Updated July 19, 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 and credit unions with consistently competitive CD rates:
12 months – 3 years: BBVA – 2.70% APY – 1.90% 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 2.70% 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.
6 months – 6 years: Goldman Sachs Bank USA – 0.60% APY – 2.85% APY; $500 minimum deposit to open
3 months – 5 years: Ally Bank – 0.75% APY – 2.75% APY; $0 minimum deposit to open (higher APY with higher deposit)
|6-months: ||3-year: |
3 Months – 5 Years: Nationwide by Axos Bank – 0.75% APY – 2.56% APY; $500 minimum deposit to open
3 months – 5 years: Synchrony Bank – 0.75% APY – 2.80% APY; $2,000 minimum deposit to open
1 year – 5 years: Barclays Bank – 2.45% – 2.75% APY, no minimum deposit to open
3 months – 10 years: Discover Bank – 0.35% APY – 2.70% APY, $2,500 minimum deposit to open
6 months – 5 years: Capital One – 0.60% APY – 2.50% APY; no 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:
7 months – 13 months: Goldman Sachs Bank USA – 2.15% 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|
11 months – 14 months: PurePoint Financial – 1.65% APY – 2.00% 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 2.00% 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|
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: TotalDirectBank – 2.60% APY, $25,000 minimum deposit
TotalDirectBank is a division of City National Bank of Florida, which was established in 1970 and has acquired over $14 billion in assets. The online division, TotalDirectBank, is currently offering a 12-month CD with a 2.60% APY. You’ll need to deposit a minimum of $25,000 to open the CD and start earning interest. If you need to withdraw money from the CD before the maturity date, you may incur a penalty that is equal to 3 months’ simple interest. The CD will renew automatically unless you withdraw all of your funds at the maturity date or within the ten days following your maturity date.
Best 1-year CD rate from a Credit Union: State Department Federal Credit Union – 2.63% APY, $500 minimum deposit
State Department Federal Credit Union was established in 1935 by a group of the United State Department of State employees. While it was originally intended to help those employees, membership has expanded to include a lot more people. You can become a member of this credit union if you’re a U.S. Department of State employee, are a part of one of the credit union’s organization affiliates, through group membership, or an immediate family member of an existing member of the credit union. If you don’t qualify through any of those ways, you can choose to become a member of the American Consumer Council (ACC) when you apply for membership to this credit union. Once you become a member of this credit union, you’ll be able to open the 12 Month Certificate with a minimum of $500 and start earning 2.63% APY. If you need to withdraw money from this CD early, you may be charged a penalty that is worth 180 days of interest.
Best 2-year CD rates
Best 2-year CD rate from a Credit Union: Interior Federal Credit Union – 2.37% APY, $500 minimum deposit
Interior Federal Credit Union was established in 1935 and has acquired over $211 million in assets. To join this credit union, you can either be a family member of an existing member, qualify through employment, or by being a volunteer for partner groups or certain organizations. If you don’t meet requirements through any of those avenues, you’re able to join by joining the New Mexico Wildlife Federation. You can choose this option when you apply for membership at Interior Federal Credit Union. Once you’re a member, you can open the 24 Month Share Certificate with a minimum deposit of $500 and start earning the 2.37% APY. This CD has an early withdrawal penalty that is equal to 180 days of interest.
Best 2-year CD rate from a National Bank: Nationwide by Axos Bank – 2.90% APY, $500 minimum deposit
With as little as $500, you can open this 24-month CD and earn 2.90% APY. The early withdrawal penalty for this CD is equal to 12 months’ worth of interest. This CD will automatically renew if you don’t take action once it matures. You’ll need to call, send an email, or write a letter to the bank on the maturity date stating that you wish to close this account. You’ll have a ten day grace period after the account matures to take action, which includes closing the account, changing terms, or making additional deposits.
Best 3-year CD rates
Best 3-year CD rate from a Credit Union: Mac Federal Credit Union – 3.00% 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 become a member, you can open this credit union’s 36-month CD with a minimum deposit of $1,000 and begin earning 3.00% APY. This credit union does not disclose its early withdrawal penalty. While this credit union currently has the best 3-year CD rate, becoming a member and opening an account doesn’t seem to be as simple as it is at other institutions. You’ll need to fill out a contact form and wait for someone from the credit union to reach out to you. If depositing your money into a 3-year CD with the highest rate is all you care about, then it may be worth going through this credit union’s process. If ease of access is more important to you, then you may want to consider another option for a 3-year CD.
Best 3-year CD rate from a National Bank: First National Bank of America – 2.75% APY, $1,000 minimum deposit
First National Bank of America was established in 1955. Originally, its goal was to focus on the local Michigan community’s financial needs. However, they decided to expand in 2011 in an effort to help even more people. Today, this bank services customers nationwide. With a minimum deposit of $1,000, you can open a 36-month CD earning 2.75% APY. The early withdrawal penalty for this CD is equal to 360 days of interest.
Best 4-year CD rates
Best 4-year CD rate from a Credit Union: Hanscom Credit Union – 3.10% APY, $1,000 minimum deposit
Hanscom Federal Credit Union was established in 1953 and has acquired over $1 billion. To become a member of this credit union, you can qualify through employment, military status, family relations, or by being a member or becoming a member of one of the credit union’s sponsoring member organizations. Once you become a member of Hanscom Federal Credit Union, you’ll be able to open its 48-month CD. You’ll need to deposit a minimum of $1,000 to earn the 3.10% APY. The early withdrawal penalty for this term is equal to 180 days dividends on the withdrawn amount.
Best 4-year CD rate from a National Bank: First National Bank of America – 2.80% APY, $1,000 minimum deposit
First National Bank of America is also offering the best CD rate on a 4-year CD. With a minimum deposit of $1,000, you can earn 2.80% APY. This is definitely worth it if you’re okay with locking your money away for four years and don’t want to deal with the field of membership required by credit unions. This CD does have an early withdrawal penalty that is equal to 540 days of interest.
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 $395 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: Affinity Plus Federal Credit Union – 3.00% APY, $500 minimum deposit
Affinity Plus Federal Credit Union was established in 1930 by employees of the state of Minnesota. This group of people wanted to create a solution for those who couldn’t easily turn to a traditional bank. While this credit union went through quite a few changes before settling into the institution it is today, it has grown to have over $2 billion in assets. Anyone can become a member by making a one-time payment of $25 to the Affinity Plus Foundation, which supports financial education throughout Minnesota. Before you choose this option, be sure to check out the credit union’s other fields of membership to see if you qualify another way. Once you become a member, you’ll be open its 60-month CD with a deposit of at least $500. This will allow you to start earning the 3.00% APY. If you need to withdraw money from the CD before it matures, be aware that you may incur a penalty that is equal to 365 days of interest.
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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