The Best CD Rates – October 2020

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Updated on Monday, October 19, 2020

If you’re looking for a better yield on your savings and have time to burn, a high-rate CD at an online bank would be a great option. With a CD, you agree to lock up your funds in an account for a specific period of time, and in return the bank offers a higher yield than you’d find on a standard savings account. If you’re not keen on the idea of completely locking your money away for a set amount of time, you may want to consider a no-penalty CD. These accounts give you the benefit of locking down a rate for a set amount of time without requiring you to lock in your money for the length of the term.CDs are often seen as the next level up after savings for that reason. If you’ve maxed out your savings account with enough funds to see you through the next year or so, it can be wise to start shoveling savings into a CD to maximize your returns.

For the best CD rates in the industry, check out online banks. They tend to offer much better interest rates than traditional banks, thanks to the lack of typical brick-and-mortar costs.

For example, let’s say you find a 12-month CD at a big brick-and-mortar bank that requires a $1,000 minimum deposit and pays 0.05% APY. If you were to open that account with just the minimum, you’d earn 50 cents after a year. Even a bigger deposit of $10,000 would only yield $5 at maturity.

At an online bank, on the other hand, you could earn 2.80% often with a minimum deposit of $1,000. Opening the account with $1,000 would yield $28, while a $10,000 deposit would earn $280 in a year, a much better return on your money no matter how you look at it. (If you would rather get a savings account or money market with no time restriction, look at the best savings accounts or best money market accounts).
Check out MagnifyMoney’s top picks for the best CD rates below.

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The best CD rates for October 2020

To find the best CD rates, we look for the banks that consistently offer competitive CD rates month over month. This list is updated weekly and the rates are organized by 1-year rates from highest to lowest. Here are the accounts from top banks with consistently competitive CD rates:

6 months – 6 years: Marcus by Goldman Sachs – 0.25% APY – 0.70% APY; $500 minimum deposit to open

High-yield 12 Month CD from Marcus by Goldman Sachs

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Our advertiser Marcus by Goldman Sachs is the online consumer bank of Goldman Sachs (the large investment bank). Your funds are FDIC insured, and Goldman offers very competitive annual percentage yields (accurate as of 7/9/20). Even better: there is only a $500 minimum deposit. So, if you don’t have enough money to meet the minimum deposit of the other banks on this list, or you are looking for another bank for your savings, GS is a good option. It also doesn’t hurt that they also offer some of the best CD rates in the market today. Here are their rates:

Term

APY

Minimum Deposit Amount

6 months

0.25%

$500

9 months

0.35%

$500

12 months

0.65%

$500

18 months

0.65%

$500

24 months

0.65%

$500

3 years

0.65%

$500

4 years

0.65%

$500

5 years

0.70%

$500

6 years

0.70%

$500

3 months – 5 years: Ally Bank – 0.20% APY – 1.00% APY; $0 minimum deposit to open (higher APY with higher deposit)

12 Month High Yield CD from Ally Bank

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Member FDIC

Ally is one of the largest internet-only banks in the country. Ally’s former advertising campaign made it very clear: no branches = higher rates. And Ally has consistently paid some of the highest rates in the country across savings accounts, money market accounts and CDs. For savers with fewer funds, Ally is unique. There is no minimum deposit to open a CD. However, if you have more money, you’ll earn more in interest and in some cases, earn a higher APY. And one of our favorite features of Ally: they often (although not always) offer preferential rates on renewal. Far too often banks give the biggest bonuses to new customers, but Ally has done a good job of rewarding its existing customers. All deposits at Ally are FDIC insured up to the legal limit.

