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 July, the average 1-year CD interest rate is 1.38% APY and the average 3-year CD rate is 1.82% APY, compared to the average 5-year CD rate of 2.19% 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 3.45% APY, though the next best rate comes in at 3.25% 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|
The Federal Savings Bank
Citizens State Bank
Hiway Federal Credit Union
Garden Savings Federal Credit Union
First National Bank of America
State Department Federal Credit Union
Home Loan Investment Bank, F.S.B
United States Senate Federal Credit Union
Dover Federal Credit Union
The Federal Savings Bank — 3.30% APY, $10,000 minimum deposit
To earn the highest rate on this list, you’ll need at least $10,000 to spare, as this is the minimum opening deposit required to open a Federal Savings Bank 5-year CD. The penalty for an early withdrawal from this account equals one year of interest.
Established in 2000, the Federal Savings Bank is veteran-owned and focuses heavily on mortgage lending throughout all 50 U.S. states. It has two retail banking branches in the Chicago area.
Citizens State Bank — 3.20% APY, $1,000 minimum deposit
To get started with one of Citizens State Bank’s handful of Certificates of Deposit, including its high-yield 60 Month Term, you’ll need to deposit at least $1,000. The penalty on an early withdrawal from a 60 Month Term CD will equal 12 months interest on the amount withdrawn.
Chartered in 1958, Citizens State Bank offers its products nationwide through its virtual banking platform, CSBdirect.com. The bank is headquartered in Perry, Fla. and offers its nationwide customers convenient online, mobile and widespread ATM access.
Hiway Federal Credit Union — 3.20% 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.
Garden Savings Federal Credit Union — 2.53% APY, $500 minimum deposit
Garden Savings Federal Credit Union offers a competitive CD rate on its 5 Years Share Certificate. You’ll need at least $500 to open. Dividends are typically paid out monthly on this account. The early withdrawal penalty is 180 days of dividends earned.
Garden Savings Federal Credit Union was founded in 1968, originally to serve employees at AT&T Bell Laboratories. Today, you can become a Garden Savings member through several other sponsor companies, your place of residence, worship or school or through a family member.
First National Bank of America — 3.00% 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.
State Department Federal Credit Union — 3.09% 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.
Home Loan Investment Bank, FSB — 3.05% APY, $2,500 minimum deposit
Check out Home Loan Investment Bank’s competitive 5 Year CD, which you can open with at least $2,500. The early withdrawal penalty will equal six months’ worth of interest.
Home Loan Investment Bank was founded in 1959 and maintains branches throughout Rhode Island and Massachusetts.
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).
Dover Federal Credit Union — 3.05% APY, $25,000 minimum deposit
Dover Federal Credit Union typically requires a minimum deposit of $500 to open a Personal Share Certificate. However, to earn at a higher rate, you can deposit $25,000, which is the case with the 5 Year Share Certificate. You can even deposit $100,000 or more to snag a higher rate.
The penalty Dover Federal Credit Union may impose on an early withdrawal will equal 180 days dividends.
Dover Federal Credit Union was first chartered in 1958 by Air Force and civilian workers at Dover Air Force Base. Membership is open to military and civilian employees and contractors in the United States Military & Uniformed Services, employees or volunteers of select Business Partners, family and household members of current members and Friends of Bombay Hook association members.
nbkc bank — 3.04% APY, $1,000 minimum deposit
You can get started with an nbkc bank 60 Month CD with just $1,000. The penalty for early withdrawals will equal 18 months’ worth of interest, the highest penalty on this list.
nbkc bank is largely an online bank, but customers in the Kansas City area can visit its branches in the area, both in Kansas and Missouri.
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.