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Best of, Credit Cards

Best Credit Cards for Bad Credit May 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

If you have bad credit, it can be difficult to get approved for loans and credit cards. But it is not impossible. Even people with bad credit have options – which we will now explain.

What exactly is a bad credit score? When we’re talking about obtaining credit via credit cards, the magic number is somewhere between 620 and 650. If your credit score falls below 650, you’re going to have a difficult time obtaining credit from some of the larger lending institutions, and if it’s below 620, you’re going to have a difficult time obtaining credit from anyone — including smaller financial institutions like credit unions and independent marketplace lenders.

There are, however, some products for which you’ll have an easier time qualifying. Before you apply, make sure you’re prepared to be responsible with your new line of credit so you can boost your score and credit history rather than damaging it further. The best way to do this is to spend within your means by creating a budget and sticking to it. Here are some helpful tools to help you do just that. Remember to always pay your bill off in full on or before the due date each month to establish good credit.

Here are the products and topics we’ll be discussing today:

Check if You’re Pre-qualified

Before you apply for a credit card check if you’re pre-qualified from a variety of institutions. This does not hurt your credit score and is a good first step when looking to apply for credit. You can read our complete guide to getting pre-qualified for a credit card here.

Build Credit with Secured Credit Cards

If you are trying to rebuild your credit, one of the best approaches is to get a secured credit card. In order to get the card, you will have to write a check to deposit with the credit card company. This money will be your line of credit.

In order to effectively rebuild your credit, you must actually use the card, and we recommend not charging more than 20% of your credit line. For example, if you have a $500 credit line, you should not charge more than $100. Then, pay off your balance in full every single month. You can even build credit with $10 a month on a secured card and see your credit score rise.

After you’ve consistently managed your secured card well over a period of time, you may be able to increase your credit line beyond your initial deposit or migrate to an unsecured credit card. With most companies, this is a tedious process that you’ll have to initiate. You also aren’t guaranteed to get results even after you’ve made a request.

Discover operates differently than most companies in this realm, making it our number one pick for secured cards.

Discover it® Secured

If you’re looking for a secured credit card, look no further than the Discover it® Secured. On top of being great for people with a bad credit score, Discover will also accept applicants who have no credit history at all. Discover offers great ways for you to rebuild your credit and be on the way to an unsecured card.

Discover it® Secured

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

Read Full Review

Discover it® Secured

Annual fee
$0
Minimum Deposit
$200
Regular APR
25.24% Variable
Credit required
bad-credit
Poor/New

Magnify Glass Pros

  • Bankruptcies May Be OK If you have a Chapter 7 bankruptcy on your credit report, it won’t automatically disqualify you from getting approved for a Discover it® Secured. However, there are no guaranteed approvals. This is a positive if you’ve had trouble getting a credit card in the past.
  • Helps You Rebuild Your Credit This is a legitimate way to rebuild your credit when you don’t qualify for other cards, or the agreement you are offered by another company is laden with fees and high interest rates.
  • Offers a Rewards Program Not only can you rebuild your credit, but you’ll also earn rewards points as you do so. This is a great feature that many secured cards don’t offer and is a reason why we consider Discover number one. Earn 2% cash back at restaurants or gas stations up to $1,000 in combined purchases each quarter. Plus 1% cash back on all other credit card purchases. For new cardmembers, Discover matches the cash back you earn at the end of your first year of card membership, automatically.
  • Easy to Transition to a Discover account without a security deposit Starting at eight months, Discover automatically reviews your account to see if you’re eligible to have your security deposit returned while continuing to enjoy the card benefits. This is typically a process you’d have to initiate with other lenders. It’s good to note that Discover reviews all loans, and credit cards including Discover when making their decision.

Cons Cons

  • Rewards Limited The higher 2% reward tier is limited to the first $1,000 you spend at restaurants and gas stations each quarter. Regardless, that’s $20 back, which is a great reward when your goal is to increase your credit score.
  • Be Careful Not to Overspend As with the other cards in this review, you have to be careful that the rewards program doesn’t entice you to overspend. Otherwise, you run the risk of damaging your credit score further. Make sure that your primary goal, to raise your credit score, precedes the urge to spend too much money in order to get rewards.
Bottom line

Bottom line

The Discover it® Secured is a fantastic product for those with bad credit. Pay your balance in full by the end of every statement period and your financial life is almost guaranteed to get rosier. You’ll even have the added benefit of rewards — just be careful not to let the rewards program lure you into overspending. With proper practices, you’ll be on your way to an unsecured card and a better credit score.

