Certificates of deposit are an effective way to lock away your money and they often pay higher interest rates than savings accounts. But not all CDs are the same and the interest rates can vary widely from institution to institution. To find the best CDs, we compared one, three and five-year CD rates at over 50 institutions. Then, we averaged those rates together and considered other factors such as nationwide availability.
Banks have steadily dropped interest rates this year due to the coronavirus pandemic. In October 2020, we updated our best list based on the top CD rates available nationwide.
CIT Bank Term CDs have high interest rates to steadily grow your savings. Terms range from six months to five years and interest compounds daily.
No maintenance fees. You won't pay anything to open or maintain a CIT Bank Term CD, though you'll pay a fee if you withdraw funds early.
Automatic renewal. If you don't take any action during your grace period, your CD will automatically renew for the same term at your current rate.
High APY. Earn 0.3% APY on a 12-month CD. Standard CDs with a six-month term earn 0.3% APY and generally increase for longer periods, such as 0.5% APY for five-year CDs. The national average for six-month CDs is just 0.14% APY.
Early withdrawal penalties. Like all CDs, expect to pay a penalty if you withdraw funds before your CD matures. CIT Bank charges a fee equal to three to 12 months' interest depending on your CD term.
No physical branches. CIT Bank is an online institution, so you can't visit a branch or open an account in-person.
$1,000 minimum deposit. This opening deposit is typical for national banks, but higher than what you'll find at some online banks and credit unions.
Radius Bank CD terms range from three months to five years, but some terms can't be opened online. Opening deposits also vary depending on the length of your CD.
Low opening deposits. Short-term CDs have opening deposits of $1,000. Long-term CDs of one year or more have opening deposits of REQUIREMENTS.MIN_DEPOSIT.
Competitive APYs. Although Radius Bank's rates aren't the highest on the market, they're much higher than what you'll find at traditional banks.
Can't open every term online. Radius Bank offers nine CD terms, but you can only open a one-year, 18-month and three-year CD online. The others must be opened over the phone or in-person at its one branch location.
Consumers Credit Union is an Illinois-based credit union offering competitive rates on its short and long-term CDs. The best part? You only need $250 to get started.
Wide selection of terms. Open a CD for as short as 91 days or as long as five years.
Multiple CD types. Choose between a regular CD, a jumbo CD or an IRA CD.
Low opening deposit. All you need is $250 to open a Consumers Credit Union CD, compared to other banks that require $1,000 or more.
Open to members only. You must be a Consumers Credit Union member to open this CD. You can apply for membership online when you're ready to get started.
Early withdrawal penalties. As with all CDs, expect to pay a penalty fee if you need to withdraw money before your CD matures.
Features of the best CDs
Compare the following factors when deciding on a certificate of deposit:
The interest rate. The interest rate payable on your CD balance is critical when deciding which account offers the best deal. A high interest rate means better returns for you. But watch out for special conditions like high minimums for opening an account or unusually large fees if you need access to your money early.
How often the interest is compounded. How often interest is calculated has an effect on the amount of interest you can earn. For example, an account that compounds interest monthly will end up paying more interest over time than one that compounds annually.
Where the interest is paid. Next, look at where the interest your account earns is paid when the deposit matures. For example, will you need to have a linked account with the same bank, or can you have the money sent to other financial institutions?
Minimum balance requirements. Check to see what the minimum and maximum balance limits are for the CD. Usually they’re at least $1,000. Are they suitable for the amount of money you’re looking to save? Compare accounts that match your requirements.
The terms available. Compare how long you’re able to save your money with each account. Terms typically range from six months to five years, so make sure the time period you choose suits your needs.
The importance of high CD rates
Certificates of deposit offer a higher rate of fixed interest than you’ll find on a savings account. The interest rate is locked in for the entire term, which means you don’t have to worry about any interest rate drops.
But while a fixed interest rate offers security, it also means you’ll miss out on rising interest rates. Even if the bank’s interest rate goes up, the fixed rate on your account stays the same until the deposit matures.
Let’s take a look at a case study to demonstrate just how much difference a slightly higher interest rate can make.
George’s certificate of deposit
George has $10,000 he would like to invest in a two-year CD, so he decides to compare rates between his bank and its main competitor.
George’s bank offers a 2.25% interest rate, which means at the end of 24 months, George’s $10,000 deposit will have earned $459.84 of interest.
Meanwhile, the competitor bank offers an interest rate of 3%, which allows George to earn $617.57 in interest. By choosing the second account with the better interest rate, George earns an extra $157.73 in interest.
CD from his bank
CD from competitor
Minimum deposit amount
Total balance at end of term
Historical CD rates
Average CD rates fluctuate over time. For example, in the early 2010s, CD rates were steadily declining, but in 2014 they began to rise again. The chart below shows the national average over the last several years:
National average for 12-month CD
National average for 60-month CD
Certificates of deposit provide a secure, convenient way to build a sizable savings balance, but it’s important to find the best interest rates to ensure that the money in your account is working as hard as possible. Spending the time to shop around for the best rates and watching for the best time to open a CD can help you save for a more reliable future.
Banks typically raise and lower rates according to the Federal Reserve. When the Fed cut rates to near-zero in March 2020 to help alleviate the economic impacts of the coronavirus pandemic, many banks followed suit by lowering rates on CDs and savings accounts.
In most cases, no. The rate you see is the rate you get. But it doesn’t hurt to ask a customer support representative if there’s anything you can do to secure a higher rate. There may be certain promotional or relationship APYs you don’t know about. Or, you may be able to secure a higher rate with a higher opening deposit.
When you ladder CD rates, you spread your money out across multiple CDs with varying term lengths — that way you have access to your money on a rolling basis.
For example, let’s say you have $10,000 to invest in CDs. Instead of putting it all in one CD, you put $2,000 each in a one-year, two-year, three-year, four-year and five-year CD. With this approach, you have penalty-free access to $2,000 each year. You take advantage of high APYs but you also maximize your liquidity.
Cassidy Horton is a writer for Finder, specializing in banking and investments. She has a Bachelor of Science in Public Relations and a Master of Business Administration from Georgia Southern University. Cassidy enjoys educating people about financial services, exploring the Pacific Northwest and watching endless reruns of The Office.
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