Advertiser Disclosure

Earning Interest

Best Money Market Rates & Accounts – December 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Updated December 2, 2019

If you’re looking to save more money beyond your regular savings account, consider adding a money market account to the mix. A money market account can earn at a higher rate than a savings account, especially if you have a larger balance to deposit. Many MMAs tier their rates as well, rewarding higher balances with higher rates.

Like most deposit accounts, the rate on money market accounts has grown over the past few years, up from 0.188% APY in 2016 to 0.383% APY in November 2019. Savings account rates have also increased, but still averaged only 0.278% APY in November 2019.

You can do much better than a 0.383% APY on a money market if you’re willing to break with traditional brick and mortar banks. Opening an MMA at the bank around the corner, for example, may not yield more than 1.00% APY, while an internet-only bank might offer a rate of 2.00% APY or higher. With a rate like that, you can boost your savings by a wide margin.

If you were to put $50,000 into an MMA earning 0.04%, you would earn only $20 in interest over a year. Put that same starting amount into an online bank account at 2.00%, and you’d earn $1,000 in interest over a year.

With so many options out there, it can seem daunting to search for a new bank account with a potentially new bank. We’ve made it it easier for you by rounding up the best money market accounts out there. We searched through over 12,000 banks and credit unions to find the money market accounts paying the highest interest rates. We also looked at an account’s minimum requirements and fund accessibility.

Overall, we found that internet banks consistently beat the competition. You might not recognize all their names — new online banks are continuing to crop up — but if it’s high interest rates you’re looking for, it might be good to branch out since online banks are the way to go. Here are our favorite rates for December 2019:

1. Guaranteed Rate Through 6/30/2020: Customers Bank – 2.25% APY, $25,000 minimum deposit and balance to earn APY

Ascent Money Market - Online Only from Customers BankCustomers Bank was founded as Century Bank in 1997 and rebranded in 2011 to the name we know today. The bank has acquired over $10 billion in assets since it opened its doors. If you have a minimum of $25,000 to deposit and are looking to save that money, Customer Bank’s Ascent Money Market Savings Account may be just what you need. If you’re able to fund the account within 30 days of application approval, you lock in a minimum APY of 2.25%. Customers Bank is currently guaranteeing this rate through June 30, 2020. The language on the Ascent page states, “The minimum rate of 2.25% APY is guaranteed thru June 30, 2020.” This implies that if the bank increases the rate on this account, customers will benefit from the rate increase. There isn’t a monthly service fee and there isn’t an excess transaction fee if you happen to make more than six transactions in a statement cycle. You will simply receive a warning letter each time you exceed six transactions and the bank will close your account if you’re sent a third warning letter. The bank encourages accountholders to use this account to hold savings, so there aren’t any check-writing capabilities or ATM/debit cards issued with this account. The bank also limits ACH transfers to $5k per day and $50k per statement cycle. If you choose to wire money from an external account to fund this account, the bank will waive the $10 incoming wire transfer fee. The guaranteed rate makes this account a great option for true savers with at least $25,000 to deposit.

LEARN MORE Secured

on Customers Bank’s secure website

Member FDIC

2. Favorite Online Package: Ally – 0.75% APY, no minimum deposit and link to free checking

Online Savings Account from Ally BankAlly Bank is a very popular internet-only bank. If you keep a daily balance of $5,000 or less, you will earn the 0.75% APY. If you’re able to keep a minimum daily balance of $25,000 the APY increases to 0.75%. Although the interest rate on the money market account is not the highest, Ally does offer a very competitive overall package – particularly if you link the account to an Ally checking account. The checking account has no minimum balance and no monthly fee. You can link your money market account to your checking account to provide overdraft protection. Money would be transferred to your checking account with no transaction fee if you ever made a mistake. You would be able to access your money market account with your Ally ATM card, which has free AllPoint access and up to $10 of non-Ally ATM fees reimbursed every month. This money market account is a nice way to provide yourself with overdraft protection while earning interest. If you don’t need check-writing capabilities on your savings, you would still be better off with Ally’s savings account.

LEARN MORE Secured

on Ally Bank’s secure website

Member FDIC

The rest of these are the best money market accounts listed by APY regardless of minimum balance:

3. High Rate: MECU Credit Union – 2.25% APY, $10,000 minimum deposit and balance to earn APY

Money Market Special - New Money from MECUMECU Credit Union was established in 1936 in Baltimore, MD. A group of city employees got together to create this credit union in the hopes of offering affordable financial services to their community. Today, it serves customers nationwide and have acquired over $1 billion in assets. Anyone can become a member by joining the American Consumer Council (ACC). If you live in Maryland, Delaware, Washington D.C., Pennsylvania, or Virginia, the credit union will cover the cost for you. Other ways to qualify for membership include living, working, worshiping, or attending school in Baltimore or being related to an existing member.Once you become a member of MECU, you’ll be able to open its Money Market Account. The credit union is currently offering a promotional APY of 2.25% if you’re able to deposit at least $10,000 into the account. If the balance drops below $10,000, the APY drops to 0.05%. If the balance exceeds $1 million, the APY also drops to 2.25%. This account doesn’t come with any monthly fees. This account does come with check-writing capabilities as well as ATM access. You can easily access the account online or via the credit union’s mobile app.

