Certificates of deposit, or CDs, are a popular deposit account that grows your deposit passively. Compared to other savings accounts, CDs tend to have higher interest rates, and they’re extremely low-maintenance. Learn more about CDs, if they’re a smart investment right now, average rates and their advantages.
CDs, sometimes called share certificates, are accounts that earn interest on your deposited funds.
CDs “lock” your funds away for a certain amount of time to earn interest passively. They don’t charge monthly maintenance fees, they don’t come with a debit card for spending and they’re not investment accounts.
As deposit accounts, they come with FDIC or NCUA insurance, typically up to at least $250,000 per depositor.
Here are the key things to know about CDs:
For many savers, and those with funds they can afford to lock away for months at a time, CDs are a safe way to grow funds passively. If you want consistent earnings and a guaranteed interest rate, CDs can definitely be worth it.
The great thing about CDs is that they have fixed rates, which can be a huge advantage over the variable rates of standard savings accounts. In weak market conditions, banks tend to decrease their rates, but your CD’s rate can’t be affected. Your savings account rate, however, can be lowered at any time.
Of course, the opposite is also true. If rates increase after you’ve opened your CD, you could be missing out on a higher rate. There’s a little bit of an opportunity risk, so the best time to open a CD is when rates are high or you suspect rates will decline.
In 2025, CDs may be a good investment right now since rates have been slowly decreasing. Since the record-high rates during the COVID-19 pandemic, rates have been on a downward trend, though the decline has been slow. Throughout the year, rates have either slightly decreased or stayed steady, with top CDs this year being around 4.50% APY.
However, CDs are largely considered a safe investment at any time, regardless of market conditions, since they’re federally insured deposit accounts that will earn a guaranteed interest rate.
If you need to withdraw your CD funds before the term is over, the bank typically charges early withdrawal penalties, which usually means they take some of your earned interest. In most cases, early withdrawal penalties are around 90 to 365 days of earned interest, depending on the bank and your CD’s term.
If you’re worried about early withdrawal penalties, there are also no-penalty CDs. This type of CD typically allows for one full withdrawal without losing earned interest, though interest rates tend to be lower than traditional CDs.
Most major institutions offer CDs, including Chase, Wells Fargo and Marcus by Goldman Sachs. You can also compare various CDs using the savings marketplace Raisin.
You open a CD with an initial deposit, and you don’t make more contributions afterward — what you put in at the start is what grows. Most banks require an opening deposit of at least $500 or $1,000. However, some banks don’t have a minimum CD opening deposit, including Ally Bank and Capital One.
Throughout the CD’s term, which can be anywhere from one month to ten years, your deposit earns interest. Once the CD term is over, you withdraw your deposit and interest earnings, or you can renew the CD for a similar term.
While CDs are a little less flexible than savings accounts, they’re a better choice if you value predictability.
CDs have fixed interest rates, so even if market conditions change during the CD’s term, your interest rate is already locked in. Savings accounts have variable interest rates, so your rate can change at any time. However, if you want to add to your savings whenever you’d like, a high-yield savings account may be better for you.
On average, CDs have higher interest rates than savings accounts. We’ve compared CD earnings to average savings earnings using rates from the FDIC, with an opening deposit of $10,000.
| Deposit account | Deposit | Length of time | Average APY | Interest earnings |
|---|---|---|---|---|
Savings | $10,000 | 12 months |
0.42% | $41 |
CD | $10,000 | 12 months |
1.75% | $177 |
Narrow down top CD accounts by interest rates and minimum deposits from various institutions. For a closer comparison, tick the Compare box on multiple options to see features side by side.
We currently don't have that product, but here are others to consider:
How we picked theseThe Finder Score analyzes hundreds of CDs from more than 100 institutions. It takes into account the product's interest rate for available terms and opening deposit requirements - this gives you a simple score out of 10.
Different banks and credit unions offer CDs for various lengths of time, ranging from as short as seven days to as long as 20 years. For our ratings, we consider the term lengths that the FDIC uses in its monthly updates on national rates.
If a bank or credit union doesn’t offer a CD for a specific term used by the FDIC, we don’t penalize it: Instead, we simply don’t rate it. Each of the standard term lengths has its own APY rating based on the FDIC’s average rates.
CDs can be great if you have a lump sum you can afford to lock away, but they’re not the best accounts if you need to access your savings.
Pros:
Cons:
CDs are deposit accounts with locked interest rates, making them a great option for savers in need of a predictable and safe way to grow funds. You can find short- and long-term options, jumbo CDs for mega deposits, no-penalty CDs to avoid early withdrawal penalties and ladder CDs to suit your needs.
Learn more about CDs and different types.
A callable CD can be terminated before its maturity date, unlike regular CDs. However, callable CDs tend to have higher APYs as a tradeoff.
The highest CD rates in Texas are from Ciera Bank, Quontic Bank, Susser Bank, Ally Bank and more. See the full list here.
Some of the highest CD rates in Florida are from Quontic Bank, Bethpage Federal Credit Union, First Internet Bank and more. See the full list here.
Some of the highest CD rates in Michigan are from Flagstar Bank, Quontic Bank, First Internet Bank, Ally Bank and more. See our full list here.
Finding the best CD rate is vital to ensuring that your savings balance grows to the maximum amount possible in the shortest time.
High rates on a variety of terms with low opening deposit requirements.
Raisin’s Sallie Mae CDs offer a big APY for a small opening deposit.
See what the average interest rate was in the US for 3-month, 60-month, 1-year, 3-year and 5-year CDs since 2009 and learn how the economy affects rates.
With the help of a CD calculator, you get a better idea of how your certificate of deposit will grow over time.