Updated January 20, 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 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).
The best CD rates from top banks
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 with consistently competitive CD rates:
6 months – 6 years: Goldman Sachs Bank USA – 0.60% APY – 2.20% APY; $500 minimum deposit to open
1 Year – 3 Years: Rising Bank – 2.15% APY – 2.10% APY; $1,000 minimum deposit to open
Rising Bank launched in February 2019 as the online division of Midwest BankCentre. Midwest BankCentre has been around since 1906 in Missouri and has acquired over $1 billion in assets. This bank decided to assert itself as a top competitor in the online banking space by offering competitive rates.
While most online banks have pulled back on rate offerings, Rising Bank continues to offer a top 2.15% APY on its 1-year CD. However, unlike some of the top online banks like Ally Bank and Goldman Sachs, Rising Bank requires a minimum deposit of $1,000 and caps balances at $500,000 on its CDs. If you have less than $1,000 to deposit into a CD, you’re better off choosing another online bank. If you have more than $500,000 to deposit into a CD, you may also want to consider another online bank.
Aside from its rates, Rising Bank also distinguishes its CDs with the early withdrawal penalties. If you need to withdraw from the 1-year CD early, you’ll only incur a penalty that is 90 days’ worth of interest. If you need to withdraw early from the 18 to 36-month CDs, the penalty is 180 days’ worth of interest. One thing to be aware of is that Rising Bank compounds interest every three months. Other online banks compound interest monthly, so this is a bit of a downside. Once this CD matures, you can withdraw the full balance to close the account. If you don’t withdraw the full balance ten days after the maturity date, Rising Bank will automatically renew your CD. Rising Bank has a mobile app for your convenience.
30 days – 5 years: BrioDirect – 0.05% APY – 2.05% APY; $500 minimum deposit to open
6 months – 5 years: Capital One – 0.60% APY – 1.60% APY; no minimum deposit to open
3 months – 10 years: Discover Bank – 0.35% APY – 2.20% APY, $2,500 minimum deposit to open
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.
1 year – 5 years: Barclays Bank – 2.00% – 2.10% APY, no minimum deposit to open
3 months – 5 years: Ally Bank – 0.75% APY – 2.15% APY; $0 minimum deposit to open (higher APY with higher deposit)
|6-months: ||3-year: |
3 months – 5 years: Synchrony Bank – 0.75% APY – 2.15% APY; $2,000 minimum deposit to open
12 months – 3 years: BBVA – 1.50% APY* – 1.00% APY; $500 minimum deposit to open
BBVA has been around since 1964. This bank had humble beginnings in Birmingham, Alabama as Central Bank & Trust Company. This small community bank went through several name changes and pioneered several banking initiatives in Alabama (including opening on a Saturday and introducing the first ATM and debit card in the state). In the early 90s, the bank changed its name to Compass Bancshares. In 2007, it had its biggest change to date. The bank was acquired by a Spanish company (Banco Bilbao Vizcaya Argentaria) and renamed BBVA Compass. Recently, BBVA dropped the Compass and is now just called BBVA. Through all these changes, BBVA has grown to acquire over $92 billion in assets.
While this, now, giant bank has not historically offered competitive rates on its deposit accounts, it’s begun competing in the online space by offering online-only CDs with decent rates. Currently, BBVA is offering a competitive 1.50% on its 12 Month Online CD*. The bank does mention that this CD available for a limited time, so you may want to lock in your money in this CD sooner rather than later. You’ll need a minimum of $500 to open the CD. The early withdrawal penalty on this CD is pretty unique. It’s $25 plus 1% of the amount withdrawn. While BBVA does have other CD terms, this CD currently has the best rate.
*Note: This rate is only available to individuals who live in certain states. If you live in Alabama, Arizona, California, Colorado, Florida, New Mexico, or Texas, you will not qualify for this rate. Instead, you’ll qualify for a 1.50% APY.