LEARN MORE Secured

on MECU’s secure website

NCUA Insured

4. High Rate: Prime Alliance Bank – 1.97% APY, $10,000 minimum balance to earn APY

Personal Money Market from Prime Alliance BankPrime Alliance Bank was established in 2004 and has grown to acquire over $455 million in assets. The bank is currently offering a Personal Money Market account with an APY of 1.97%. You’ll need to deposit and maintain a balance of at least $10,000 in order to earn this APY. If your balance drops below $10,000, the APY will drop to 1.87%. There aren’t any monthly fees with this account. Prime Alliance Bank will provide an ATM card if you request one. This account can be managed online or via the bank’s mobile app.

LEARN MORE Secured

on Prime Alliance Bank’s secure website

Member FDIC

5. High Rate: Sun East Federal Credit Union, 2.20% APY, $5,000 minimum balance to earn APY

Max-Yield Money Market Account Promotional - New Money (13 Month Intro Rate) from Sun East Federal Credit Union

Sun East Federal Credit Union was established in 1949 by employees of the Sun Oil Company. These employees wanted to help each other out financially and decided to do so by establishing their own credit union. Since its establishment, the credit union has grown to acquire over $634 million in assets. Anyone can become a member of this credit union by donating $10 to the Sun East Charitable Foundation. You can also qualify by your location, family members, or through employers.

Once you become a member of this credit union, you’ll be able to open the Max-Yield Money Market Account. This account is currently offering a 2.20% APY that is guaranteed for 13 months. You’ll need to maintain a balance of at least $5,000, but the balance can’t exceed $250,000. Keep in mind that after the 13-month promotional period ends, the account will turn into the Classic MMA. The Classic MMA earns a much lower APY. If you aren’t able to maintain the minimum balance of $5,000, you’ll incur a monthly fee of $10. This account does come with check-writing capabilities. You’re able to manage this account online as well as through the credit union’s mobile app.

LEARN MORE Secured

on Sun East Federal Credit Union’s secure website

NCUA Insured

6. High Rate: Quontic Bank – 2.10% APY, $5,000 minimum balance to earn APY

Personal Money Market from Quontic BankQuontic Bank was established in 2005 and has acquired over $394 million in assets. This online bank is currently offering a money market with some high rates if you’re able to deposit at least $5,000. There is a minimum deposit requirement of $500 and if your balance remains at that amount, you’ll earn 1.85% APY. If you’re able to maintain a balance between $5,000 – $99,999.99, you’ll earn 2.10% APY. If you’re able to maintain balance of $100,000 or more, you’ll earn 2.20% APY. There aren’t any monthly fees. The account does come with a Mastercard Debit Card, which you can use at any Allpoint or MoneyPass ATM at no charge. If you happen to have a Quontic or Citi branch in your area, you’ll also be able to use those ATMs at no charge. Quontic Bank has a mobile banking app that allows you to access the account wherever you are.

LEARN MORE Secured

on Quontic Bank’s secure website

Member FDIC

7. High Rate: earn.bank – 2.05% APY, $100 to open, $0 minimum balance, $10k to avoid $10 monthly fee

Money Market Account from earn.bankearn.bank is a division of Silvergate Bank, a state-chartered bank headquartered in San Diego, CA. The state-chartered bank has over $1 billion in assets, and your deposit would be FDIC insured up to the legal limit. Silvergate Bank created earn.bank to provide “a transparent, powerful savings vehicle that will help you meet your savings goals”. At 2.05% APY, the internet-only bank is certainly starting out strong. You’ll need $10,000 to open the account, but there isn’t a minimum balance requirement to earn the high rate. A few downsides to this account include a $10 monthly maintenance fee that comes with a steep balance requirement if you want it waived. While you don’t need to maintain a minimum balance to earn the APY, you would need to maintain an average daily balance of $10,000 to avoid the monthly fee. The account does not come with check-writing privileges and there is no ATM access. You’ll also want to make sure you’re enrolled in eStatements as you’ll be charged a $25 fee for each paper statement you receive. You can deposit your funds via ACH (electronic transfer), which can take a couple of days. Just remember: there is a limit of 6 withdrawals per calendar month.