3-months:
  • 0.20% APY (less than $5k)
  • 0.20% APY ($5k minimum deposit)
  • 0.20% APY ($25k minimum deposit)
18-months:
  • 0.70% APY (less than $5k)
  • 0.70% APY ($5k minimum deposit)
  • 0.70% APY ($25k minimum deposit)
6-months:
  • 0.40% APY (less than $5k)
  • 0.40% APY ($5k minimum deposit)
  • 0.40% APY ($25k minimum deposit)
3-year:
  • 0.75% APY (less than $5k)
  • 0.75% APY ($5k minimum deposit)
  • 0.75% APY ($25k minimum deposit)
9-months:
  • 0.50% APY (less than $5k)
  • 0.50% APY ($5k minimum deposit)
  • 0.50% APY ($25k minimum deposit)
5-year:
  • 1.00% APY (less than $5k)
  • 1.00% APY ($5k minimum deposit)
  • 1.00% APY ($25k minimum deposit)
12-months:
  • 0.65% APY (less than $5k)
  • 0.65% APY ($5k minimum deposit)
  • 0.65% APY ($25k minimum deposit)
1 year – 5 years: Citizens Access – 0.60% APY – 0.75% APY; $5000 minimum deposit to open

Online 1 Year CD from Citizens Access

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Citizens Access is the online division of Citizens Bank, N.A., aimed at providing more convenient access to better banking products. Both divisions are headquartered in Providence, R.I. Citizens Bank was founded in 1828 and as of September 2019, had $150 billion in assets.Citizens Access’ online CD accounts require a pretty high opening deposit of $5,000. However, all its terms earn at premium rates, making your savings more worthwhile. Citizens Access also offers an easy opening process to build a CD ladder with them. You’ll need to deposit at least $5,000 in each new CD, though.

When you fund any new Citizens Access CD within 10 days after opening, the bank’s CD Rate Pledge will apply, snagging you the highest interest rate offered by the bank for that CD term within those 10 days. Here are their rates:

CD TermAPY
12 months0.60%
2 years0.60%
3 years0.65%
4 years0.70%
5 years0.75%
3 months – 10 years: Discover Bank – 0.25% APY – 0.80% APY, $2,500 minimum deposit to open

12 Month CD from Discover Bank

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Discover Bank's website is secure

Discover is best known for cash back credit cards. However, Discover has also quietly built a leading internet bank that offers checking accounts, savings accounts and CDs. Discover has invested in a mobile banking app and strong on-shore customer service.Although Discover does not always have the highest rate, it is very close (within basis points) across all durations. If customer service and digital tools (like apps) are important to you, Discover is an excellent consideration. Note: you can even get a CD rate with a duration as short as 3 months. However, you would be better off opening a high yield savings account if you plan on saving the money for less than a year.Keep in mind that all CD terms come with an early withdrawal penalty if you choose to withdraw money before your maturity date. If your Discover CD is less than one year, the penalty is worth three months of simple interest. If the term is between one to three years, the penalty is worth six months of simple interest. Four-year CDs have a penalty that is worth nine months of simple interest. Five year CDs have a penalty that is worth 18 months of simple interest and seven to 10-year CDs have a penalty that is worth 24 months of simple interest.

CD TermAPY
3-months0.25%
6-months0.45%
9-months0.55%
12-months0.60%
18-months0.60%
2-year0.65%
30-months0.70%
3-year0.70%
4-year0.70%
5-year0.80%
7-year0.80%
10-year0.80%
1 year – 5 years: Barclays Bank – 0.30%0.30% APY, no minimum deposit to open
Barclays is one of the oldest banks in the world. Although they’re based in London, they do have a U.S. presence and offer competitive rates on their CDs and savings account. Currently, they’re offering some of the highest CD rates in the market, and they have an edge over the rest of the institutions on this list: they don’t require a minimum balance to earn the APY or open an account. Deposit as little or as much as you’d like into a term of your choice and you can start earning interest as long as the account is funded within 14 days of opening the CD. Additionally, your funds are insured through the FDIC.

CD TermAPY
1-year0.30%
2-year0.30%
3-year0.30%
4-year0.30%
5-year0.30%
6 months – 5 years: Communitywide FCU – 0.90% APY – 1.15% APY; $1,000 minimum balance

12 Month Share Certificate from Communitywide Federal Credit Union

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NCUA Insured

In exchange for a $1,000 minimum deposit, Communitywide’s 12-month share certificate earns a 1.00% APY. One great feature is flexibility regarding your dividends, which may be compounded in the certificate, deposited to another share certificate, or transferred to another account. Another feature to understand is that there is no automatic renewal of Communitywide’s share certificates, which could be a good thing for savers who like to be reminded to survey the best rates available before rolling over their investments.