Read our full review of the Discover it® Secured

Also Consider

OpenSky® Secured Visa® Credit Card from Capital Bank N.A.

OpenSky® Secured Visa® Credit Card

This card does not do a credit check, and no bank account is needed to apply. This is beneficial for those with low credit scores or no access to a bank account. If you’ve filed for bankruptcy, you’re in luck because they don’t care to know, unlike other institutions. However, OpenSky® Secured Visa® Credit Card charges a $35 annual fee, which the Discover it® Secured does not. This can be a deal breaker if you don’t want to pay a fee, since there are many secured cards without fees.

Read MagnifyMoney’s full Secured Credit Card Guide.

Our Credit Union Favorite

If you’re looking to open a credit card with bad credit, it can be hard to find a card you qualify for. That’s where credit unions come in. They are sometimes more accepting of your credit history and have cards especially designed for people with low credit scores — helping your approval chances.

Visa® Classic from Georgia's Own Credit Union

Georgia’s Own Credit Union offers a variety of credit cards all with low interest. The Visa® Classic from Georgia's Own Credit Union is positioned toward those who need to rebuild credit and boasts a low APR. When you apply for a credit card on Georgia’s Own website you are directed toward an application that is for all credit cards they offer. This means that depending on your creditworthiness, you may not be directed to the Visa® Classic from Georgia's Own Credit Union as an option. Therefore, if you want to apply directly for the card, the best bet is to speak with a loan officer who will tell you if you’re pre-approved for the Visa® Classic from Georgia's Own Credit Union.

Visa® Classic from Georgia's Own Credit Union

APPLY NOW Secured

on Georgia's Own Credit Union’s secure website

Read Full Review

Visa® Classic from Georgia's Own Credit Union

Annual fee
$0
Regular Purchase APR
13.99%–18.99% Variable
Credit required
fair-credit
Fair

Magnify Glass Pros

  • Good chance of getting approved Georgia’s Own tailored this credit card toward those needing to rebuild or re-establish their credit history. This gives those with bad credit a greater chance of being approved. Also, if your score is above 620, you are more likely to be approved.
  • Fair APR This card has a fair APR ranging from 13.99%–18.99% Variable. This is significantly lower compared to other cards targeted to people with less than perfect credit, with APRs as high as 19.99%. Although your goal is to pay every bill in full and on time each month, if you keep a balance, this low APR won’t accrue as much interest as other cards.

Cons Cons

  • Have to join the credit union In order to get this card, you have to join Georgia’s Own Credit Union. Anyone can become a member regardless of residence. If you don’t qualify for Georgia’s Own free eligibility options, you will have to join the GettingAhead Association, which has a $5 annual membership fee. The best bet is to speak to a loan officer (404-874-1166) and see if you’re pre-approved for the credit card, and if pre-approved, you can join GettingAhead while completing your credit card application. All members will also need to keep $5 in a savings account that must remain in the account while you have the card open.
  • Foreign transaction fee of 2% of the U.S. dollar amount of each transaction Make sure to leave this card at home when you travel abroad as you’ll be charged a foreign transaction fee of 2% of the U.S. dollar amount of each transaction. This is slightly lower than most cards, which charge a 3% foreign transaction fee, yet high enough to increase your bill significantly if you make purchases abroad.
  • No rewards program There is no rewards program for this credit card. Georgia’s Own offers several other cards that have rewards programs, but you may have a harder time qualifying if you don’t have a good credit score.
Bottom line

Bottom line

The Visa® Classic from Georgia's Own Credit Union is a good option for people who have a bad credit score. If you don’t mind joining a credit union and plan on practicing proper credit behavior, you can rebuild your credit score. Later on, you’ll be able to qualify for other credit cards that have rewards programs.

Read our full review of the Visa® Classic from Georgia's Own Credit Union

Best for Cash: Personal Loans

If you’re looking to get some cash in your pocket, credit cards in general aren’t your best answer. Cash advances are not ideal, and putting a purchase you can’t currently afford onto a credit card with a high interest rate attributable to your not-so-great credit score is going to be an expensive venture.

Instead, you’ll want to consider personal loans. They’re admittedly a little more work up front with the application process, but the savings can be worth it. You can check to see if you are prequalified without impacting your credit score at most lenders. And LendingTree (the parent company of MagnifyMoney) has created a tool that lets you compare rates from dozens of lenders at once, without impacting your score.