LEARN MORE Secured

on earn.bank’s secure website

Member FDIC

8. High Rate: Pacific National Bank – 2.05% APY, $5,000 minimum balance to earn APY

MMDA Online Special (New Money Only) from Pacific National BankPacific National Bank has quite an interesting history. In 1982, Banco Del Pacifico Ecuador (BPE) decided to establish Banco Del Pacifico International in Miami, FL as an Edge Act bank. The Edge Act allowed national banks to do international banking through divisions chartered by the Federal Reserve Bank. By 1985, Banco Del Pacifico International decided to become a national bank charter and changed its name to Pacific National Bank. Since this change, the bank has acquired over $499 million in assets. The bank initially offered its services to South Florida residents, but decided to expand to all U.S. residents with a valid Social Security Number in 2016. Today, Pacific National Bank is offering an online special on its money market account. With a minimum deposit of $5,000, you could earn an APY of 2.05%. You’ll need to maintain that amount in the account on a daily basis to waive the monthly maintenance fee of $25 and to continue earning the high rate. Check writing is available with this account, but keep in mind that you can only make six certain transaction within a month due to federal law. If you exceed six certain transactions within a month, Pacific National Bank will charge a fee of $20 per additional transaction. You may also make ACH transfers, free of charge, without any limits after the initial funding. In addition to banking online, the bank offers a mobile banking app for your convenience.

LEARN MORE Secured

on Pacific National Bank’s secure website

Member FDIC

9. High Rate: Virtual Bank – 2.01% APY, no minimum balance to earn APY

eMoneyMarket from Virtual BankVirtual Bank, a division of IBERIABANK, is currently offering an introductory rate on their money market account that is the highest available. This rate is guaranteed for 12 months and will adjust to the standard rate that is in effect at the time. New customers can earn the 2.01% APY by depositing a minimum of $100. While there isn’t a minimum balance requirement to earn the APY, there is a balance requirement to avoid incurring the $5 monthly service fee. All you’ll have to do is maintain a daily minimum balance of $100 and they’ll waive the monthly fee. While this account doesn’t have any check writing capabilities, you can easily move money in and out of the account via ACH. Virtual Bank has a mobile app, that has the mobile check deposit feature, in addition to their online banking platform.

LEARN MORE Secured

on Virtual Bank’s secure website

Member FDIC

10. High Rate: Western State Bank – 2.00% APY, no minimum balance to earn APY

High Yield Money Market from Western State BankWestern State Bank was chartered in 1902 as the Bank of Webster due to its location in Webster, North Dakota. In 1966, a group of people purchased the Bank of Webster and in 1968, this group of individuals moved the bank’s headquarters to another part of North Dakota and changed its name to Western State Bank. At that time, the bank had $600,000 in assets. Today, the bank has over $1 billion dollars in assets and serves customers nationwide.

Western State Bank is currently offering a remarkable 2.00% APY on its High Yield Money Market account. The bank does not require a minimum deposit amount to open the account nor do they require a minimum balance to earn the high rate. They do, however, place a limit on the how large of a balance the account can hold. If your balance exceeds $2,000,000, the APY will drop to 2.00%. While this account has an excellent rate, it does lack in features. Western State Bank will not provide checks or a debit card to go along with this account. You can only withdraw money via ACH, wire transfer, or the bank can mail you a cashier’s check if you call and ask for this method. The bank does have ACH limitations to keep in mind. You can only transfer $25,000 at a time and you can only do so six times per month (not exceeding $100,000). If you’re looking for a money market account with check-writing capabilities or ATM access, then this account may not be for you. If you’re looking for a high-yield savings account, then this account is a great place to deposit your money and earn interest.

LEARN MORE Secured

on Western State Bank’s secure website

Member FDIC

11.High Rate: MemoryBank – 2.00% APY, $50 minimum to open

Online Money Market Account from MemoryBankMemoryBank is the online division of Republic Bank & Trust Company. While this online division launched in 2016, its parent company has been around since 1982 and has over $5 billion in assets. Currently, MemoryBank is offering a 2.00% APY on its Online Money Market Account. You’ll need a minimum of $50 to open the account, but you won’t need to maintain this amount to earn the APY. The account doesn’t come with a monthly service fee, but it also doesn’t have check writing capabilities or ATM access. MemoryBank does have a mobile banking app to help you manage your account on-the-go.

LEARN MORE Secured

on MemoryBank’s secure website

Member FDIC

Premier Members Credit Union – 4.00% APY up to $2k

Premier Members Credit Union

Premier Members Credit Union is open to anyone willing to make a $5 donation Impact on Education, a charity for the Boulder Valley School District. This credit union is currently offering an incredible rate of 4.00% with only $5 to open the account. You can earn this APY on balances up to $2,000. Amazingly, even if you grow the balance up to $5,000, you’ll earn 1.00% APY. As the balance increases, the APY decreases to the following:

  • $5,000.01-$10,000: 0.45%
  • $10,000.01-$50,000: 0.30%
  • $50,000.01-$100,000: 0.30%
  • $100,000.01-$250,000: 0.25%
  • $250,000.01+: 0.25%

Premier Members Credit Union rewards low balance savers by placing the highest rate with the lowest deposit, but if the balance grows they start using a reverse tier system where they blend the APY as the balance grows. Checks are available with this account, but you can only make six withdrawals per month. Each additional withdrawal will be assessed a $10 fee.

LEARN MORE Secured

on Premier Members Credit Union’s secure website

NCUA Insured

What is a money market account?

