- 1 What You Need To Know About CDs
- 2 Where To Open A CD Account?
- 3 How To Choose A CD Account
- 4 Featured CD Accounts
- 5 Best CD Rates Ranking
- 5.1 Best 3 Month CD Accounts
- 5.2 Best 6 Month CD Accounts
- 5.3 Best 9 Month CD Accounts
- 5.4 Best 1 Year CD Accounts
- 5.5 Best 18 Month CD Accounts
- 5.6 Best 2 Year CD Accounts
- 5.7 Best 30 Month CD Accounts
- 5.8 Best 3 Year CD Accounts
- 5.9 Best 4 Year CD Accounts
- 5.10 Best 5 Year CD Accounts
- 5.11 Best 7 Year CD Accounts
- 5.12 Best 10 CD Accounts
After researching CD rates for my own personal investments, I’ve decided to put together a guide to help everyone find the best CD rates that fit into their specific needs.
Certificates of Deposit are going to give you the best return on your savings when investing with banks or credit unions. Online Banks are going to be the best option for most, and I’ll discuss why below.
What You Need To Know About CDs
What is a Certificate of Deposit? They are basically deposit accounts where you earn a fixed interest rate over your chosen term length. The significant difference with CD accounts compared with Checking or Savings accounts is that you cannot access your money without penalty, until the term is over.
Why Choose CDs Over Checking/Savings Accounts? The bottom line is, CDs will give you higher interest rates than traditional Checking and Savings accounts. Some banks and credit unions have high-yield Checking and Savings accounts though, don’t they? Yes, but these Rewards Checking accounts usually have Direct Deposit and minimum transactions requirements to keep up with. And for even the best Savings accounts, the interest rates are only competitive up to 12 month term CDs. For terms greater than 12 months, CDs take the lead.
Are CD Accounts Insured? Yes, up to $250,000 per account (FDIC insured for banks and NCUA insured for credit unions)
Special Requirements For CDs. The beauty of CDs are that they are low maintenance. You choose a term length, deposit at least the minimum required, and let your interest accrue. You MUST keep up with when your CD matures (or expires), because most banks will automatically renew the CD at the end of the term. Be sure to set up a calendar reminder, because you’ll only have a short window of time to cancel after the term is over.
Biggest Disadvantage Of CDs. The biggest disadvantage to CDs is you don’t have access to your money. You definitely need to know if you have a set amount of money you can put away for a while. While you can access your money before your term ends, this will incur penalty fees. Since the best rates are for CD terms greater than a year, you’ll have to tread carefully if you’re not 100% sure you can afford to set the money away.
“CD Laddering” Tactic
There is one neat tactic you can employ with CDs called “CD Laddering” when you’re unsure about putting away a big chunk of your savings for the long term. It involves setting up multiple CDs with differing term lengths. Doing this will allow you more access to your funds.
Here’s how it all works:
Here’s a typical scenario where CD Laddering can come in handy. Let’s say you’ve got $10,000 you’d like to invest in a CD. While looking for the best CD rates, you find that a 5-year CD earns double the interest of a 1-year CD. However, you’re unsure you can put away that entire $10,000 for a long 5 years.
With CD Laddering, rather than putting the entire $10,000 into one 5-year CD, you put $2,000 into 5 different CDs (i.e. 1,2,3,4,5-year CDs). What happens in this scenario is each of the CDs will earn a different amount of interest, with the 5-year CD likely earning the most. Additionally, each CD will expire with every passing year. Once the 1-year CD expires, you can decide to either withdraw the money if you need it, or re-invest it into a new 5-year CD. With each passing year, you’ll be able to make this decision with each expiring CD. Once 5 years have passed, assuming you’ve re-invested all the expired CDs, all of your CDs are then essentially 5-year CDs that are earning that higher interest.
Since you’ll have access to a part of your cash with each passing year without penalty, many people like taking this approach. This was just one example, you can vary the CD terms and amounts of deposits according to your own particular needs.
*To go even further with this strategy, consider mixing CD terms from different banks that will yield you the highest combination of rates!
Where To Open A CD Account?
For most of us, our first introduction to CD accounts was probably through a local traditional bank that we do day-to-day business with. The problem here is, traditional brick-and-mortar banks offer the worst CD rates. With all the overhead costs they incur, there’s simply no way to offer customers competitive rates. Credit Unions and Online Banks offer much better rates.
National Bank CD Rates
The biggest banks with the most branches actually offer the poorest CD rates. They count of the fact that they have such a big customer base, and a general lack of knowledge of CDs from these customers, to drive their offers. Among the big national banks, Bank of America tends to offer the best CD rates. Still, you’re better off with other options.
Regional Bank CD Rates
Regional banks, who still have a significant customer base, offer a bit better rates for most CD terms. Obviously these CD accounts are only going to be available to you if you live a region where the bank operates.
Credit Union CD Rates
In general, Credit Unions offer even better rates than Regional Banks for most of the longer CD terms. Credit Unions are institutions created and operated by their members. Not only are there regional restrictions, you’ll also have to deal with becoming a member to take advantage of these CD rates.
Online Banks Offer The Best CDs
Just as is the case with Online Checking and Online Savings accounts, I’ve found that Online CD accounts are the way to go now for the best rates.
When you’re looking to put your investments somewhere, the main priority is going to be getting the highest rates. You’re not going to need much in terms of face-to-face service that you’d get with traditional banks and credit unions.
Because they operate online, these banks offer CD accounts that are available to everyone nationwide. There’s no need to worry about finding a local branch, or applying for membership.
How To Choose A CD Account
Online Banks are going to give you the best CD rates that are available nationwide. Here’s how to find the best rates these online CD accounts.
- First, figure out what minimum balance requirement you can meet. This is the minimum balance required to earn the listed Annual Percentage Yield (APY). If you plan on depositing $25K, you will qualify for every CD account that has no minimum balance requirement to those with a $25,000 requirement.
- Second, choose your CD term. CD accounts earn higher rates because your money is meant to be tied up for the entire CD term. Early withdrawal of your funds is possible, but you will incur an early withdrawal penalty fee. Put away money that you won’t need access to for the entire CD term to take advantage of the best CD rates.
*Disclaimer: Our team updates these rates daily. It’s always a good idea to confirm rates with the bank directly.
Featured CD Accounts
First, look through these CD account offers from some of the more popular banks, where the data is provided by Bankrate.com. These banks will have a solid track record with providing CD accounts, so you can keep your search simple going this route.
Down below, we’ve compiled a list of all banks that offer nationally available CD accounts, and you’ll often find better rates from some lesser known banking institutions. The list is always growing and changing as banks will routinely provide special CD promotions to stay competitive.
Best CD Rates Ranking
Below you’ll find the best CD rates from all the best banks ranked from highest to lowest based on CD term. Listed are the Annual Percentage Yields (APYs) and Minimum/Maximum deposit amounts that will earn the stated APY.
Best 3 Month CD Accounts
Best 6 Month CD Accounts
Best 9 Month CD Accounts
Best 1 Year CD Accounts
Best 18 Month CD Accounts
Best 2 Year CD Accounts
Best 30 Month CD Accounts
Best 3 Year CD Accounts
Best 4 Year CD Accounts
Best 5 Year CD Accounts
Best 7 Year CD Accounts
Best 10 CD Accounts
Stay up-to-date with the best CD rates here.