LendingTree

LendingTree, our parent company, offers a one-stop tool that can help borrowers find numerous personal loan offers. After entering some basic information, you can receive offers from lenders in a matter of minutes. If you prefer to go directly to the lender’s site you can use one of the options listed below.

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

LendingTree

Loan Amount
up to $50,000
Term
24 to 60 Months
APR Range
As low as 3.99%
Origination Fee
Varies
Credit Required
Minimum 500 FICO®
Soft Pull
You can get your rate without hurting your score.

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.


A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

Magnify Glass Pros

  • Check Multiple Offers at Once You can check personal loan offers from a wide range of lenders including Avant, LendingClub and Best Egg. The entire process happens online for free and is fast and easy.
  • Soft Pull on Your Credit LendingTree performs a soft pulll on your credit in order to give you accurate loan offers. This does not affect your credit score and can give you a good picture of what to expect if you’re approved for a loan.

Cons Cons

  • Need to Create and Account to View Offers The only way to view your personal loan offers is to create and account at LendingTree. This is a minor step, but it does allow you the ease of saving your offers so you can review them later.
Bottom line

Bottom line

LendingTree offers a great tool that lets you easily check your rates for a variety of lenders, all in a matter of minutes. This is a great way for you to see what rates you may get and allows you to shop around for the best offer, without the hassle of going to multiple websites.

Avant

Avant offers personal loans even to those with less-than-desirable credit. Because there is no prepayment penalty, you can pay off your loan before the end of your term without consequence.

SEE OFFERS Secured

on LendingTree’s secure website

Avant branded credit products are issued by WebBank, member FDIC.

Avant

Loan Amount
$2,000 – $35,000
Term
24 to 60 Months
APR Range
9.95%-35.99%
Origination Fee
Up to 4.75%
Credit Required
Varies
Soft Pull
Checking your Loan Options will not affect your credit score.

Avant is an online lender that offers personal loans ranging from $2,000 to $35,000. ... Read More

Magnify Glass Pros

  • Apply Online The entire Avant application process happens online. This saves you the hassle of filling out paperwork and visiting a local branch.
  • Check Your Loan Options Before You Apply Avant allows you to check your Loan Options that you would be offered with a soft pull on your credit. This will not impact your credit score. This is helpful if you’re shopping around for different rates and gives you a realistic picture of what to expect should you choose Avant.
  • Could Save Money over Subprime Credit Cards Depending on the interest rate and upfront fee percentage you are offered, a personal loan from Avant could save you money over putting purchases on a subprime credit card. The ability to preview your interest rate can also help you compare between personal loans and other possible options.

Cons Cons

  • High Interest Rates Because you’re a subprime borrower, you’re not likely to qualify for the lowest interest rate offered. You’re more likely to be offered something closer to the 35.99% rate. This is a very high rate, and it’s important that you make all of your payments on time to avoid paying interest and damaging your credit score.
Bottom line

Bottom line

While there’s only one con for Avant’s personal loans, it’s a pretty big one. The interest rate can be extremely high, so do your math before deciding if this is a good product for you. And be sure to take advantage of the fact that they’ll let you check your interest rate before officially submitting your application. Use this feature to shop around for best offers and check if you qualify for a better loan

OneMain Financial

Avant is easier to apply for as the application process will take place online, but if you’re willing to go somewhere in person, you can also apply with OneMain Financial. Its application is also online, but in order to be approved, you’ll have to show up at a local branch with documentation backing the information you submitted at home.

OneMain Financial

Loan Amount
$1,500 – $30,000
Term
24 to 60 Months
APR Range
16.05%-35.99%
Origination Fee
Varies
Credit Required
Varies

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.... Read More


Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

Magnify Glass Pros

  • Same-day funds when you get a prepaid debit card or check, up to $10,000
  • No prepayment penalties
  • Several locations across 44 states

Cons Cons

  • High rates up to 35.99%
  • 5% late payment penalty
Bottom line

Bottom line

If you have a lower credit score and are limited in your options to take out a personal loan, OneMain Financial could provide you with a solution. However, be sure you understand the loan terms and the full cost of the loan.

Last Resort: Subprime Credit Cards

Subprime credit cards are those that lending institutions issue to those with “bad” credit. They are not a good solution to your credit woes. They almost always come with high interest rates and a litany of fees — both of which make it difficult to use this product responsibly.