A money market account is a special type of savings account: Cash you put in the account remains deposited with the financial institution, where it earns a variable annual percentage yield. Because the name of this deposit product has the word market in it, you may assume a money market account is some kind of investment product, but it’s not.

One of the features that differentiates a money market account from a savings account is that institutions generally make it easier to access deposited funds by offering checks and ATM cards. Note that some institutions are starting to provide them for savings accounts, too. Keep in mind that much like a savings account, money market accounts are governed by Regulation D, the Federal Reserve rule stating you can only make a maximum of six withdrawals via check or debit card. Additional withdrawals may incur a fee from your bank or credit union.

It’s also important to understand that money market accounts are different from money market funds. In the 1980s, shoulder pads and hair weren’t the only things that were big: Yields on money market funds were both low-risk and offered a good rate of return. To help out the banking sector, Congress passed the Garn-St Germain Depository Institutions Act of 1982, which allowed banks to offer a new type of savings account — money market accounts — with an interest rate based on those offered in money markets.

What to consider before opening a money market account

Before you get bogged down in the details, let’s take a look at some quick pros and cons of a money market account.

Pros:Cons:
  • Typically carry higher interest rates than savings accounts
  • Convenient access to your funds with check-writing abilities and a debit/ATM card (not offered on all accounts)

  • May carry monthly maintenance fees or a high balance to waive one
  • Still limited to six transfers and withdrawals per month like a savings account (or you’ll face a fee)
  • You’re better off using a higher yield product like CDs for money you won’t need in the immediate future

Who money market accounts are best for

Now that you know the basics of a money market account, should you get one? They’re a good choice if you have a big deposit you’d like to keep safe and growing at a high interest rate. Then when you need to access that money, perhaps for an upcoming purchase or in an emergency, you can often easily do so with an ATM/debit card or by writing a check.

Savings accounts vs. money market accounts

Money market accounts often earn a higher rate than standard savings accounts. The caveat is that MMAs often require higher opening deposits or higher balances than a standard savings account. Even so, you may also find that one bank’s top money market rate earns at the same rate (or lower) as a savings account at another bank.

For example, one of the best savings accounts, Ally’s Online Savings account, offers a 1.70% APY while its money market account earns at a mere 0.75% APY (on most balances). So if it’s high interest rates you’re after, be sure to compare accounts across the board rather than turning immediately to a money market account. Just be sure to keep your balance limits in mind when shopping around.

What often separates money market accounts from savings accounts is their check-writing abilities or issued ATM/debit cards. This provides easier access to your money especially if you have larger balances you’re saving for a bigger purchase. Not all money market accounts offer these features, though. Furthermore, money market accounts are still savings vehicles, so they’re also limited to six outgoing transactions per month, like transfers and withdrawals.

Read more about the differences between money market and savings accounts here.

CDs can offer higher rates than money market accounts

Savings accounts and money market accounts often pay much lower interest rates than CDs. Right now you can get a 1-year CD paying 2.05% APY (with only a $500 minimum). You can find the best CD rates here. If you build a CD ladder, you can take advantage of 5-year rates that are currently as high as 2.41%. Creating a CD ladder also allows you to protect your investments over the years by locking in today’s high rates in a long-term account while also staying flexible for any potential rate increases with your shorter-term accounts. The interest rate on a money market account can change right away, at the bank’s discretion.

If you need some savings more immediately, money market accounts are great places to keep that money— it’ll keep growing, while still remaining accessible. In contrast, should you need to access your CD funds before it matures, you’ll likely face a pretty heavy penalty, typically forfeiting three to six months of interest.

A money market account isn’t the same thing as a money market fund

Money market accounts, like deposit accounts, provide FDIC insurance on your deposits up to $250,000. Money market funds, on the other hand, are investment accounts, most likely sold by your broker, and are regulated by the Securities and Exchange Commission instead. Money market funds invest in highly liquid cash and cash equivalent securities that typically mature within 13 months.

As an example, Vanguard offers the Prime Money Market Fund. Like other money market funds, this one “invests in short-term, high-quality securities.” Its objective is to keep the fund trading at $1 and generate a decent return. Still, money market funds can end up with a lower return than those you see from the money market accounts listed in this article. Since money market fund returns are dependent on the market and the Federal Reserve Rate, it’s important to keep an eye on the current interest rate climate to see whether investing in these funds are worth your time and money.

Money market funds charge expense ratios, or management fees, that are charged as a percentage of your fund (Vanguard’s is currently 0.16% as of Dec. 2018). You can also end up paying some transaction fees. It’s important to watch out for an account’s fees which can often lessen your total investment in the end. Like money market accounts, money market funds can also require a high minimum balance to open an account.