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:
7 months – 13 months: Goldman Sachs Bank USA – 1.90% APY – 1.65% APY; $500 minimum deposit to open
Similar to its regular CDs, you only need a minimum of $500 to deposit into Goldman Sachs Bank USA’s 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 (1.90% APY vs 0.60% 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:
|Term||APY||Minimum balance to earn the APY|
11 months – 14 months: PurePoint Financial – 1.65% APY – 1.90% 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 1.90% 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|
6 months: Investors eAccess – 1.80% APY; $500 minimum deposit to open
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 1.80% 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.
|Term||APY||Minimum balance to earn the APY|
11 months: Ally Bank – 1.65% APY – 1.85% APY; $0 – $25,000 minimum deposit to earn APY
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 (2.00% APY vs 1.65% 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:
|Term||APY||Minimum balance to earn the APY|
|11 months||1.65%||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: Quontic Bank – 2.20% APY, $1,000 minimum deposit
Quontic Bank is a digital bank with over $394 million in assets. Currently, the online bank is offering a 2.20% APY on its 12-month CD. You’ll need at least $1,000 to open the account and earn the APY. The account can be funded via ACH or by mailing in a check.
If you need to withdraw money from the CD early, you may incur an early withdrawal penalty that is equal to one year’s worth of interest. If you allow the CD to reach maturity, you’ll have ten days to decide whether you want to withdraw the funds, open a new CD with a different term, or renew the CD with the existing term. If you choose to withdraw the funds or open a different CD, you’ll need to call the bank to let them know. If you choose to renew the existing term, you won’t have to take any action as the CD will renew ten days after the original maturity date.
Best 1-year CD rate from a Credit Union: USALLIANCE Financial – 2.15% APY, $500 minimum balance
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 special on a 12-month CD. The credit union is offering this special to those who can deposit new money into the account, which means that you don’t currently have funds deposited in an existing USALLIANCE account. If your funds qualify, you’ll earn a 2.15% APY. This is currently the best rate available for a 1-year CD from any credit union. You’ll need to deposit a minimum of $500 of new money to open the account. If you need to withdraw money from the account before the maturity date, the penalty will equal 180 days of dividends on the amount that is withdrawn. If you need to make an early withdrawal on the principal amount, you’ll have to contact USALLIANCE for approval.
Once your CD matures, you’ll have a seven day grace period to withdraw your funds. In order to withdraw the funds, the credit union tries to provide easy access by transferring the fully matured funds to a Share Management Checking or Savings account, STAR Account, or MyLife Account (checking or savings). Once the funds are transferred to one of those accounts, you can then initiate an ACH transfer to send the funds to an external bank account.
Best 2-year CD rates
Best 2-year CD rate from a Credit Union: MAC Federal Credit Union – 2.40% APY, $1,000 minimum deposit
MAC Federal Credit Union was established in 1952 to serve active duty personnel and civil service members associated with Fort Wainwright. In 2001, the credit union expanded to serve the Fairbanks community. Now, they serve customers nationwide through online and mobile banking.
You can become a member a number of ways including residence, employment, and relation to an existing member. You can also become a member if you are part of, or choose to be part of, the Polar Bear Chapter of the Association of the United States Army. Once you’re a member, you can open the 24 Month CD with a minimum deposit of $1,000 and start earning the 2.40% APY. This CD has an early withdrawal penalty that is equal to 90 days of interest.
Best 2-year CD rate from a National Bank: Prime Alliance Bank – 2.20% APY, $500 minimum deposit
Prime Alliance Bank was established in 2004 and currently has over $455 million in assets. If you have at least $500, you’ll be able to open this 24-month CD and begin earning the 2.20% APY. If you choose to withdraw from this CD early, you may incur a penalty of three months’ interest on the withdrawn amount. If you allow the funds to stay in the account until it fully matures, you’ll have ten days to decide what you’d like to do with the funds. If you choose to do nothing, the CD will renew with the same term.