For example, First Premier makes a business out of lending to subprime borrowers with bad credit. Most of their applicants are only awarded a $300 line of credit. That’s after they pay a $95 fee just to apply (which is not a common practice in the credit card industry) and a $75 annual fee. If you are approved for a higher credit limit, your annual fee for the first year may be higher ($79-$125). In the second year, the annual fee drops ($45-$49), but at this point you are charged a $6.25-$10.40 account servicing fee every single month.

The cherry on top? The card’s APR is 36%. Heaven forbid you are ever late on a payment — your balance will skyrocket with the insanely high interest rate. Don’t forget about the late payment fee — up to $38.

Another example is Credit One Bank — not to be confused with Capitol One Bank, though their logos do look eerily similar. Not every Credit One Bank credit card comes with outrageous fees. In fact, there are 26 separate possible card agreements. But if you are a subprime borrower, you’re likely to qualify for higher rates.

Your credit may not be great, but that doesn’t make subprime credit cards a “fair” product. You may qualify for other, better options that aren’t as laden with fees. That’s why we recommend you first check if you’re pre-qualified for offers then look at store cards and personal loans before choosing a subprime credit card.

Bad Credit FAQs

Store cards can be used as payment anywhere the credit card company, such as MasterCard or Visa, is accepted. Private label cards can only be used at the branded company’s store. For example, if you get a private label card for New York & Company, you can only use it for purchases at New York & Company. You would not be able to use it at any other store.

Your best bet is to ask. If you are applying online, pick up the phone and call or use the company’s online chat if available.

If you have a physical card in front of you, you’ll notice that store cards always have the associated credit card company shown on the front, whether that be Visa, American Express, MasterCard, or another.

Private label cards tend not to display this information, though a major financial institution that a lot of companies work with for their private label cards is Comenity. If you have a card associated with Comenity Bank, it is likely a private label card.

No. Most businesses have an online application for their store cards.

Personal loans are typically issued by more reputable lenders who aspire to more transparency than those in the payday loan space. Payday loans are often advertised as having interest rates somewhere between 10% and 30%, but that interest is charged over a short period of time, making their effective APR (annual percentage rate) much higher. Some payday loans have an effective APR of 400% or more.

The lender isn’t likely to tell you that, though. Many businesses in this space are predatory. Payday loans also tend to come with outrageous fees.

While rates and fees on personal loans for those with bad credit aren’t ideal, they’re more than substantially lower than those of payday loans. Make no mistake about it: despite enticing advertising promises of deceptive payday lenders, personal loans are an infinitely better option.

Borrowing cash from your credit card company often comes with a fee of 1%-5%. That may not seem terrible when you look at the upfront fees of many personal loans, but you also have to account for interest.

Unlike purchases you charge to your card, interest on cash advances starts accruing immediately. You do not get to wait for your next statement to be issued. The interest rate for cash advances is also often higher than that of regular purchases.

A personal loan is an installment loan with a balance that will go down if you pay the minimum payment each month. This makes it far easier to manage than debt accrued via a cash advance. If you only pay the minimum payment on a cash advance each month, your balance will go up at a quick pace, potentially spiraling out of control.

First of all, the less you charge, the easier it will be to pay back. Since you have a bad credit score, you may have had issues with charging too much in the past and being unable to pay it off.

Secondly, around 30% of your credit score is made up of your credit utilization ratio. You find this ratio by dividing the amount of credit extended to you by the amount you have borrowed. By borrowing only 20% of your available credit, you reduce the risk of having your current balance negatively impacting your credit score.

It can sometimes take a year or more to see your score improve by 100 points if you are doing everything correctly and responsibly.

Yes, but only if you use them responsibly, paying the balance off in full every month. Keep in mind your credit utilization ratio here, too.

Potentially. Ten percent of your credit score is made up of something called “credit mix.” You don’t need to have every single type of credit in your credit report, but you should have more than one type. Here are the five that count:

  • Credit cards
  • Installment loans
  • Retail accounts
  • Finance company accounts
  • Mortgage loans

Conceivably, if you have a mortgage or business debt tied to your Social Security number or EIN, you might be able to get away with rebuilding your score through a personal loan (which is an installment loan). The key is to manage all of those debts well — and to do so consistently — especially since you already have bad credit.