For over 50 years, Communitywide Federal Credit Union has provided banking services to the citizens of northern Indiana, and now a completely revamped online and mobile portal brings its great rates to you, wherever you are. Membership in Communitywide FCU is open to members of the Michiana Goodwill Boosters or the Marine Corps League of St. Joseph Valley, as well as employees of over 40 companies in the central Midwest region.

Term

APY

6 Months

0.90%

12 Months

0.95%

60 Months

1.15%

6 months – 5 years: Pen Air Federal Credit Union – 0.60% APY – 1.35% APY; $500 minimum deposit to open

3 Month CD from Pen Air Federal Credit Union

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NCUA Insured

Pen Air Federal Credit Union offers a slew of certificates of deposit, with term lengths ranging from just three months to 60 months. Its 12-month CD is certainly worth highlighting, with its 1.00% APY. There is a minimum deposit of just $500 required for this account.

Membership to Pen Air Federal Credit Union is open to anyone who also joins the Friends of Navy-Marine Corps Relief Society. Although Pen Air only has physical locations in Florida and Alabama, it offers its products online, nationwide

Term

APY

6 months0.60%
1 year0.80%
3 years1.15%
5 year1.35%
6 months – 5 years: State Department Federal Credit Union – 0.55%1.10% APY, $500 minimum deposit

12 Month Certificate from State Department Federal Credit Union

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State Department FCU offers an array of CDs, ranging in term length of six months to 60 months. Its 1-year CD has a particularly competitive rate, with a 0.85% APY. This product requires a low minimum deposit of $500, and dividends are compounded daily.

Membership to State Department FCU is open to anyone who also joins the American Consumer Council and opens a savings account at the credit union with just $1.

TermAPY
6 months0.55%
12 months0.85%
24 months0.90%
36 months1.00%
48 months1.00%
60 months1.10%
7 months – 3 years: Veridian Credit Union – 0.30%0.70% APY, $1,000 minimum deposit

12 Month CD Special from Veridian Credit Union

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The Veridian Credit Union is currently offering a special, 12-month CD with an attractive APY of 0.85% and a minimum balance of $1,000. If you have more cash you’re looking to stash, Veridian is also offering a special 12-month jumbo CD with a minimum balance of $100,000 and an APY 0.95%.

The Veridian Credit Union is open to anyone who lives or works within its field of membership, which consists of all 99 Iowa counties and a select number of counties in Nebraska. Additionally, membership is open to registered users of the business payment app Dwolla.

CD TermAPY
7 months0.30%
9 months0.40%
12 months0.85%
18 months0.60%
2 years0.65%
3 years0.70%
7 months – 5 years: Lafayette Federal Credit Union – 0.70%1.26% APY, $500 minimum deposit

1 Year Fixed CD from Lafayette Federal Credit Union

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Lafayette Federal Credit Union offers both variable rate and fixed rate certificates of deposit, but its crown jewel is certainly its 1-year fixed rate CD, with an APY of 0.80%. For this product, a $500 minimum deposit is required to open an account and to earn the high APY. Lafayette’s CDs will automatically renew upon maturity, unless otherwise requested by the customer.

Lafayette Federal Credit Union opens its arms to anyone who also joins the American Consumer Council or the Home Ownership Literacy Council. It offers its products online, nationwide.

CD TermAPY
1-year0.80%
2-year0.90%
3-year1.01%
4-year1.16%
5-year1.26%

The best no-penalty CD rates

No-penalty CDs are unique because these accounts allow customers to withdraw from their CD without incurring an early withdrawal penalty. These CDs are an attractive offer to customers as it provides no risk if they choose to withdraw their money early. Here are some of the best no-penalty CD rates that are available nationwide:

11 months: Ally Bank – 0.60% APY – 0.60% APY; $0 – $25,000 minimum deposit to earn APY

No Penalty 11 Month CD from Ally Bank

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Unlike the other two banks that offer multiple terms, Ally Bank only offers one term on its no-penalty CD. While Ally doesn’t require a minimum deposit to open, it does reward higher balances with higher APYs. This no-penalty CD is great for low-balance individuals who want to keep their money liquid. However, if you’re okay with locking your money into a CD for 12 months, you’re better off going with Ally’s regular 12-month CD as it has a higher APY (0.65% APY vs 0.60% APY) and doesn’t have a certain balance requirement to earn that high rate.

