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Updated on Tuesday, September 15, 2020
Short-term certificate of deposit (CD) accounts offer investors a safe opportunity to squirrel away money for a future expense. If you’re looking for a brief solution for storing your cash and want to earn more interest than a typical savings account will offer, a 6 month CD can make a lot of sense. (It’s also a good place to start if you’re building a CD ladder.)
Using information from DepositAccounts.com, database of offerings at more than 17,100 banks and credit unions, we found the five banks and five credit unions with the top 6-month CD rates. If there was a tie, we chose the institution with the smaller minimum deposit requirement. The national average APY on 6-month CDs (among banks and credit unions) is 0.35%, according to the DepositAccounts.com database. These options outperform that average by a long shot. (You may also want to view our picks for the overall best CD rates.)
Banks with the best 6-month CD rates
As of September 2020
All rates expressed in annual percentage yield (APY) unless otherwise stated.
1. Marcus by Goldman Sachs — 0.75% APY, $500 minimum deposit
Not only does the 7-month No-Penalty CD from Marcus by Goldman Sachs offer a solid 0.75% annual percentage yield (accurate as of 7/9/2020), but it also comes with the added benefit of no early withdrawal penalty. This makes for more flexibility when saving with a CD, as you don’t have to worry about losing money to open another account with your CD funds. There is a $500 minimum deposit requirement.
Marcus by Goldman Sachs operates online under the purview of investment firm Goldman Sachs. It is accessible both online and via its mobile app, available in the Apple App Store and Google Play.
2. DollarSavingsDirect — 0.60% APY, $1,000 minimum deposit
DollarSavingsDirect offers a select few CDs, including its high-yield 6-month CD. Interest is compounded daily and credited monthly. You’ll need at least $1,000 to open an account. It’s best to avoid an early withdrawal, as you’ll lose 90 days’ interest whether earned or not.
DollarSavingsDirect is an online banking division of Emigrant Bank, which was founded in 1850.
3. iGObanking — 0.75% APY, $1,000 minimum deposit
Open an iGOcd® for as little as $1,000 to earn this high APY. Once the CD matures, you can pick your new term and add additional funds if you want. You can also opt to transfer your interest at maturity into any iGObanking account. If you withdraw funds before then, you’ll give up 3 months’ simple interest on the amount withdrawn as a penalty.
iGObanking is an online division of FDIC-insured Flushing Bank. iGObanking offers a range of products and accounts that you can open online.
4. BankUnitedDirect — 0.65% APY, $1,000 minimum deposit
Boost your rate (and maturity wait time) a bit with BankUnitedDirect’s 9-month online CD. It earns 0.65% APY and requires a $1,000 minimum deposit to get started. Interest is compounded and paid monthly. The early withdrawal penalty for the 9-month online CD would be an amount equal to 30 days’ simple interest on the amount withdrawn.
BankUnitedDirect is the online banking division of BankUnited, N.A., which itself is a subsidiary of BankUnited, Inc. BankUnited was founded in 2009.
5. My Banking Direct — 0.65% APY, $500 minimum deposit
Interest on this 7-month CD from My Banking Direct is calculated as simple interest and credited to your account quarterly. You’ll need to open the account with at least $500 and maintain a balance of $500 to earn this APY. Cashing out early will cost you 90 days’ simple interest on the amount withdrawn.
My Banking Direct is a service of New York Community Bank, which was established in 1859 in the New York City borough of Queens.
Credit unions with the best 6-month CD rates
1. CommunityWide Federal Credit Union — 1.00% APY, $1,000 minimum deposit
With at least $1,000, you can open a high-yield 6-month CW certificate account online. The early withdrawal penalty from this account is equal to the amount withdrawn multiplied by the remaining days left in the term.
Founded as a credit union to provide quality financial services to individuals in South Bend, Ind., CommunityWide Federal Credit Union has grown to offer its services to various communities within Indiana as well as online.
Anyone can become a CommunityWide member by donating to a list of organizations, including the YMCA. If you’re a member of the Michiana Goodwill Boosters or Marine Corps. League of St. Joseph Valley, you’re also eligible to become a member.
