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Updated on Thursday, September 16, 2021
If you’re looking for a better yield on your savings and have time to burn, a high-rate CD can 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.
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 that term.
Because you’re required to lock up your money for the term, CDs are often seen as the next level up after savings. But if you’ve maxed out your savings account with enough funds to see you through the next year or so, it may be wise to start moving your savings into a CD to maximize your returns.
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Best CD rates
The best CD rates in the industry tend to be offered by online banks, as you’ll see in our selections below. They usually offer much better interest rates than traditional banks, thanks to their lack of typical brick-and-mortar costs.
If you’d rather get a savings account or money market with no time restriction, look at the best savings accounts or best money market accounts. Otherwise, read on for MagnifyMoney’s top picks for the best CD rates.
Best 1-year CD rates
1. Lafayette Federal Credit Union — 0.80% APY, $500 minimum deposit
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, which comes with an APY of 0.80%. For this product, a $500 minimum deposit is required to both open an account and earn the 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 lives in Maryland, Virginia or the District of Columbia and is a member of the American Consumer Council. You can also become a member if you join the Home Ownership Literacy Council. Lafayette FCU offers its products online, nationwide.
2. Abound Credit Union (13-month) — 0.80% APY, $500 minimum deposit
Abound Credit Union offers an APY of 0.80% for its 13-month Certificate Special with just a minimum deposit of $500.
Membership with Abound Credit Union is available if you are an employee of a Select Employer Group or a contractor attached to Fort Knox Army base. You can also join if you are active or retired military, Reserve, National Guard, or Civil Service employee; or have ties to certain areas of Kentucky.
3. CommunityWide Federal Credit Union — 0.75% APY, $1,000 minimum deposit
CommunityWide Federal Credit Union offers term share certificates from six months to five years, with rates ranging from 0.70% to 0.95% and a minimum deposit of $1,000. When the CD has matured, the funds will be deposited into regular shares unless you request otherwise.
Membership at CommunityWide FCU is extended to those who are part of Michiana Goodwill Boosters, Marine Corps League of St. Joseph Valley or Habitat for Humanity Helpers. If you’re an employee, retiree or donor member of a list of qualifying companies, such as Goodwill Industries of Michiana, Inc., Housing Assistant Office, Inc. and the Y.M.C.A, you can qualify for membership, as can household members and spouses of current members.
Best 2-year CD rates
1. Langley Federal Credit Union (21-month) — 1.00% APY, $1,000 minimum deposit
Langley Federal Credit Union currently offers the best rate for a two-year CD at 1.00% APY, and the maturity date is a little sooner — the term of the CD is just 21 months. Additionally, they over a five-year fixed rate CD at 0.70% APY, a decent rate for the current environment.
Langley has a broad-based membership eligibility: you just need to make an initial $5 in order to be able to join. The credit union was originally founded in 1936 by employees of the National Advisory Council for Aeronautics.
2. Lafayette Federal Credit Union — 0.90% APY, $500 minimum deposit
Lafayette Federal Credit Union already offers one of the best rates for a 1-year CD, but its 2-year fixed rate CD — with an APY of 0.90% and a $500 minimum deposit — is a standout as well. Lafayette FCU also offers variable-rate CDs with APYs ranging from 0.75% to 1.11%. Certificates automatically renew at maturity unless otherwise stipulated.
You can qualify to become a member of Lafayette FCU in several different ways including living in Maryland, Virginia or the District of Columbia and being a member of the American Consumer Council; being employed by DXC or CSRA; living, working, worshipping or attending school in Washington D.C.; or becoming a member of the Home Ownership Financial Literacy Council.
3. Abound Credit Union — 0.85% APY, $500 minimum deposit
Abound Credit Union offers some of the most competitive CD rates across the board. Their two-year certificate offers a strong 0.85% APY, which compounds quarterly and has a minimum opening deposit of $500.
Abound Credit Union was started in Kentucky and serves members of the military. Unfortunately, they do not have the same broad-based membership eligibility requirements as some other credit unions, which may restrict you from joining unless you’re either retired military or an employee of certain partner companies.
Best 3-year CD rates
1. Lafayette Federal Credit Union — 1.01% APY, $500 minimum depositLafayette Federal Credit Union appears on our list of the best CD rates in a few categories. Its 3-year CD, with an APY of 1.01% and a $500 minimum deposit, makes it one of the best 3-year CDs available.
There are several ways to qualify for membership, such as living, working, worshipping or attending school in Washington, D.C. You can also join by becoming a member of the Home Ownership Financial Literacy Council.