If you still choose to open Ally’s 11-month no-penalty CD and you need to withdraw money before the terms ends, you’ll need to withdraw your funds in full and won’t be able to do so until seven days after funding the account. Here are the tiered rates for Ally’s no-penalty CD:

TermAPYMinimum balance to earn the APY
11 months0.60%None
7 months – 13 months: Marcus by Goldman Sachs – 0.55% APY – 0.35% APY; $500 minimum deposit to open

7 Month No-Penalty CD from Marcus by Goldman Sachs

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Similar to its regular CDs, you only need a minimum of $500 to deposit into Marcus Goldman Sachs’ no-penalty CDs. This makes these CDs highly attractive to customers with smaller deposits. If you choose to open one of these CDs, you’ll only be locked in for seven days after you fund the account. After the seventh day, you’re free to withdraw your funds, but keep in mind that you’ll need to withdraw the full amount.

These CDs are an excellent option if you want your money to remain liquid or if you want to invest your money into an interest-earning account for a short amount of time. One thing to note is that the 7-month no-penalty CD has a much higher rate than the regular 6-month CD (0.55% APY vs 0.25% APY). The high APY makes Goldman’s 7-month no-penalty CD a fantastic option if you want to earn interest in a short amount of time. Here is Goldman’s full list of no-penalty CD rates:

TermAPYMinimum balance to earn the APY
7-month0.55%
$500
11-month0.45%
$500
13-month0.35%
$500
6 months: Investors eAccess – 0.40% APY; $500 minimum deposit to open

6 Month No Penalty CD from Investors eAccess

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Investors eAccess is the online division of Investors Bank, a large bank headquartered in New Jersey that was established in 1926. The parent bank currently has over $26 billion in assets. The online division was launched earlier this year and decided to introduce itself by offering a strong rate on its inaugural product, the eAccess Money Market account. It seems this online bank is slowly offering different deposit accounts, but one thing that sticks out is that it’s offering these new products with high rates.

Currently, Investors eAccess is offering two types of CDs: a 6-month No-Penalty CD and a 10-month regular CD. The 6-month No-Penalty CD is comes with a strong 0.40% APY. You need at least $500 to open the account and you’re free to withdraw from the principal amount after the first seven calendar days from opening the account without incurring any penalties. If you choose to withdraw the full amount (including any interest earned) before the maturity date, you won’t incur any penalties, but the full withdrawal will close the account. Regardless of how much you choose to withdraw from the account, the bank will send you the funds via an official Bank Check. The check will be made out to the account owner and mailed First Class to the address on file.

TermAPYMinimum balance to earn the APY
6-month0.40%$500
11 months – 14 months: PurePoint Financial – 0.15% APY – 0.10% APY; $10,000 minimum deposit to open

13 Month Online No-Penalty CD from PurePoint Financial

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PurePoint Financial is the online division of Union Bank. Both the parent bank and this online division are backed by financial giant, Mitsubishi UFJ Financial Group (MUFG). Under the MUFG Union Bank umbrella, this institution has acquired over $130 billion in assets. As its online division, PurePoint Financial has been able to offer its customers highly competitive rates not only in CDs, but in an online savings account.

Currently, PurePoint Financial is offering an extremely competitive rate of 0.10% on its 13-month no-penalty CD. It also offers an 11-month and a 14-month no-penalty CD, but those two accounts have lower rates than its 13-month no-penalty CD. Keep in mind that you’ll need at least $10,000 to deposit into any of these CDs. If you do choose to withdraw money from this CD before the term is up, you’ll need to withdraw the full amount. You’ll also have to wait seven days after you fund the account to withdraw any of the money. Here’s a full list of PurePoint Financial’s no-penalty CDs.

