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By Norma Rodríguez
Updated: April 8, 2021 11:24 AM ET | Originally published: March 31, 2021
Certificate of Deposit
Money; Getty Images

Certificates of Deposit (also known as CDs) can be a great way to save and grow your money without incurring risk. CDs can be opened and funded with one deposit that’s kept locked in for a predetermined term and interest rate. Before choosing a CD, consider both how soon you’ll need the deposited money, and the terms and rates offered by different financial institutions.

To help you decide which CD account is the right one for your savings plan, we researched and selected the best CD rates for 2021.

Our Top Picks for Best CD Rates for April 2021

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Best CD Rates Reviews

Interest rates quoted are valid as of April 8, 2021, and are subject to change. Check with each financial institution for current rates before making any investment decision.

Marcus by Goldman Sachs – Best Interest Rates

Marcus by Goldman Sachs is one of the few in the online banking market offering two types of CDs: a high yield and a no-penalty CD. Both certificates only require a $500 deposit to open and offer a 10-day CD-rate guarantee.

High Yield CD

Pros Cons
Terms from 6 to 60 months Early withdrawal fee
0.15% APY for a 6-month CD, 0.55% APY for a 12-month, and 0.60% APY for a 60-month CD No physical branches
Funds can be added during the first 30 days after opening No IRA CD
10 days grace period after maturity date date

No Penalty CD

Pros Cons
No fee to withdraw the full balance after the first 7 days of funding Only offers 3 terms (7,11, 13 months)
Competitive APY of 0.45% for a 7-month term No funds can be added after the initial deposit

Ally Bank – Best for No Minimum Deposits

Ally Bank offers 3 different types of CDs: High Yield CD, Raise Your Rate CD, and No Penalty CD. These CDs don’t require a minimum deposit, offering competitive APY rates and access to online banking products. Ally Bank also allows its CDs to be opened in the name of a trust.

High Yield CD

Pros Cons
Terms from 3 months to 5 years Early withdrawal fee
Rate of 0.20 % for a 3-month CD, 0.55% for a one year, and 0.80% on a 5 year CD
0.05% loyalty reward when you renew your CD with Ally Bank
Ally 10 Day Best Rate Guarantee
Available as IRA

Raise Your Rate CD

Pros Cons
0.55% APY Only two terms available: 2 years and 4 years CD
You can bump up the interest rate in your CD if the APY increases during the term of the CD Early withdrawal penalty
0.05% loyalty reward when you renew your CD with Ally Bank
10 day grace period after maturity date date

No Penalty CD

Pros Cons
0.50% APY on 11-month term Only one available term and APY rate
You can withdraw your full balance and interest any time after the first 6 days of funding your CD
0.05% loyalty reward when you renew your CD with Ally Bank

Discover Bank – Best for CDs with a Wide Range of Maturities

Discover Bank is about more than just credit cards — it offers great CDs too. While most banks have only three or four different increments, Discover offers 12 different terms. With Discover, you’re sure to find a high-rate CD that fits your savings plan.

Pros Cons
Terms from 3 months to 10 years $2,500 minimum deposit
Rate of 0.50% APY on CDs on terms of 12-24 months, 0.55% APY on terms of 30-48 months, and 0.60% APY on a 5 year (60 months) CD Early withdrawal penalty
CD Laddering available Doesn’t offer a no-penalty CD
24/7 customer service
IRA CD available

Comenity Direct – Best for High APYs

If you’re interested in finding the best CD rate, Comenity Direct offers a wide range of terms with higher APYs than other banks and credit unions. Comenity also offers a mobile app featuring mobile check deposits and funds transferring.

Pros Cons
Terms from 12-60 months Early withdrawal penalty
Rate of 0.63% APY for a 1-year CD, 0.85% APY for a 3-year, and 0.90% for a 5-year CD Fees for paper statement requests, wire transfers, and check requests
Interest is compounded daily, however, it is credited and posted monthly $1,500 minimum deposit
CD Ladder available
10 day grace period after maturity date

Navy Federal Credit Union stands out from other credit unions because it has 2 different types of CDs, competitive rates, low minimum deposit requirements, and an online Savings Learning Center. It also offers the option of a share certificate through its Easy Start Certificate and Special Easy Start Certificate. Membership is only available for military members and their families.

Standard Certificate

 

Pros Cons
Terms of 3 months up to 7 years Early withdrawal fees
Rate varies by time and amount deposited Minimum deposit of $1,000
A $1,000 CD for a 3-month term earns an APY of 0.40%, for a 12-month an APY of 0.55%, and for a 7-year term an APY of 0.90%

3-Year Variable Rate Certificate

Pros Cons
Allows customers to add more money on their CD after their 12 or 24 month anniversary Only available in a 3-year term
Your rate will never fall more than 0.50% APY as high as 0.37%
Minimum deposit $500

Synchrony Bank – Best for Online CD

Synchrony services are focused on savings accounts, certificates of deposit, and credit cards. This online bank offers some of the better rates on online CDs. They offer a wide variety of terms and the option of withdrawing the interest paid during the term of your CD before the maturity date.

 

Pros Cons
No minimum balance Early withdrawal penalty
Terms from 3-60 months No checking account available
CD Laddering available You have to transfer the interest paid to a Synchrony Bank High Yield Savings or Money Market Account or a non-Synchrony Bank account
0.15% APY for a 3-month, 0.50% for a 12-month, and 0.80% for a 60-month CD
Mobile app with check deposits
You can withdraw interest paid during your CD’s current term anytime without penalty

Other Companies We Considered

As part of our research to find the best CD rate, we looked at an array of companies offering Certificates of Deposit. The following list includes some of the companies we reviewed but that didn’t make the final cut though we still consider them noteworthy.