2. Quontic Bank — 1.00% APY, $500 minimum deposit
Quontic Bank offers a 1.00% APY on its three-year CDs, which is one of the best rates currently offered. Their highest CD APY (for a five-year term) is just marginally higher at 1.11%.
They’re a bank that promotes adaptation and innovation, and their services are entirely online. Quontic advertises that they work with underbanked communities to help repair generational iniquities.
3. Quorum Federal Credit Union (30-month) — 1.00% APY, $1,000 minimum deposit
While Quorum FCU doesn’t offer a CD with a three-year term, its 30-month CD provides a strong rate at 1.00% APY for a two-and-a-half year commitment. Quorum is an online-only credit union that offers NCUA insurance on its banking products up to $250,000.
Best 4-year CD rates
1. Abound Credit Union (47-month) — 1.40% APY, $500 minimum deposit
Abound offers solid rates on their conventional CD terms, but they have specials with even better rates, including a 47-month term that offers a 1.40% APY on deposits of $500 or more. Dividends for that CD compound quarterly instead of annually, like some other CDs.
Membership eligibility at Abound is determined by residency in the state of Kentucky — you can also work, worship or attend school in the state. There are also some other eligibility avenues, including if you’re an employee of an affiliated company, work at the Fort Knox Army base or if you’re a retired or active duty military, reserve or civil service member.
2. Lafayette Federal Credit Union — 1.16% APY, $500 minimum deposit
Lafayette Federal Credit Union is also offering one the best 4-year CD rates out there right now. Its 4-year CD has a 1.16% APY and requires a $500 minimum deposit. Your CD will automatically renew, unless you stipulate otherwise.
You can become a member of Lafayette FCU several ways, including being a member of the American Consumer Council who resides in Maryland, Virginia or the District of Columbia and. You can also join if you’re employed by the DXC or CSRA or live or work in the Potomac, Md. or Washington, D.C. area.
3. NASA Federal Credit Union (49-month) — 1.15% APY, $10,000 minimum deposit
For a limited time, NASA Federal Credit Union is offering one of the best 4-year CD rates out there. Its 49-month CD has a 1.15% APY. However, you’ll need a $10,000 minimum deposit. Your CD will automatically renew to a 48-month CD at the rate at the time of renewal unless you stipulate otherwise — that APY is currently 0.85%.
You can become a member of NASA FCU if you are a current or retired employee of NASA, a member or employee of NASA Federal Association or partner company or if you are related to or living with a current NASA Federal member. If you don’t meet these requirements, you can also become a member of NASA FCU when you become an affiliated member of the National Space Society. Membership requires opening a savings account with a minimum deposit of $5.
Best 5-year CD rates
1. Abound Credit Union (59-month) — 1.35% APY, $500 minimum deposit
Abound Credit Union is also a leader in the best 5-year CD rates, though technically its CD has a 59-month term. The credit union’s 59-month CD currently offers an impressive APY of 1.35%, and you’ll need to make a minimum deposit of $500.
You can become a member of Abound Credit Union through employment at one of the credit union’s Select Employer Groups. Contractors attached to Fort Knox Army base and active retired military or civil service members are also eligible to join, as are those with ties to certain areas of Kentucky.
2. Lafayette Federal Credit Union — 1.26% APY, $500 minimum deposit
Lafayette Federal Credit Union also offers one the best 5-year CD rates, with a standout rate of 1.26% and low minimum deposit of $500 minimum. CDs automatically renew when the term ends unless you choose otherwise.
Lafayette FCU offers membership to those who live in Maryland, Virginia or the District of Columbia. You can also qualify for membership if you work with certain employers or are a member of organizations, such as Home Ownership Financial Literacy Council.
3. Affinity Plus Federal Credit Union — 1.25% APY, $500 minimum deposit
Affinity Plus Federal Credit Union also offers one of the best 5-year CD rates, with its 5-year CD’s 1.25% APY. A minimum balance of $500 is required.
You can become a member of Affinity Plus if you’re an employee or volunteer with various organizations in Minnesota, or if you’re a student or alumnus of one of many Minnesota colleges or universities. If you live, work or worship in certain Minnesota cities, you can also qualify for membership.
Best no-penalty CDs
This list of the best no-penalty CDs adheres to the same methodology as the CDs listed above, except these CDs don’t charge a penalty for early withdrawal of funds.
1. CFG Bank — 13 months, 0.62% APY, $500 minimum deposit
Based in Baltimore, CFG Bank offers a variety of financial products online and through its Maryland branches. CFG Bank’s line of CDs offers impressive APYs and terms ranging from 12 months to 60 months, though its 13-month CD is the way to go if a one-time, penalty-free withdrawal is what you’re after. You only need a $500 deposit to get started.