TermAPYMinimum balance to earn the APY
11-month0.15%$10,000
13-month0.10%$10,000
14-month0.10%$10,000

The highest CD rates from banks and credit unions by term

The following banks and credit unions are currently offering the highest CD rates for each term.

Best 1-year CD rates

Best 1-year CD rate from a Credit Union: Financial Resources Federal Credit Union – 1.01% APY, $500 minimum deposit

14 Month CD Special from Financial Resources Federal Credit UnionFinancial Resources Federal Credit Union is currently offering a 14-month special CD with a high rate of 1.01% APY. Additionally, if you are also a Hero or Champion account holder at Financial Resources, you will receive a higher rate of 1.31% APY.There is a minimum deposit of $500 required for this product.

Membership to Financial Resources Federal Credit Union is open to anyone who also joins the American Consumer Council.


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NCUA Insured

Best 1-year CD from a National bank: Primary Bank – 0.80% APY, no minimum deposit required

12 Month CD from Primary Bank
Primary Bank was established in 2015 and is headquartered in New Hampshire. The bank has acquired over $255 million in assets. If you’re interested in opening a 1-year CD with this bank, you won’t need a specific deposit amount. The bank also doesn’t have a balance requirement to earn the 0.80% APY. The bank may impose an early withdrawal penalty if you choose to withdraw from the principal early, but you’ll have to contact the bank to learn about the penalty.


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on Primary Bank’s secure website

Member FDIC

Best 2-year CD rates

Best 2-year CD rate from a Credit Union: Evansville Teachers FCU– 1.04% APY, $1,000 minimum deposit

2 Year CD from Evansville Teachers Federal Credit Union To join this credit union, you may make a $5 donation to the Mater Dei Friends & Alumni Association. You may want to strongly consider doing so, as the 2-year CD rate offered by Evansville FCU is the best on the market in terms of APY, at 1.04%. Plus, it only requires a minimum balance of $1,000.


Best 2-year CD from a National Bank: INSBANK – 0.95% APY, $2,500 minimum deposit

2 Year CD from INSBANK Online Virtual bank INSBANK offers a wide range of CDs that vary in term length from 90 days to three years. Currently, its 2-year CD is offering a competitive APY of 0.95% for a reasonable minimum deposit of $2,500. However, if you really want to maximize interest earned, the 3-year CD rewards you with the highest APY at 1.00%.


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Best 3-year CD rates

Best 3-year CD rate from a Credit Union: Partner Colorado Credit Union – 1.05% APY, $500 minimum deposit

36 Month CD from Partner Colorado Credit UnionDespite its name, Partner Colorado Credit Union extends its membership to anyone who makes a $5 donation to the Partner Colorado Foundation. It offers an array of financial products and services, including regular, baby jumbo and jumbo certificates of deposit with varying term lengths.

Partner Colorado Credit Union’s standout product is its 3-year CD. This CD boasts an APY of 1.05% and a minimum required balance of $500.


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NCUA Insured

Best 3-year CD rate from a National Bank: United Texas Bank – 1.05% APY, $500 minimum deposit

36 Month CD from United Texas BankUnited Texas Bank offers an array of CDs ranging in term length from one month to 48 months. Its 3-year CD offers a particularly generous APY of 1.05%. There is a minimum deposit of $1,000 required for this product. Penalties may apply for early withdrawal.

While United Texas Bank only has two locations in Dallas, its products are available online, nationwide.


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Member FDIC

Best 4-year CD rates

Best 4-year CD rate from a Credit Union: Hiway Federal Credit Union – 1.30% APY, $25,000 minimum deposit

48 – 59 Month CD from Hiway Federal Credit Union You’ll need a $25,000 minimum deposit to snag this top rate from Hiway Federal Credit Union. Smaller deposits as low as $500 will still earn interest, just at lower interest rates. The early withdrawal penalty for this range of CDs equals 365 days’ dividends.