Most people compare the return of a money market fund (sold by their broker) to the interest rate paid by a traditional bank (sold by their local bank teller). As a result, they are willing to take the risk of a money market fund. However, as you can see from the best money market accounts in this article, you can get FDIC insurance and beat the return of most funds without taking on the risk of market investments.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

Advertiser Disclosure

Earning Interest, Reviews

Discover Bank CD Rates Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Discover Bank’s roots stem back to the Discover credit card brand and the Sears-owned Greenwood Trust Company. Over the past 30 years, Discover Bank’s parent, Discover Financial Services, has become one of the largest credit card issuers in the U.S.

Discover Bank offers an array of financial products, including a full menu of certificates of deposit (CDs). If you’re looking for competitive CD rates, Discover Bank is worth a look.

Discover Bank’s CD rates

CD term

Annual Percentage Yield (APY)

3 months

0.35%

6 months

0.65%

9 months

0.70%

12 months

2.00%

18 months

2.00%

24 months

2.05%

30 months

2.05%

3 years

2.05%

4 years

2.05%

5 years

2.10%

7 years

2.15%

10 years

2.20%

How do Discover Bank’s CD rates compare?

While Discover Bank’s CD rates aren’t always the highest available in our listings of the best CDs, they are consistently among the top offers we’ve seen across all terms. That said, you may be able to find a similar or even better rate with a CD that has a lower minimum deposit than Discover Bank’s rather hard-to-swallow $2,500.

There are usually several nationwide banks offering a 12-month CD at an annual percentage yield (APY) that’s higher than Discover Bank’s 12-month CD APY. Some minimum deposit requirements are also lower.

Regarding returns, it’s always a good idea to invest in CDs with the highest APYs possible, but remember to keep your CD investing strategy in mind. For example, if you’re investing in CDs using the ladder strategy, it might be easier to keep everything in one bank since you’ll be switching in and out of CDs frequently.

Discover Bank manages to stand out from its competition with its mobile app and 24/7 U.S.-based customer service. To some people, these conveniences may be worth a few basis points of interest accrued.

What you need to know about Discover Bank’s CDs

Discover Bank provides an open image, and the company makes even its fine print more accessible and easier to understand than other banks do. Consumers may find Discover Bank’s transparency a key asset when investing their wealth. Due to this approach, purchasing CDs through Discover Bank is a rather straightforward process.

How to open a Discover Bank CD

On Discover Bank’s online banking webpage, click on the orange “Open an Account” button near the top right of the page. You can then choose which accounts you’d like to open. Select the certificate of deposit option, then after inputting your details, choose a CD term and enter an initial deposit amount.

You’ll then need to complete the application by providing your name, address, date of birth, phone number, Social Security number, employment status and possibly your driver’s license. Once your application is complete and accepted, you’ll need to fund the account.

How to fund a Discover Bank CD

You’ll need to fund it within 45 days of submitting your application, which you can do in one of three ways:

  • Transfer funds from another bank account over the phone. (You can only do this when you first fund your account.)
  • Transfer funds from another bank via online transfer.
  • Mobile check deposit.
  • Write a check to yourself and send it to the following address:
    • Discover Bank
    • P.O. Box 30417
    • Salt Lake City, UT 84130

The minimum opening deposit amount for each of Discover Bank’s CDs is $2,500. Once you open a CD, you can’t deposit funds into the same CD later, so it’s a good idea to make sure you have all the cash you want to invest before you open the account. Alternatively, you could look into a CD ladder strategy.

Withdrawing funds from a Discover Bank CD

When you want to withdraw money from your CD, the biggest thing to consider is whether that CD has matured or in other words, finished its term.

If your CD hasn’t yet matured, you have two options: You can take your earned interest out penalty-free at any time, or you can withdraw the principal at any time — but you will incur a penalty. Discover Bank’s penalty amount is determined by the original term of your CD:

  • Less than 1 year: three months’ worth of simple interest
  • 1 year to less than 4 years: six months’ worth of simple interest
  • 4 to 5 years: nine months’ worth of simple interest
  • 5 years to less than 7 years: 18 months’ worth of simple interest
  • 7 years or longer: 24 months’ worth of simple interest

If your CD has finished its term, you can withdraw your money penalty-free, allow the CD to renew or roll it into a CD of a different term length (more on that in a bit).

Earning interest on a Discover Bank CD

Your Discover Bank CD will start earning interest on the same business day that you fund the account. The interest will then be added to your account once each month.

When deciding what to do with your interest, you have two options: The default option is to allow it to compound within the CD (meaning you’ll earn interest on that interest amount), or you can have it automatically deposited each month into another Discover Bank account.

What happens once the Discover Bank CD matures?

You’ll get a heads-up notice from Discover Bank about a month before your CD matures so you can decide what to do with the money. You have two main options: Either reinvest it into another CD (of the same term length or a different term length), or withdraw the money from the CD and put it into another account, such as a checking or savings account, or even a CD at a different institution.

If you don’t let Discover Bank know what you want to do with the maturing CD, it will automatically renew in a new CD of the same term length. You have a nine-day grace period after your CD automatically rolls over to make any changes or withdrawals penalty-free.

