Certificates of deposit (CDs) rates currently have a national average of
0.23% to
1.84% APY, depending on the term. But you can find CD rates nearly three times higher at online banks. Without the overhead of a physical location, they can pass the savings onto you in the form of more competitive interest rates.
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10 best CD rates right now
The best CDs offer low minimum opening deposits and APYs higher than the national average.
First National Bank of America is a strong choice for competitive interest rates on long-term CDs. While most banks have a maximum CD term of 60 months, First National Bank of America offers terms of up to 84 months, and the rates on these terms range from 3.76% to 4.52%. Plus, its $1,000 opening deposit is on par with other banks. But you'll need to look elsewhere for CD terms of less than one year.
Quontic Bank consistently lands on our list for best CDs because of its strong APYs ranging from 3.00% to 4.25%, good mix of short and long term lengths, and $500 minimum deposit to start. But it imposes the harshest early withdrawal penalties we've seen so far if you need to cash out your CD before the term ends. If the penalty is more than your accrued interest, you may lose part of your principal. For instance, you'll incur a 180-day penalty on its 6-month term, a year penalty on its 1-year term and a two-year penalty on its 5-year term.
Alliant Credit Union offers a modest six terms backed by strong APYs ranging from 3.65% to 4.1%. Alliant also imposes no upper limit on how much you can deposit into your account. Where it especially shines is its generous early withdrawal penalty. Your fee equals the number of days your CD is open with a maximum penalty amount.
For example, Alliant's 1-year CDs have an early withdrawal penalty of up to 90 days' worth of interest. So if you withdraw your principal at 45 days, you'll just pay the interest you've accrued so far. That means you'll never lose your principal. This is head-and-shoulders kinder and more flexible than most banks that charge a flat penalty, and if the early withdrawal fee is more than the interest you've earned, you would actually lose money to get your cash out early.
But you'll need to be an Alliant Credit Union member and fulfill the $1,000 minimum deposit requirement to open an account.
Bread Savings offers an outstanding rate of 4.30% APY across its 5 terms. And its reasonable early withdrawal penalties mean you won't face the rapacious fees some other banks charge if you need to withdraw from your account early. But compared to other banks that require $0 or $500 to open an account, you need at least $1,500 to open a Bread Savings CD.
TAB Bank's eight CD term options have a healthy range from six months to five years and range in APY from 3.25% to 4.25% Its early withdrawal penalties are also on the lower end of the market. But you'll need to lock away at least $1,000, which is higher than the required deposit for many of the other accounts on our list.
Synchrony couples strong APYs ranging from 0.25% to 4.3%, all with a 15-day higher rate guarantee. That means Synchrony will increase your rate to the current APY on the day it receives your deposit if it falls within 15 calendar days of when you opened your account. Plus, there's no minimum opening deposit.
First Internet Bank is one of the few banks that offer competitive interest rates for its lowest CD terms: from 3.72% to 4.42% with eight terms to choose from and commitments as short as three months. But its early withdrawal penalties fall in the middle of what other banks impose if you need to access your principal before your CD matures. For example, it charges 180 days' interest on its 1-year CDs — the lowest penalty we've seen is 60 days, while the highest is 365 days.
Marcus CDs offer a selection of eight terms, all with terrific APYs ranging from 3.60% to 4.1% and a 10-day CD rate guarantee. It also has a low $500 minimum deposit to open the account. But Marcus doesn't allow partial withdrawals, which means that in addition to an early withdrawal penalty, it may close your account.
Ally is all about attractive interest rates across its seven terms, with APYs ranging from 2.90% to 4.00% Its CDs are also backed by a 10-day best rate guarantee, which means you'll automatically get the higher rate within 10 days of your account opening with no funding conditions. This interest rate guarantee also applies to CD renewals, and if you renew your CD, Ally also boosts your APY by 0.05%.
And while you can't make partial withdrawals to your account, its early withdrawal penalties are some of the lowest in the market.