Hiway Federal Credit Union was founded in 1931 to serve the financial needs of Minnesota Department of Transportation employees. Today, membership is extended to members of select communities, employees of select employer groups, relatives and roommates of eligible individuals and members of the Minnesota Recreation and Park Foundation or Association of the U.S. Army.


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on Hiway Federal Credit Union’s secure website

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Best 4-year CD rate from a National Bank: First Internet Bank– 1.20% APY, $500 minimum deposit

48 Month CD from Hyperion BankHyperion Bank offers a large selection of CDs, with terms ranging from 30 days up to 60 months. Currently, its 4-year CD stands out for its 1.20% APY and low minimum deposit of just $500, making it one of the most attractive 4-year CDs currently available.

Based in Philadelphia, Hyperion Bank offers its products and services to consumers online, nationwide.


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Member FDIC

Best 5-year CD rates

Best 5-year CD rate from a Credit Union: Generations Credit Union – 1.65% APY, $500 minimum deposit

60 Month CD from Generations Credit Union Generations Credit Union offers an array of certificates of deposit, but its 5-year CD is currently one of the best of its kind, with an APY of1.65%. For this CD, there is a required minimum deposit of $500. While balances up to $49,999 will garner the 1.65% APY, balances of over $50,000 will reap an even higher APY of 1.70%.

Established in 1939, Generations Credit Union is based in Washington. Membership to Generations is open to anyone who also joins the Northwest Energy Coalition and the Northwest Credit Union Foundation, regardless of where they live.


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on Generations Credit Union’s secure website

NCUA Insured

Best 5-year CD rate from a National Bank: Federal Savings Bank – 1.35% APY, $500 minimum deposit

5 Year Promotional CD - New Money from The Federal Savings Bank The Federal Savings Bank is currently featuring a 1.35% APY for its 5-year CD. There is a low minimum deposit of $500 for this product.

The Federal Savings Bank is a veteran-owned, federally-chartered bank. While the bank only has locations in Illinois, it offers its products nationwide, online.


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The cities that are most likely to use CDs for their savings

We recently looked at the 100 largest U.S. metros to find the cities with the highest percentage of households that own certificates of deposit.

Among the 100 largest U.S. metros, San Francisco came out on top, with 25.4% of households owning certificates of deposit. That’s more a little more than twice as many households, on a percentage basis, than Greensboro, N.C., our bottom-ranked city, where only 12.5% of households own CDs.

Typically, households in large cities are more likely to sock money away in CDs. Chicago, Los Angeles, New York and Washington, D.C. — among the 10 largest metros in the U.S. — all make our list of top 10 cities where people own CDs. There are some exceptions: Odgen, Utah ranks No. 4 in the nation for CD saving: 21.9% of Ogden households have CDs.

Variability in local CD rates may explain some of the differences, as the highest rates available by state can vary by as much as one percentage point. In fact, in Jan. 2019, Utah had the highest average local 1-year CD yield in the country.

Questions to ask before you open a CD

1. How are CDs different from savings accounts?

With a CD, the saver and the bank make stronger commitments. The saver promises to keep the funds in the account for a specified period of time. In exchange, the bank guarantees the interest rate during the term of the CD. The longer the term, the higher the rate – and the higher the penalty for closing the CD early. With a savings account, you’re limited to six withdrawals or transfers per month. Otherwise, you can empty the account at any time without paying a penalty. You can’t lock in the interest rate on a savings account, though, since the bank can change the interest rate at any time.

2. Am I better off keeping my cash in savings?

CDs work best if you’re confident you won’t need to access a certain amount of money for a specified period of time. Let’s say you have $10,000 laying around that you can safely say you won’t need to use for two years. In a high-yield savings account earning 2.45%, you would earn $496.00 over two years with annual interest compounding — and potentially even more, if your bank compounds interest more frequently. If you put that money into a 2.90% 2-year CD, you would earn $588.41 (compounding yearly) once the account matures. The extra interest income is easy money, considering the ease of opening an account online. However, if you think you might need to use the money in the next couple of months, especially if your finances are already a little rocky, a savings account is a much better idea for its better flexibility.