The bottom line

As far as big-name banks go, Discover Bank offers great CD products. Although the initial investment required seems a bit high, the bank offers exceptional customer service and APYs that make up for a relatively minor inconvenience for many investors.

If you’re the kind of person who likes to keep your finances in one place, Discover Bank has competitive online savings and checking accounts. No matter how long you’re considering investing money in a CD, Discover Bank is worth a look. Even if the bank doesn’t have the best available APYs, it’s usually within several basis points of the top offerings and well above the average.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

Advertiser Disclosure

Earning Interest

The Best CD Rates – December 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Updated December 12, 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
Goldman Sachs Bank USA

LEARN MORE Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

Our advertiser Marcus by Goldman Sachs is the online consumer bank of Goldman Sachs Bank USA (the large investment bank). Your funds are FDIC insured, and Goldman offers very competitive rates. 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:

CD TermAPY
6-months0.60%
9-months0.70%
12-months2.05%
18-months2.05%
2-year2.10%
3-year2.10%
5-year2.15%
6-year2.20%
30 days – 5 years: BrioDirect – 0.05% APY – 2.05% APY; $500 minimum deposit to open
BrioDirect

LEARN MORE Secured

on BrioDirect’s secure website

FDIC Insured

BrioDirect is the online division of Sterling National Bank. While its parent bank has been around for quite some time, the online division only recently launched. Right now, BrioDirect is offering a 2.05% APY on its 12-month CD. You’ll need to deposit a minimum of $500 to open the account and start receiving the 2.05% APY. If you choose to withdraw any portion of the principal, you’ll incur an early withdrawal penalty of 90 days interest. This penalty will apply regardless of whether you’ve earned that amount of interest or not. Here are all of their rates:

CD TermAPY
30-days0.05%
3-months1.55%
5-months1.95%
7-months1.35%
9-months2.20%
11-months1.35%
12-months2.05%
18-months1.00%
24-months1.00%
30-months1.00%
36-months1.00%
48-months1.00%
60-months1.00%
6 months – 5 years: Capital One – 0.60% APY – 1.60% APY; no minimum deposit to open
Capital One

LEARN MORE Secured

on Capital One’s secure website

Member FDIC

Capital One is famous for its credit card business. However, it has recently started getting aggressive with its CD rates. There is no minimum deposit for their 360 CDs, which make them comparable to Barclays’ and Ally’s CDs. Capital One CDs are FDIC insured, up to the federal maximum. And you get the comfort of depositing your money with a well-known bank. In addition to this bank’s competitive CD rates, it also has interest-earning savings, checking, and money market accounts that offer top rates. We believe this makes Capital One a great option for those wanting to do all their banking in one place.

CD TermAPY
6-months0.60%
9-months0.80%
12-months2.00%
18-months1.90%
24-months1.80%
30-months1.70%
36-months1.65%
48-months1.65%
60-months1.60%
3 months – 10 years: Discover Bank – 0.35% APY – 2.20% APY, $2,500 minimum deposit to open
Discover Bank

LEARN MORE 

Discover Bank's website is secure

Member FDIC

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-months0.35%
6-months0.65%
9-months0.70%
12-months2.00%
18-months2.00%
2-year2.05%
30-months2.05%
3-year2.05%
4-year2.05%
5-year2.10%
7-year2.15%
10-year2.20%
12 months – 3 years: BBVA – 1.50% APY* – 1.00% APY; $500 minimum deposit to open
BBVA

LEARN MORE Secured

on BBVA’s secure website

Member FDIC

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.

CD TermAPY
12-months1.50%*
15-months1.00%
18-months1.00%
3-years1.00%
1 Year – 3 Years: Rising Bank – 2.05% APY – 2.10% APY; $1,000 minimum deposit to open
Rising Bank

LEARN MORE Secured

on Rising Bank’s secure website

Member FDIC

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 2.05% 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.

CD TermAPY
1-year2.05%
2-year2.05%
3-year2.10%
3 months – 5 years: Synchrony Bank – 0.75% APY – 2.25% APY; $2,000 minimum deposit to open
Synchrony Bank

LEARN MORE 

Member FDIC

Synchrony used to be a part of GE, and now has an online bank that pays competitive rates. The online deposits are used to fund their store credit card portfolio – and the company is publicly traded. If you have $2,000 or more to deposit into a CD, Synchrony will offer you some of the best CD rates. However, if you have less than $2,000, you’re better off going with one of the other online banks above. Your deposit will be insured up to the FDIC limit. In a rising rate environment, this is a great way to get a high interest rate without locking yourself into a long term.