Best 3-year CD rates
Best 3-year CD rate from a Credit Union: Garden Savings Federal Credit Union – 2.53% APY, $500 minimum deposit
Founded in 1968, Garden Savings Federal Credit Union was opened to serve employees at AT&T Bell Laboratories, known today as Alcatel-Lucent. Today, Garden Savings membership is open to over 150 Select Employer Groups, as well as members of select New Jersey communities and family members of current members. Garden Savings Federal Credit Union maintains over $350 million in assets and has four branches in New Jersey.
Garden Savings Federal Credit Union offers a great spread of Share Certificates, including its competitive 3-Year Certificate, earning at a 2.53% APY where interest is paid monthly. It requires at least $500 to open and start saving. The early withdrawal penalty is 180 days of dividends earned. Garden Savings Federal Credit Union provides deposit insurance up to $500,000, thanks to federal coverage from the NCUA and private insurance by the Excess Share Insurance Corporation.
Best 3-year CD rate from a National Bank: Primary Bank – 2.30% APY, no minimum deposit
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 3-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 2.30% 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.
Best 4-year CD rates
Best 4-year CD rate from a National Bank: Prime Alliance Bank – 2.40% APY, $500 minimum deposit
Prime Alliance Bank has a great rate on its 4 year CD as well as its 2 and 5 year CDs. If you have at least $500, you’ll be able to open this 48-month CD and begin earning the 2.40% APY. If you choose to withdraw from this CD early, you may incur a penalty of three months’ interest on the withdrawn amount. If you allow the funds to stay in the account until it fully matures, you’ll have ten days to decide what you’d like to do with the funds. If you choose to do nothing, the CD will renew with the same term.
Best 4-year CD rate from a Credit Union: Lafayette Federal Credit Union – 2.27% APY, $500 minimum deposit
Lafayette Federal Credit Union was founded in 1935 and serves communities in the Washington, D.C. area. Membership is also open to employees of select partner groups, members of the Home Ownership Financial Literacy Council, current members’ family members and current or future members of the American Consumer Council. You can access Lafayette FCU accounts and services online, on mobile and over the phone.
Lafayette Federal Credit Union currently offers the best rate on its 4-year term Fixed-Rate Certificate. With just $500, you can start growing your money at its 2.78% APY. Just be careful of making an early withdrawal as it will cost you 480 days worth of dividends.
Best 5-year CD rates
Best 5-year CD rate from a Credit Union: Lafayette Federal Credit Union – 2.52% APY, $500 minimum deposit
Founded in 1935, Lafayette Federal Credit Union is based in Rockville, Md. It has branches in Maryland, Virginia and Washington, D.C., plus CO-OP Shared Branches and ATMs throughout the country. Lafayette FCU is also accessible online, on mobile and over the phone, although you may face long wait times.
You can become a member if you are a resident or employee in Maryland, Virginia or Washington, D.C., an employee of an approved agency or company, an immediate family member of a current member, a member of the Home Ownership Financial Literacy Council or a current or future member of the American Consumer Council.
Lafayette Federal Credit Union’s 5-year Fixed-Rate Certificate offers competitive savings, earning
2.52% APY. It requires only $500 to open. You’ll lose 600 days’ worth of dividends if you make a withdrawal from the 5-year term Fixed Rate Certificate.
Best 5-year CD rate from a National Bank: Prime Alliance Bank – 2.50% APY, $500 minimum deposit
Prime Alliance Bank features one of the highest bank rates on its 5 year CD. For the current month, we’re seeing Prime Alliance as one of the most competitive Bank providers of CDs. Interested savers should take a look at its 2 year and 4 year offerings as well. If you choose to open a 5 year CD with Prime Alliance, keep in mind that you may incur a three month interest penalty on early withdrawals. However, if you keep your money in the CD for the full-term, you’ll earn a rate as high as 2.50% APY with a minimum deposit of $500.
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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