Capital One 360 has some of the highest interest rates in the industry for a major bank, ranging from 3.50% to 4.00% across its ten terms. Plus, there is no minimum deposit required to open the account. The icing on the cake is its 10-day rate lock guarantee, which automatically bumps your rate if it increases within 10 calendar days of your application date.
Finder’s banking experts analyze CDs from more than 65 institutions to choose our best picks. We look at accounts that meet the following criteria.
For our best overall highest CD rates list, we calculate the average of each bank’s 1-, 3- and 5-year terms when comparing APYs. The resulting average must be above 4% APY. For our best rates by term, we look at the highest rates.
Minimum opening deposits must be no more than $1,500
No membership requirements, unless it’s easy to join
Must be available in most states
What is a CD and how does it work?
A CD is a type of savings account with a fixed APY and term length. Once you open the account, you’re guaranteed to earn the advertised APY on your deposit regardless of market changes for the entire term. The tradeoff for this guarantee is you can’t access your funds before the end of the term length without incurring a penalty fee. Any interest earned through your CD account is considered taxable income.
A CD’s interest rate is determined by the bank but is affected by the Federal Reserve’s Federal Funds Rate. As the funds rate increases or decreases, so will the CD’s rate.
Can a CD help me beat inflation?
Not quite. A CD’s APY is locked in for the set term length. During a period of inflation, interest rates rise over time, which increases APYs. If you lock in a CD at 2% APY but inflation causes interest rates to rise to well over 3%, you’re losing potential interest on that CD. However, the opposite is true as well: When interest rates fall during a recession, your CD continues earning the higher interest rate.
Are CD rates going up?
Yes, CD rates have steadily increased since last year as the Federal Reserve continues to raise interest rates. Currently, the national rate for a 12-month CD is
1.84%, up from just 0.13% APY at the beginning of 2020, reflecting a significant increase of 1.70%, and making opening a CD worth it.
Top CD rates vs. the national average
Rates have increased significantly this year. Compare standard CD interest rates according to the FDIC to the best CD rates our experts have spotted.
A CD allows you to lock away an investment for months to years in exchange for a higher interest rate than you’d find on an everyday savings account. If you’re looking for the best rates, online banks and fintechs tend to offer the highest rates.
And keep in mind that typically, the longer the term length on a CD, the higher the APY. Since CD terms can range from a few months to more than a year, you’ll want to create a savings plan before you can find the ideal CD for your needs.
1. Decide your savings goals.
As a general rule, CDs offer greater savings the longer you agree to tie up your deposit. You may find that a CD with a 5-year term earns more than a 6-month term CD. This makes CDs great for turning a modest investment into a profit over a short to medium length of time. However, a short-term CD can still prove useful, depending on your savings goal. Here are two examples of ideal savings goals appropriate for each type of term length.
Short-term CDs (3-12 months): Upcoming birthday gift, next year’s rent, small vacation
Long-term CDs (13-60 months): College tuition, large vacation, home upgrades, graduation gift
While your CD is open, you won’t have easy access to those funds. If you think you’ll need access to those funds, a savings account or a less restrictive CD might prove a better alternative than a standard CD:
No-penalty CDs. Some banks offer CDs that don’t charge fees for withdrawing money early, though interest rates might be lower than standard CDs.
High-yield savings accounts. Go for a savings account with a high APY if you want more access to your money, but keep in mind that your rate isn’t fixed like a CD.
2. Compare APYs for your preferred term.
Check APYs from a variety of banks, making sure to use the same term length across banks as you compare. The main features to compare include:
APY
How often your savings compound
Bank account transfer options
FDIC or NCUA insured
What else should I know?
Most CDs charge fees if you take your money out of the account earlier than the end of the term. Fees can vary widely by the bank, but examples of typical withdrawal penalty fees include:
Six-month CDs: 90 days’ interest
One-year CDs: 180 days’ interest
Three- to five-year CDs: 365 days’ interest
Upon CD maturity, you usually have a grace period to renew your CD or to cash out. These range from 7 to 21 days, with the average at 10 days.