Although you get one no-penalty fee withdrawal, there is a seven days’ interest penalty if you withdraw your funds within six days of opening the account.
2. Ally Bank — 11 month, 0.50% APY, $0 minimum deposit
Ally Bank is one of the most popular online banks. Its no-penalty CD has an 11-month term and earns 0.50% APY, with no minimum deposit required. You can withdraw your balance and interest any time after your first six days of funding.
If you don’t mind leaving your money for longer than a year, you could earn a slightly higher APY with Ally Bank’s high-yield CDs, though these do have an early withdrawal penalty. Those CDs range from three months to five years and offer an APY of 0.15% to 0.80%.
3. Colorado Federal Savings Bank — 11 months, 0.45% APY, $5,000 minimum deposit
Colorado Federal Savings Bank has CD options ranging from just one month to five years. They also offer a special 11-month CD that has no penalties on withdrawals after seven days — the APY for that account is 0.45%, a solid rate for the 2021 interest rate environment.
There are fairly limited deposit account types for a financial institution at Colorado Federal Savings Bank. The company orients their services around real estate banking and is affiliated with a mortgage originator and servicer named Provident Funding.
Methodology for determining the best CD rates
To find the best CD rates for each term length, MagnifyMoney looked at over 200 financial institutions that offered accounts available nationwide, from small community banks and credit unions to traditional brick-and-mortar banks and online banks. We update our list on a regular basis to ensure we’re providing readers with the most up-to-date information.
We determined our list and rankings by considering the following factors:
- CD rates: We heavily weighted the APYs offered by each bank or credit union, favoring CDs with the highest APYs. Our list is ordered from highest to lowest APY, with CDs grouped by term length.
- Nationwide availability: To further ensure the accessibility of the accounts selected, we only considered accounts that are available nationwide.
- Minimum deposit: While minimum deposit requirements did not determine which CDs we considered for our list, they did impact our final ranking. If two CDs of the same term length had identical APYs, we gave preference to the CD with the lower minimum deposit requirement, as that makes the CD more accessible.
- FDIC-insured: It is crucial for your deposit accounts to be protected by FDIC insurance in case your financial institution were to fail. As such, we only included FDIC-insured accounts on our list.
- NCUA-insured: Some of the deposit accounts are available through credit unions that are also NCUA-insured. In these cases, we have included the requirements for membership.
The cities that are most likely to use CDs for their savings
We 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 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 January 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. Typically, 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. For example, if you have $10,000 lying around that you can safely say you won’t need to use for two years, you earn more with a CD than you would with a high-yield savings account. 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.
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,” said Ken Tumin, founder of 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 noted that there’s an added tax benefit to opening a 1-year CD over a savings account. With a 1-year CD, you can choose to have interest paid at maturity. Savings accounts, on the other hand, pay out interest each month.
3. What CD term length should I select?
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. However, the early withdrawal penalties on CDs can be significant: If you opened a one-year CD and closed it after six months, you might forfeit a great deal of interest and may have been better off with a savings account. On a 1-year CD, 120 days’ worth of interest is a typical penalty, although it can reach as high as 181 days — or even more. On 5-year CDs, the penalty can range from 90 days to 540 days of interest.
Given the risk of early withdrawal penalties, it’s important that you’re completely confident that you won’t 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.
Tumin suggests finding long-term CDs with small or mild withdrawal penalties. 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.
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 also 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, on the other hand, often have dramatically better interest rates. That shouldn’t be surprising — because internet-only banks don’t have branches, they’re able to pass along their cost savings to you in the form of higher interest rates and lower fees.
Credit union CDs might be your best bet simply because of the higher CD rates. (Interestingly, while internet banks tend to offer the best rates for other financial products such as savings accounts, they don’t always offer the highest CD rates.)
Should I open a CD in the current rate environment?
With CD rates dropping significantly in the last year and continuing to fall as low as .04% with some banks, it’s natural to wonder if right now is a good time to have your money tied up for years in a CD. Ideally, the best time to open a CD is when the rates are high. However, if you have the cash and you won’t need it for a while, it might be a good idea to find a CD that, at least, offers a rate higher than the traditional bank savings account.
Also, if you don’t want your money tied up, you could consider a no-penalty CD. CFG Bank, for example, offers a 13-month CD with an APY of 0.62%, which allows you one early withdrawal without paying a penalty. So, you can stash away your money, earn some interest and if you need to withdraw early, it won’t cost you.
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, and the tool will then provide you with CD options, listed 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 more closely at longer terms — think 5-year and even 10-year accounts. If you don’t quite have thousands of dollars to stash away, look for a bank that requires a lower minimum deposit, if any at all. You can also find select no-penalty CDs, which tend to have terms of around one year or less.
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