It’s important to note that deposit rates are a bit in flux right now, due to the uncertainty surrounding the federal funds rate (more on that below). But we’re currently seeing some high, favorable interest rates on 1-year CDs, rates that outstrip savings account rates.

If you can afford to part with the funds, “choosing a 1-year CD now does make sense rather than keeping the money in a savings account,” says Ken Tumin, founder of LendingTree-owned DepositAccounts.com. “However, it is possible that 1-year rates could go below some savings account rates.”

That’s why it’s important to compare rates before you sign up for a certain account.

Tumin also notes that there is an added tax benefit to opening a 1-year CD now over a savings account. With a 1-year CD, you can choose to have interest paid at maturity, or in 2020 on accounts opened now. Taxes would be owed on that interest for 2020, but not paid until 2021. Savings accounts, on the other hand, pay out interest each month. So a savings account opened today will generate interest income for the 2019 tax year.

3. What CD term length should I select?

The early withdrawal penalties on CDs can be significant. On a 1-year CD, 90 days’ worth of interest is a typical penalty, although it can reach as high as 180 days. On 2- and 3-year CDs, a 6-month penalty is about average. The impact of the penalty on your return can be significant: if you opened a one-year CD with a 2.65% APY and closed it after six months, you would forfeit half of the interest and earn only 1.32%. You would have been better off with a savings account paying 2.25%.

The worst case scenario is with the longest CDs. 5-year CDs usually have a one-year penalty for taking out funds early. If you open a 5-year CD and close it quickly, you could actually end up losing money.

Given the risk of early withdrawal penalties, it’s important that you’re completely confident that you will not need to withdraw the money early. Check that you already have enough savings in a flexible emergency fund to cover you for the next few years in the event of an accident or surprise trip to urgent care. Ask yourself whether your deposit would be put to better use paying off any debts. If you’re not completely convinced you can sock away that much money for such a commitment, go for a shorter CD term or a savings account.

As of right now, if you’re trying to jump on the best rates and have cash to stash away for years, your best bet is to lock in a 5-year CD to get the best rates possible.

“It doesn’t look like we’ll see another Fed rate hike in the first half of the year,” says Ken Tumin. “In the last month or two, we’re seeing some drops in CD rates.”

However, this downward movement looks like more of a correction being made by banks who may have boosted their CD rates too far too fast, instead of signaling the start of an industry-wide drop in rates.

“We won’t see a big drop until we see signs that the Fed will start cutting rates,” Tumin notes.

Tumin suggests finding long-term CDs with small or mild withdrawal penalties, like Ally. That way, in the event you do need to break into your funds (whether for an emergency or to move to a new, higher rate), you won’t lose the majority of your savings. So while there are still 5-year CDs out there with 3% APY and higher, you’re going to want to lock those in for the long term.

4. Should I consider my local bank or credit union?

The interest rates shown in this article are all from credit unions and online banks that offer products nationally. However, our product database includes traditional banks, community banks and credit unions.

If traditional banks offered better rates, they would have been featured in this article. Internet-only banks have dramatically better interest rates. That should not be surprising — because internet-only banks do not have branches, they are able to pass along their cost savings to you in the form of higher interest rates and lower fees.

If you’re worried about early withdrawal penalties, credit union CDs might be your best bet; on average, they tend to have lower penalties than banks. Pair that with high credit union CD rates, and you’ve got a winning savings combo. (Interestingly, while internet banks tend to offer the best CD rates, they also tend to assess bigger early withdrawal penalties than brick-and-mortar banks.)

How to find the best CD for you

If you don’t find an account that meets your needs in this article, you can use the MagnifyMoney CD tool to find the best rate for your individual needs. Input your zip code, deposit amount and term. The tool will then provide you with CD options, from the highest APY to the lowest.

Even though CDs are traditionally pretty structured, you still have hundreds of options available to you. If your savings goal is years in the future, look closer at longer terms like 5- and even 10-year accounts. If you don’t quite have thousands of dollars to stash away, you can find a bank that requires a lower minimum deposit, if at all. You can also find select no-penalty CDs, which tend to be around one year long or less.
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