Updated April 5, 2019
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 no minimum deposit. 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).
The best CD rates from top banks and credit unions
To find the best CD rates, we look for the banks and credit unions that consistently offer competitive CD rates month over month. This list is updated monthly, and competition continues to intensify. Here are the accounts from banks and credit unions with consistently competitive CD rates:
6 months – 6 years: Goldman Sachs Bank USA – 0.60% APY – 3.05% APY; $500 minimum deposit to open
3 months – 5 years: Ally Bank – 0.75% APY – 3.00% APY; $0 minimum deposit to open (higher APY with higher deposit)
|6-months: ||3-year: |
6 months – 5 years: Capital One – 0.60% APY – 3.10% APY; no minimum deposit to open
1 year – 5 years: Barclays Bank – 2.70% – 3.05% APY, no minimum deposit to open
3 months – 5 years: Synchrony Bank – 0.75% APY – 3.10% APY; $2,000 minimum deposit to open
6 months – 7 years: PenFed Credit Union – 2.30% APY – 3.00% APY, $1,000 minimum deposit to open
6 months – 120 months: Vio Bank – 2.00% APY – 2.90% APY; $500 minimum deposit to open
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 – 14 months: PurePoint Financial – 2.15% APY – 2.50% APY; $10,000 minimum deposit to open
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 2.50% 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.
|Term||APY||Minimum balance to earn the APY|
7 months – 13 months: Goldman Sachs Bank USA – 2.25% APY – 2.35% APY; $500 minimum deposit to open
|Term||APY||Minimum balance to earn the APY|
11 months: Ally Bank – 1.80% APY – 2.30% APY; $0 – $25,000 minimum deposit to earn APY
|Term||APY||Minimum balance to earn the APY|
|11 months||1.80%||Up to $5,000|
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 National Bank: Colorado Federal Savings Bank – 2.86% APY, $5,000 minimum deposit
Despite having the state of Colorado in their name, Colorado Savings Bank doesn’t have any branches and serves customers nationwide through their online banking platform. They’ve been around since 1990 and have over $1 billion in assets. Currently, they’re offering a 12 month CD with a 2.86% APY with a minimum deposit amount of $5,000. The early withdrawal penalty for this bank’s 12 month CD is three months’ worth of interest. While they’re an online-only bank, they don’t currently have a mobile app.
Best 1-year CD rate from a Credit Union: Partner Colorado Credit Union – 2.05% APY, $500 minimum deposit
Partner Colorado Credit Union is a credit union that anyone can join. The credit union was established in 1931 and was originally named Denver Postal Credit Union. Now, as Partner Colorado Credit Union, it has over $417 million dollars in assets and serves customers nationwide. You can check here to see if you are eligible to join the credit union. If you do not meet any of those eligibility requirements, don’t worry. With a $5 donation to the Partner Colorado Foundation, you can become a member of the credit union. You can make this donation when you go through the application to open the account. Partner Colorado Credit Union is offering a nice 2.05% APY for a one year certificate (CDs are called “certificates” at credit unions). Just keep in mind that if you choose to withdraw money from your CD early, you may be hit with a penalty that is worth 90 days’ of interest. Your money is insured by the NCUA (it is like the FDIC, but for credit unions).
Best 2-year CD rates
Best 2-year CD rate from a National Bank: CD Bank – 3.07% APY, $10,000 minimum deposit
CD Bank is the online division of TBK Bank, which was established in 1981 and has acquired over $4 billion in assets. This online division has only been around since 2017, but it launched with competitive rates at the time and has continued to offer competitive rates on its shorter-term CDs as the CD market has risen. At this moment, CD Bank is offering a 2-year CD with an APY of 3.07%. You will need to deposit a minimum of $10,000 in order to earn this APY. The early withdrawal penalty for this CD is equal to 18 months interest on the withdrawn amount. Be aware that once this CD matures, the only two ways you can receive the fully matured funds is via a cashier’s check or outgoing wire transfer. If you choose to use an outgoing wire transfer, the bank may charge you a $15 fee.
Best 2-year CD rate from a Credit Union: Greenwood Credit Union – 2.50% APY, $1,000 minimum deposit
Greenwood Credit Union is open to anyone and everyone. The only requirement to become a member with this credit union is to open their Share Savings Account with a minimum deposit amount of $5. You’ll also have to maintain that amount in the account to remain an active member. When you go to apply for membership, you can also add that you want to open their 24 month CD. You’ll need to deposit $1,000 in order to earn their outstanding 2.50% APY. This deposit will be in addition to the $5 to open the Share Savings Account. If you choose to withdraw any of the principal from the account before the term is up, the credit union may apply an early withdrawal penalty that is equal to 180 days’ worth of interest. Accounts can be managed online or through their mobile app. Deposits made to Greenwood Credit Union are insured by the NCUA.