Barclays Bank

Pros Cons
No minimum deposit requirement APY of 0.25% for a 12-month CD
Early withdrawal penalty
In order to maintain an account, funding must occur within 14 days of account opening

Capital One

Pros Cons
No minimum balance requirement Early withdrawal fees
Can be opened online or at a location 0.20% APY for a 12-month CD

Citibank

Pros Cons
Offers CD Laddering Their Online-Only Savings Account has a higher APY than most of their CDs
Minimum opening deposit is $500 Rates vary upon geography
Money must be transferred from the available balance in your Citibank checking account or savings account

American Express National Bank

Pros Cons
No fees or minimum balance requirements Doesn’t have a checking account option or an ATM card
Extremely competitive rates Limited customer support
American Express doesn’t offer a no-penalty CD

Best CD Rates Guide

What is a certificate of deposit

CDs require a lump-sum deposit that’s locked in for a predetermined period at a fixed annual percentage yield (APY). The APY represents how much you’d earn in one year, including the compound interest. That means you make the initial deposit, forget about the money for the length of time it’s locked in, and you get a fixed rate of return based on the number you were offered when you made the deposit.

  • CDs have higher minimum deposit requirements than most savings accounts, usually $500 or more
  • Common CD term lengths at most banks are 6, 12, 18, 24, 36, 48, and 60 months
  • Depending on the bank, early withdrawal may incur a penalty fee
  • Longer-term CDs usually have a higher annual percentage yield (APY) that gives you more substantial returns on your principal investment

The Pros of Using CDs`

  • CDs are useful savings tools if you’re sure you won’t need the money until a later date
  • They’re the right choice for long-term savings goals where you have a defined date in mind, or if you won’t need the money for the next couple of years
  • They provide higher interest rates than high-yield savings accounts, particularly when committing larger amounts to long-term CDs (this is usually done via high-minimum deposit jumbo CDs, though there are different CDs that may also offer high rates, such as one-year cd options)
  • Great tools for spenders who tend to withdraw money from their savings accounts too soon
  • Can help savers stay on track with their goals no matter what (due to early withdrawal fees)
  • They’re a low-risk investment if you choose to open a certificate of deposit in a national bank or credit union insured up to $250,000 per depositor by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).
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The Cons of Using CDs

  • You’re locking your money away for a long period of time, meaning you’ll have less liquidity. If you need to withdraw your money early, you may have to pay a penalty
  • Longer terms have higher yields
  • In the current low-interest-rate environment, CDs aren’t paying out very much compared with historical rates
  • If you sign up for a five-year CD now in order to get the highest currently available rates, there’s a good chance that rates will rise at some point over the next five years and you could end up missing out on higher APYs. Of course, the opposite could also be true and we might see lower rates in a few months
  • You may be able to find online savings accounts and money market accounts offering similar APYs.
  • CD accounts usually don’t offer access to a debit card or ATM network. If they do, it usually involves additional fees.

Why a CD Ladder is the Best of Both Worlds

Long-term CDs pay higher rates than short-term CDs, however, locking your money away for five years can be risky, especially if you might need that money at some point. That’s why many people recommend a CD laddering strategy because it allows you to earn money at relatively high rates while still having access to your deposit.

What is CD Laddering?

CD Laddering is an option that a certificate of deposit provides for maximizing your savings.

Let’s say you have $5,000 to open a new CD. With CD Laddering you can open 5 certificates, each of $1,000. The trick here is that you open each certificate with a different maturity term. You’d place $1,000 each in a one-year, two-year, three-year, four-year, and five-year CD.

Then, each time a CD matures, you can either withdraw the money if you need it or roll it over, with the compounding interest, into a new five-year CD. After five years, all of your money will be locked away in five-year CDs.

Due to the staggered start times, you’ll still be able to withdraw one small pot of money each year without paying any penalties while benefiting from the higher terms of long-term CDs.

Best CD Rates FAQ

Which banks have the best CD rates?

From the banks and the credit union on this list, Comenity Direct is the financial institution offering the best CDs with the highest cd rates.

What is the difference between a CD and an IRA?

The difference between a certificate of deposit (CD) and an individual retirement account (IRA) is that the certificate of deposit is a deposit account where you lock your funds for a specific amount of time. Your earnings will depend on the interest rate you locked at the time of your deposit. However, an IRA is not a deposit account, but rather a tax-advantaged retirement account where you keep other types of investments such as bonds and/or stocks.

What’s an IRA CD?

An IRA CD is when you deposit the retirement investment money you have in your IRA in certificates of deposit.

Are CDs worth it in 2021?

Due to the coronavirus pandemic, interest rates are low. This is somewhat due to the Fed lowering interest rates several times in 2020.

However, most CDs still offer higher interest rates than even high-yield savings accounts.
If you worry about interest rates rising soon while your money is locked in a fixed interest rate, you can look into CD Laddering.

How much does a $10,000 CD make in a year?

The interest rate earned on your CD will depend on the fixed rate you locked in at the time of funding your account. For example, locking the fixed rate of interest of 0.50% for a 12-month term will leave you at the end of the maturity date with $10,049.

How We Chose the Best CD Rates

To find the best CD accounts, we only included banks offering competitive rates, fewer fees, online banking, and mobile apps. We also took into consideration CD Laddering, different terms, and multiple CD types (such as no-penalty CDs, rising-rate CDs, etc.). Of course, all of our choices were FDIC-insured.

Summary of Money’s Best CD Rates of April 2021