Benefits and drawbacks of CDs
Pros
Higher rates than savings accounts. CDs offer higher interest rates than you’d find with standard savings accounts. The current national average for savings accounts is just
0.43%, while the national average for a 12-month CD is
1.84% APY.
Fixed interest rates. Your rate is locked for the remainder of the term rather than wavering with the market.
Variety of terms available. Most banks offer terms from six months to five years, giving you the flexibility to choose what works best for you.
Cons
Money locked up. You won’t have access to the money in your CD until it’s finished maturing.
Not affected by rising rates. If rates go up after you’ve already set up your CD, that account won’t benefit from the new APY.
Penalties for early withdrawals. Unless you choose a no-penalty CD, standard CDs charge fees if you take your money out earlier than the end of the term.
Maximum deposit amount. Some CDs cap you on how much you can deposit into your account. Your money is only FDIC-insured up to $250,000.
Expert tip: Reduce your risk with a no-penalty CD or CD laddering.
While fixed rates are a benefit to opening a CD, it's also a drawback if you open it before federal rates rise. If this happens, your money is locked in a term with a lower rate. If you're set on opening a CD, look at no-penalty CDs, which let you withdraw your money penalty free. Another approach is to try CD laddering, a type of strategy where you place equal amounts of money in varying CD term lengths. This gives you more frequent access to your invested money and helps avoid the risks of changing interest rates.
Aside from standard CDs, there are five types of CDs available.
No-penalty CDs. As the name suggests, these CDs don’t charge a penalty for early withdrawal. But they tend to have lower APYs than standard CDs.
Bump-up CDs. These CDs allow for a one-time “bump” to your CD’s interest rate if the market rises after you opened your account.
Jumbo CDs. A jumbo CD requires a high minimum deposit to open and offer fewer terms compared to standard CDs. Some jumbo CD minimum deposits can start as high as $100,000.
IRA CDs. An IRA CD is a type of CD that you can fund through an existing IRA account or as a new IRA account. These terms can reach as high as 10 years, and they offer the same tax benefits found on a traditional IRA account.
Brokerage CDs. A brokerage CD is a type of CD purchased through a brokerage firm. Brokered CDs may have larger APYs or more flexible term lengths than a CD purchased through a bank.
4 alternatives
If opening a CD doesn’t work with your financial strategy, consider these alternative ways to save.
High-yield savings accounts. Open a high-yield savings account if you don’t want to risk locking your money away.
Money market savings accounts. These accounts are similar to savings accounts, though they come with check-writing privileges and ATM cards.
Investment accounts. Creating an investment account can result in great savings, though over a much longer time than a CD or savings account. There’s also much more risk associated with investment accounts compared to savings accounts or CDs, and they’re not FDIC-insured.
Bonds. An asset similar to stocks, bonds represent a loan to investors with a fixed interest rate, in which you earn the interest. There are corporate bonds, government bonds and municipal bonds to check out.
Alexa Serrano Cruz is Deputy Editor at Forbes Advisor and was the lead editor at Finder, specializing in banking. As a personal finance expert, she helps Americans make informed decisions about their finances. Her expertise includes savings, budgeting, kids' banking, and more. Prior to joining Finder, Alexa worked as an editor in Miami and New York.
Alexa is a certified anti-money laundering specialist and her personal finance expertise has earned recognition from reputable publications such as Nasdaq, Best Company, U.S. News & World Report, MSN, Yahoo, and Valuewalk. Alexa has also made notable appearances on platforms such as Winnie Sun TV, money podcasts like LifeBlood, and broadcast news publications like Fox News and NBC News.
Alexa also served as an editor for ACAMS Today, a prominent publication dedicated to anti-financial crime detection and counter-terrorist financing. See full bio
Alexa's expertise
Alexa has written 17 Finder guides across topics including:
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.
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