CD TermAPY
3-months0.75%
6-months1.00%
9-months1.25%
12-months2.00%
15-months2.00%
18-months2.00%
24-months2.10%
36-months2.10%
48-months2.15%
60-months2.25%
1 year – 5 years: Barclays Bank – 2.00% – 2.10% APY, no minimum deposit to open
Barclays

LEARN MORE 

Member FDIC

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-year2.00%
2-year2.00%
3-year2.00%
4-year2.00%
5-year2.10%
3 months – 5 years: Ally Bank – 0.75% APY – 2.15% APY; $0 minimum deposit to open (higher APY with higher deposit)
Ally Bank

LEARN MORE Secured

on Ally Bank’s secure website

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 can earn a higher APY. If you have more than $25,000 to deposit, you can earn between 0.75% APY and 2.15% 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. A good example of this is a 1% cash back promotion Ally is currently offering to new and existing customers. All deposits at Ally are FDIC insured up to the legal limit.

3-months:
  • 0.75% APY (less than $5k)
  • 0.75% APY ($5k minimum deposit)
  • 0.75% APY ($25k minimum deposit)
18-months:
  • 1.90% APY (less than $5k)
  • 2.00% APY ($5k minimum deposit)
  • 2.05% APY ($25k minimum deposit)
6-months:
  • 1.00% APY (less than $5k)
  • 1.00% APY ($5k minimum deposit)
  • 1.00% APY ($25k minimum deposit)
3-year:
  • 1.95% APY (less than $5k)
  • 2.05% APY ($5k minimum deposit)
  • 2.10% APY ($25k minimum deposit)
9-months:
  • 1.25% APY (less than $5k)
  • 1.25% APY ($5k minimum deposit)
  • 1.25% APY ($25k minimum deposit)
5-year:
  • 2.15% APY (less than $5k)
  • 2.15% APY ($5k minimum deposit)
  • 2.15% APY ($25k minimum deposit)
12-months:
  • 2.00% APY (less than $5k)
  • 2.00% APY ($5k minimum deposit)
  • 2.00% APY ($25k minimum deposit)

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 – 1.65% APY – 1.90% APY; $0 – $25,000 minimum deposit to earn APY
Ally Bank

LEARN MORE Secured

on Ally Bank’s secure website

Member FDIC

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:

TermAPYMinimum balance to earn the APY
11 months1.65%Up to $5,000
11 months1.70%$5,000
11 months1.90%$25,000
7 months – 13 months: Goldman Sachs Bank USA – 1.90% APY – 1.65% APY; $500 minimum deposit to open
Goldman Sachs Bank USA

LEARN MORE Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

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:

TermAPYMinimum balance to earn the APY
7-month1.90%
$500
11-month1.90%
$500
13-month1.65%
$500
6 months: Investors eAccess – 1.80% APY; $500 minimum deposit to open
Investors eAccess

LEARN MORE Secured

on Investors EAccess’s secure website

Member FDIC

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.

TermAPYMinimum balance to earn the APY
6-month1.80%$500
11 months – 14 months: PurePoint Financial – 1.65% APY – 1.90% APY; $10,000 minimum deposit to open
PurePoint Financial

LEARN MORE Secured

on PurePoint Financial’s secure website

Member FDIC

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.

TermAPYMinimum balance to earn the APY
11-month1.65%$10,000
13-month1.90%$10,000
14-month1.75%$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: Wheelhouse Credit Union – 2.50% APY, $1,000 minimum balance
11 Month Certificate Special - New Money from Wheelhouse Credit Union

Wheelhouse Credit Union was established in 1934 by employees of the city of San Diego. The credit union has grown to acquire over $282 million in assets, but is limited to the San Diego area. Membership is limited to those who live and work in San Diego, members of the Zoological Society, and relatives of existing members.

Once you become a member, you’ll be able open the credit union’s 11-month CD, which currently earns an APY of 2.50%. You’ll need at least $1,000 of new money to open the account. If you choose to withdraw money from the CD early, you may have to pay a penalty. The exact penalty amount can be found in the CD’s Account disclosure, which you’ll receive after you open the account. Once the funds mature, Wheelhouse Credit Union will roll the funds over to a 12-month CD unless you specify otherwise.


LEARN MORE Secured

on Wheelhouse Credit Union’s secure website

NCUA Insured

Best 1-year CD rate from a National Bank: Quontic Bank – 2.25% APY, $1,000 minimum deposit
12 Month CD from Quontic Bank

Quontic Bank is a digital bank with over $394 million in assets. Currently, the online bank is offering a 2.25% 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.


LEARN MORE Secured

on Quontic Bank’s secure website

Member FDIC

Best 2-year CD rates

Best 2-year CD rate from a Credit Union: Wheelhouse Credit Union – 2.75% APY, $1,000 minimum deposit
22 Month Certificate Special - New Money from Wheelhouse Credit Union

If you’re able to join Wheelhouse Credit Union, you’ll be able to open its 22-month CD. If you’re able to deposit new money into the account, you’ll earn an APY of 2.75%. You’ll need at least $1,000 to open the account and earn the APY. If you choose to withdraw money from the account early, you may incur an early withdrawal penalty. Information about the exact penalty is found in the CD’s Account Disclosure, which you’ll receive after you open the CD. After this CD matures, it’ll renew into a 24-month CD. If you don’t wish to renew the CD after maturity, you’ll have to contact the credit union.