Best 3-year CD rates
Best 3-year CD rate from a National Bank: WebBank – 3.00% APY, $2,500 minimum deposit
WebBank is a new name on our list this month. While this bank was chartered in 1997, it didn’t start offering online banking products until late last year. It mainly served its brand partners by offering financial solutions to these companies. Through their financial solutions, the bank has been able to acquire over $871 million in assets. Currently, this online bank is offering 3.00% APY on a 3-year CD. You’ll need to deposit a minimum of $2,500. If you need to withdraw from this CD before the term is up, you’ll be subject to an early withdrawal penalty that is equivalent to 270 days’ worth of interest.
Best 3-year CD rate from a Credit Union: USALLIANCE Financial – 3.00% APY, $500 minimum deposit
USALLIANCE Financial is a credit union that anyone can join. The credit union was created in 1966 for employees of IBM. You can check here to see if you are eligible to join the credit union. If you do not meet any of those eligibility requirements, don’t worry. You can join (for $15) the American Consumer Council. This is a one-time fee (and you can join here). Once you are a member, you can then join the credit union. USALLIANCE is offering a nice 3.00% APY for a three year certificate (CDs are called “certificates” at credit unions). Just keep in mind that if you choose to withdraw money from your CD early, you may be hit with a penalty that is worth 360 days’ of interest. Your money is insured by the NCUA (it is like the FDIC, but for credit unions).
Best 4-year CD rates
Best 4-year CD rate from a National Bank: Main Street Bank – 3.15% APY, $500 minimum deposit
Main Street Bank was established in 2005 and has since grown to acquire over $258 million in assets. This bank is currently offering a 4-year CD with a rate of 3.15%. You’ll need a minimum of $500 to open the CD. If you need to withdraw money before the CD’s maturity date, you’ll incur an early withdrawal penalty that is worth 180 days interest. All deposits made to this bank are FDIC-insured.
Best 4-year CD rate from a Credit Union: Veridian Credit Union – 3.05% APY, $1,000 minimum deposit
Veridian Credit Union was established in 1934 by employees of John Deere. According to Veridian Credit Union’s history, the employees wanted to provide alternatives to for-profit institutions for their coworkers. Today, Veridian operates similarly even though they’ve expanded their field of membership to include almost anyone by allowing applicants to register as a user of Dwolla if they’re not eligible any other way. Once you become a member, you can open this 41-month CD with a minimum of $1,000. This account earns an APY of 3.05%. The early withdrawal penalty on this CD is equal to 180 days’ interest. Veridian Credit Union allows you to manage your account online as well as through their mobile app.
Best 5-year CD rates
Best 5-year CD rate from a National Bank: The Federal Savings Bank – 3.30% APY, $10,000 minimum deposit
The Federal Savings Bank is a private, federally chartered bank that is veteran-owned. This bank mainly focuses on home ownership, but offers deposit products, as well. It has acquired over $387 million in assets since it opened its doors in 2000. Currently, the bank is offering promotional CDs with fairly high rates. Its 5-year CD is currently offering the highest rate for a national bank, but you will need a minimum of $10,000 to open the account. All deposits made to this bank are FDIC-insured.
Best 5-year CD rate from a Credit Union: Alabama Credit Union – 3.03% APY, $500 minimum deposit
Alabama Credit Union was established in 1956 to serve customer related to the University of Alabama. The credit union quickly grew to serve customers outside of the University of Alabama. Since it’s establishment, it has acquired over $876 million in assets.
While this credit union does have membership requirements based on where you live and work, it also opens membership to anyone who’s a member of numerous organizations including the Secret Meals Association. To become a member of the Secret Meals Association, you can donate anywhere between $10 – $1,000. You’ll have to fill out the form and send it back to the credit union. Once you become a member, you can open its five year CD. The credit union requires a $500 minimum deposit and will award you with a 3.03% APY. A couple items to consider: if you withdraw money early from the CD, you will be subject to a penalty that is worth 360 days’ interest. Also, you can’t open this account online like you can with the other products. You’ll have to call the credit union. It’s a bit of a wonky process, but if you want to open a five year CD with a credit union, this is the one that currently has the highest rate.
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 2.35%, you would earn $475.52 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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