2. Spectrum Credit Union — 0.80% APY, $500 minimum deposit
A $500 minimum deposit will net you this competitive APY. If you prefer to have your money accessible earlier or let it grow a few months more, you’ll earn the same rate on their 3- and 9-month CDs. However, all certificates are subject to an early withdrawal penalty.
Spectrum Credit Union was founded as Bechtel Employees Federal Credit Union, but anyone can join Spectrum through membership to either the Contra Costa Historical Society or Navy League of the United States, both of which are nonprofits that require a small membership fee.
3. Lafayette Federal Credit Union — 0.70% APY, $500 minimum deposit
Lafayette Federal Credit Union offers a handful of certificates, including its 7-month fixed rate certificate, which requires $500 to open. Interest is compounded and paid quarterly. An early withdrawal from this account will trigger a penalty equal to 360 days’ worth of dividends.
Lafayette Federal Credit Union was chartered in 1935 and is headquartered in Rockville, Md. Members can access its branches in Maryland, Virginia and Washington, D.C., and CO-OP Shared Branches nationwide. LFCU membership is open to those who live or work in its serviced areas; work at partner agencies or companies; or are an immediate family member of a current member. You can also join if you are an existing member or become a member of the American Consumer Council or the Home Ownership Financial Literacy Council.
4. La Capitol Federal Credit Union — 0.70% APY, $2,500 minimum deposit
This 6-month share certificate from La Capitol Federal Credit Union (La Cap for short) requires a minimum of $2,500 to open. Dividends earned are compounded monthly on this certificate. La Cap may impose a penalty of 90 days’ interest on the amount withdrawn if you take your money out before maturity.
There are many ways to qualify for La Capitol Federal Credit Union membership. It serves folks who live, work, worship or go to school in Baton Rouge or certain parishes in Louisiana, but you can also join by becoming a member of the Louisiana Association for Financial Achievement (ACHIEVE). The membership fee for ACHIEVE is $20 for the first year and $5 per year thereafter.
5. Northrop Grumman Federal Credit Union — 0.65% APY, $2,500
Northrop Grumman Federal Credit Union has a wide range of certificate terms. Its 6-month term savings CD can be opened with a deposit of $2,500. Dividends are paid monthly or at maturity. As an added perk, you can also use the funds as collateral for a loan.
Membership to the credit union is open to employees of Northrop Grumman and Metro Los Angeles Angeles County and their immediate family members, as well as anyone who becomes a member of the Southern California Historical Aviation Foundation, which will run you $60.
Pros and cons of using 6 month CDs
- The CD rates offered by banks and credit unions are generally higher than those on savings accounts.
- The rates are fixed and guaranteed for the length of their term.
- The discipline of keeping the funds in the CD means the money will be available upon maturity. (Note: Most banks offer a seven-day grace period to reinvest or withdraw the investment, after which the funds will roll over into a new CD. However, you are not guaranteed the same rate.)
- Six-month CD rates are lower than those offered on longer CD investment terms.
- To tap into the CD funds — even for emergencies — consumers must accept a loss through penalties, which can include a percentage of the funds, a percentage of the earned interest, or a combination of both. A typical penalty on a short-term CD is between 30 and 90 days’ worth of interest earnings.
- If you’re not confident you can do without access to the funds for six months, you may be better off putting your money in a traditional savings account, which is likely to earn less interest than a CD.
- Since CD rollovers may reset at a different percentage rate, consumers must speak with the bank before the grace period ends to ensure they are getting the best deal.
Using a 6 month CD for laddering
A CD ladder comprises small-amount CDs with varying terms and respective interest rates that contribute to a long-term investment strategy. After the 6 month CD matures, investors can withdraw the funds for a predetermined expense. Or, they can reinvest the money into a longer-term CD with a better rate. By staggering the maturity dates on short-term CDs, consumers have access to their cash on a regular, predictable basis.
Where can you open a CD account?
Consumers can open 6 month CD accounts (or longer) from banks and credit unions. Bank and credit union CD rates are based on Federal Reserve rates, and there may be strategic times to pursue these short-term instruments following a rate increase.