LEARN MORE Secured

on Wheelhouse Credit Union’s secure website

NCUA Insured

Best 2-year CD rate from a National Bank: Home Loan Investment Bank, F.S.B. – 2.50% APY, $2,500 minimum deposit
2 Year e-CD from Home Loan Investment Bank, F.S.B.

Home Loan Investment Bank, F.S.B. was built with the intention of offering home loans to residents of Rhode Island. However, it has grown to offer much more than home loans. The bank currently has over $301 million in assets and continues to innovate by offering new accounts like e-CDs. Home Loan Investment Bank, F.S.B. is offering a high APY of 2.50% on a 2-year e-CD. You’ll need $2,500 to open the account. The early withdrawal penalty is six months’ interest on the amount withdrawn. This penalty applies to all CD terms from this bank.


LEARN MORE Secured

on Home Loan Investment Bank, F.S.B.’s secure website

Member FDIC

Best 3-year CD rates

Best 3-year CD rate from a Credit Union: Dow Chemical Employees’ Credit Union – 2.70% APY, $1,000 minimum deposit
36 Month Simple CD from Dow Chemical Employees' Credit Union

Dow Chemical Employees’ Credit Union was founded in 1937 by two Dow employees. When it was first established, it only served employees of The Dow Chemical Company, but it currently serves a wider demographic. You can join based on your employment (the credit union currently works with over 70 Select Employer Groups), your relation to an existing member, or if you’re a member of select organizations such as the Midland Center for the Arts’ Alden B. Dow Museum of Science & Art.

Once you become a member, you’ll be able to open the credit union’s 36-month CD with at least $1,000. The current APY is 2.70%. The early withdrawal penalty on this CD is 50% of the expected earnings on the amount withdrawn.


LEARN MORE Secured

on Dow Chemical Employees' Credit Union’s secure website

NCUA Insured

Best 3-year CD rate from a National Bank: Home Loan Investment Bank, F.S.B. – 2.55% APY, $2,500 minimum deposit
3 Year e-CD from Home Loan Investment Bank, F.S.B.

Home Loan Investment Bank, F.S.B. also has a 3-year CD with a high rate. If you have at least $2,500 to deposit, you can open this 30-month CD and begin earning a 2.55% APY. The early withdrawal penalty on this CD is equal to six months interest on the amount withdrawn. The CD can be funded via ACH and once the CD matures, the bank will mail you a cashier’s check.


LEARN MORE Secured

on Home Loan Investment Bank, F.S.B.’s secure website

Member FDIC

Best 4-year CD rates

Best 4-year CD rate from a Credit Union: Lafayette Federal Credit Union – 2.78% APY, $500 minimum deposit
4 Year Fixed CD from Lafayette Federal Credit Union

Lafayette Federal Credit Union was founded in 1935 and currently has over $601 million in assets. Anyone can become a member of this credit union by joining the Home Ownership Financial Literacy Council or through their current employer, location, or relation to an existing member.

Once you’re a member, you’ll be able to open this credit union’s 48-month CD. You’ll need at least $500 to open the account and earn the 2.78% APY. An early withdrawal penalty that is equal to 480 days of interest may be imposed if you withdraw money from the CD before it matures. If you don’t want this to automatically renew with the same term, you’ll need to contact the credit union to withdraw the funds.


LEARN MORE Secured

on Lafayette Federal Credit Union’s secure website

NCUA Insured

Best 4-year CD rate from a National Bank: Prime Alliance Bank – 2.40% APY, $500 minimum deposit
48 Month CD from Prime Alliance Bank

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 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.


LEARN MORE Secured

on Prime Alliance Bank’s secure website

Member FDIC

Best 5-year CD rates

Best 5-year CD rate from a Credit Union: Lafayette Federal Credit Union – 3.03% APY, $500 minimum deposit
5 Year Fixed CD from Lafayette Federal Credit Union

Lafayette Federal Credit Union is also offering a high rate on its 60-month CD. With a minimum deposit of $500, you’ll be able to earn 3.03% APY. If you choose to withdraw from this CD early, you’ll incur a penalty that is equal to 600 days of interest. The credit union will automatically renew this CD unless you tell them otherwise.


LEARN MORE Secured

on Lafayette Federal Credit Union’s secure website

NCUA Insured

Best 5-year CD rate from a National Bank: DollarSavingsDirect – 2.80% APY, $1,000 minimum deposit
60 Month CD from DollarSavingsDirect

DollarSavingsDirect is one of many divisions of Emigrant Bank. While Emigrant Bank has had a peculiar way getting things done, they’ve grown to acquire over $5 billion in assets. Currently, DollarSavingsDirect is offering a decent 2.80% APY on its 5-year CD. You’ll need at least $1,000 to open the CD and earn the APY. If you choose to withdraw from the CD early, you’ll incur a penalty that is equal to 180 days interest whether you’ve earned that much interest or not.


LEARN MORE 

Member FDIC

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.

You can learn more about us and how we make money here.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here