No. Transactions on prepaid debit cards do not get reported to the credit bureaus. Also, it’s important to remember than many prepaid cards come with a ton of fees.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brynne Conroy
Brynne Conroy |

Brynne Conroy is a writer at MagnifyMoney. You can email Brynne here

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Best of

The Best 6-Year CD Rates

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

If you want to earn the highest CD rates, you generally need to invest in a longer-term CD. When the bank or credit union gets to keep your money for an extended period of time, it rewards you with higher interest rates.

Higher rates can make a 6-year term an appealing choice when considering CDs. However, there aren’t as many 6-year CDs available as with other CD terms. Most banks don’t offer this particular term, often maxing out at five years or skipping to 7-year CDs. In our analysis, we managed to find nine great choices when sorting through long-term CD data from DepositAccounts.com, a LendingTree-owned company.

To find the best 6-year CDs, we first looked at the highest 6-year CD rates available nationwide. Then we ranked each by APY, taking the accounts’ minimum deposit requirements into consideration for wider availability. We also made sure to include institutions with great health ratings so you know you’re working with a reputable bank with FDIC or NCUA insurance.

The Best 6-year CD rates

Institution

APY

Minimum deposit amount

INOVA FCU

3.25%

$200

Chartway FCU

3.10%

$500

Goldman Sachs Bank USA

3.05%

$500

Third Federal Savings and Loan

2.90%

$500

Evansville Teachers FCU

2.90%

$1,000

New Buffalo Savings Bank

1.76%

$1,000

MySavingsDirect

1.65%

$1,000

1st Source Bank

1.50%

$500

EmigrantDirect

1.50%

$1,000

INOVA FCU— 3.25% APY, $200 minimum deposit

Earn the best 6-year CD rate from Inova FCU. You need at least $200 to deposit and open up INOVA’s 6-year certificate. The penalty for an early withdrawal from this account is equal to 180 days’ of dividends.

Headquartered in Indiana, INOVA Federal was originally founded to serve the employees of Miles Laboratories in 1942. You can join INOVA through your employer or other organization, or through an immediate family member who is already an INOVA member.

Learn more Secured

on INOVA Federal Credit Union’s secure website

NCUA Insured

Chartway FCU— 3.10% APY, $500 minimum deposit

You can take advantage of Chartway FCU’s longest share certificate term of 71 months starting with $500. It earns at a competitive rate, which applies to certificates between 60 and 71 months. The penalty for making an early withdrawal from a 71-month certificate will equal 180 days’ worth of interest.

Chartway FCU started as NorVA N.A.S. Federal Credit Union by civilian workers at the Norfolk Naval Air Station in 1959. Today, you can join Chartway if you live, work, go to school or worship in select areas in Texas, Utah or Virgina, you work for a select partner employer or you have an immediate family member who is a member. You may also join by donating $10 to the We Promise Foundation, Chartway’s philanthropic arm.

Learn more Secured

on Chartway Federal Credit Union’s secure website

NCUA Insured

Goldman Sachs Bank USA— 3.05% APY, $500 minimum deposit

A big name in the online banking space, Goldman Sachs Bank USA, also known as Marcus by Goldman Sachs, offers consistently competitive rates. This includes its high-yield 6-year CD, the longest term among its offerings. It requires an initial deposit of at least $500 within 10 days after opening the account. Marcus by Goldman Sachs makes a 10-day CD rate guarantee, so if the rate increases during that period, you can snag that higher rate.

Just be careful of making an early withdrawal from the 6-year CD as it will trigger a penalty of 365 days’ worth of simple interest on the principal.

An entirely online bank, Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA, the banking branch of investment giant Goldman Sachs, which traces its history back to 1869.

Learn more Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

Third Federal Savings and Loan— 2.90% APY, $500 minimum deposit

The 72-month standard CD is the longest term offered by Third Federal Savings and Loan. It earns at a competitive rate and requires only $500 to open and start saving. The penalty for an early withdrawal from a 72-month CD equals 18 months’ interest.

Third Federal is based in Cleveland, where it was founded back in 1938.

Learn more Secured

on Third Federal Savings And Loan (OH)’s secure website

Member FDIC

Evansville Teachers FCU— 2.90% APY, $1,000 minimum deposit

The 6-year certificate is Evansville Teachers FCU’s longest term and earns at a competitive interest rate alongside the credit union’s other certificates. You’ll need at least $1,000 to open an account. The penalty for an early withdrawal will equal either $100 or 180 days’ worth of interest, whichever is greater.

