employee, an employee at a partnering Select Employer Group or an immediate family member of eligible individuals. You can also become a member by joining the Navy-Marine Corps Relief Society, Inc.
First National Bank of America — 2.85% APY, $1,000 minimum deposit
At the top of the list is First National Bank of America with its high-yield 60 Months CD. It requires a minimum opening deposit of $1,000.
First National Bank of America was first founded in 1955 as First National Bank of East Lansing, becoming the name we know today in 1998. The family-owned company is based in Michigan and has three branches in the state.
Dover Federal Credit Union — 2.80% APY, $25,000 minimum to earn
With a $25,000 deposit, you can earn this competitive 5 Year CD rate from Dover Federal Credit Union. A higher deposit ($100,000 and over) will snag you a better rate, while a lower deposit will earn at a slightly lower rate. The penalty for an early withdrawal will equal 180 days dividends.
Dover Federal Credit Union was first chartered by Air Force and civilian workers at Dover Air Force Base in 1958. Generally, Dover FCU membership is open to military, Delaware families and over 450 Workplace Partners.
Prime Alliance Bank — 2.75% APY, $500 minimum deposit
Among Prime Alliance Bank’s slate of competitive CD rates is its high-rate 60-month account. It requires $500 to get started. If you make a withdrawal from this account before maturity, Prime Alliance Bank can charge a penalty of three months’ interest on the amount withdrawn.
Founded in 2004, Prime Alliance Bank is located in Woods Cross, Utah.
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 $882 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.