ETFCU was founded in 1936 by several teachers in Evansville, Ind. who needed better financial services. Today, you can be eligible for Evansville Teachers FCU membership not just as a teacher, but also through select employers or organizations, or a family or household member. You may also join by donating $5 to the Mater Dei Friends & Alumni Association.

Learn more Secured

on Evansville Teachers Federal Credit Union’s secure website

NCUA Insured

New Buffalo Savings Bank— 1.76% APY, $1,000 minimum deposit

With at least $1,000, you can start saving your money in a 6-year CD from New Buffalo Savings Bank at a pretty solid rate. Interestingly, no matter which term you have, the early withdrawal penalty will equal six months’ of interest.

New Buffalo Savings Bank was founded in 1921, and maintains its headquarters and a few branches in the New Buffalo, Mich. area.

Learn more Secured

on New Buffalo Savings Bank’s secure website

Member FDIC

MySavingsDirect— 1.65% APY, $1,000 minimum deposit

MySavingsDirect offers a wide range of MyTerm Certificates of Deposit. Its 6-year term falls in between its range of 60 to 120 month terms available at the given APY. Plus, interest is compounded daily for faster savings growth. You’ll need at least $1,000 to open an account. Making an early withdrawal from this account will trigger a penalty of 180 days’ worth of interest.

MySavingsDirect is a digital-only division of Emigrant Bank which dates back to 1850.

Learn more Secured

on MySavingsDirect’s secure website

Member FDIC

EmigrantDirect—1.50% APY, $1,000 minimum deposit

EmigrantDirect offers a lower but still decent rate on its 60- to 120-month certificates of deposit, including its 6-year term. You need $1,000 to open an account here. The penalty for early withdrawals will be an amount equal to 180 days’ interest.

Like MySavingsDirect, EmigrantDirect is another digital-only division of Emigrant Bank.

Learn more Secured

on EmigrantDirect.com’s secure website

Member FDIC

1st Source Bank— 1.50% APY, $500 minimum deposit

You can get started with 1st Source Bank’s 6-year CD with just $500. The penalty for an early withdrawal is 12 months’ interest earned on the amount withdrawn.

1st Source Bank was established back in 1863 in South Bend, Ind. It has branches in Florida, Indiana and Michigan.

Learn more Secured

on 1st Source Bank’s secure website

Member FDIC

Is it worth getting a 6-year CD?

It can be worth getting a 6-year CD if you’re signing up for the highest rates on our list. Perhaps it would make a solid addition to a CD ladder you’re building. Let’s say you have $1,000 to deposit into a CD. Depositing that into the highest-earning 6-year CD above, at 3.25% APY, will result in $215 total interest earned. Making that same deposit into the best 5-year CD at 3.35% APY yields about $182.

But this is just looking at the top rates for both terms. In truth, 6-year CD rates aren’t always competitive enough to make them a reliable investment. In fact, 5- and 7-year CD terms consistently have much better rates, despite the small one-year difference.

When we compare 6-year CD rates with 5-year CD rates, the 6-year yields struggle to keep up. You can see above that the best 6-year CD rates jump from 3.25% APY at the top all the way to just above 1%. Meanwhile, all the best 5-year CD rates offer a much better savings opportunity ranging between 3.35% and 3.20% APY. No matter which 5-year CD you pick from the list, you’re bound to yield some solid earnings.

We tend to expect that the longer the CD term, the higher the rate will be, but we just don’t see that when comparing 6-year CDs with other long-term CDs. On the whole, 6-year CD terms are bookended by better-earning products. Opening 5- and 7-year CDs will give you a wider product selection to choose from and a better chance at growing your savings.

Alternative long-term investments

Other than 5- and 7-year CDs, Ken Tumin, founder of DepositAccounts.com (which similar to MagnifyMoney, is owned by LendingTree) suggests turning to individual bonds to beef up your savings. “Much like a CD ladder, the same technique can be used with individual bonds (Treasury, municipal, corporate, etc.) to build steady savings over time,” he offered. Note that non-Treasury bonds do have some default risk that CDs don’t carry when they have FDIC/NCUA insurance.

Another alternative to a bond ladder is a mutual fund or an ETF of bonds. Unlike a ladder, the value of a bond mutual fund or ETF fluctuates with interest rates. This can give you the chance to boost your savings when interest rates go down. However, the opposite is also true, where the value of your bonds decrease when interest rates rise.

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Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here

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