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Published: Oct 13, 2022 35 min read

Rankings as of Oct 13, 2022.

Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.

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Withdrawals Can Be Carried Out Without Penalties As Early As 7 Days After Opening
Good for CD LadderingOffering A Variety Of Term Lengths Starting At 6 MonthsOffering Competitively High Yields Coupled With No Minimum Deposit Requirements11-Month CD Has No Penalties If Withdrawn Early
SkyOne Federal Credit UnionDiscover BankSallie Mae by SaveBetterBarclays BankCIT Bank
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1-Year CD Rate (APY)

4.20%

4.00%

4.25%

4.00%

4.35% (13 Months)

Grace Periods

7 days

9 days

10 days

14 days

10 days

Terms Offered

6 months - 5 years

3 months - 10 years

6 months to 5 years

1 year - 5 years

6 months - 5 years

Minimum Deposit

$1

$2,500

$2,5000

No minimum

$1,000

Withdrawals Can Be Carried Out Without Penalties As Early As 7 Days After Opening
SkyOne Federal Credit Union
Our Partner
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1-Year CD Rate (APY)

4.20%

Grace Periods

7 days

Terms Offered

6 months - 5 years

Minimum Deposit

$1

Good for CD Laddering
Discover Bank
Our Partner
Open an Account
1-Year CD Rate (APY)

4.00%

Grace Periods

9 days

Terms Offered

3 months - 10 years

Minimum Deposit

$2,500

Offering A Variety Of Term Lengths Starting At 6 Months
Sallie Mae by SaveBetter
Our Partner
Open An Account
1-Year CD Rate (APY)

4.25%

Grace Periods

10 days

Terms Offered

6 months to 5 years

Minimum Deposit

$2,5000

Offering Competitively High Yields Coupled With No Minimum Deposit Requirements
Barclays Bank
Our Partner
Open an Account
1-Year CD Rate (APY)

4.00%

Grace Periods

14 days

Terms Offered

1 year - 5 years

Minimum Deposit

No minimum

11-Month CD Has No Penalties If Withdrawn Early
CIT Bank
Our Partner
Open an Account
1-Year CD Rate (APY)

4.35% (13 Months)

Grace Periods

10 days

Terms Offered

6 months - 5 years

Minimum Deposit

$1,000

Certificates of Deposit (also known as CDs) can be a great way to save and grow your money with very little risk.

Before choosing a CD, it’s important to consider how soon you’ll need the deposited money, along with the terms and rates offered by different financial institutions.

Read on for our reviews of banks and credit unions that frequently offer the best CD rates in the market. We also feature a guide to help you choose the right account for your savings needs.

Table of Contents

Our Top Picks for Best CD Rates for November 2022

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Best CD Rates Reviews

Interest rates quoted are valid as of November 4, 2022, and are subject to change. Check with each financial institution for current rates before making any investment decision.

Pros
  • Highest APY for most CD terms
  • Terms from 12 to 60 months
  • CD laddering available
Cons
  • $1,500 minimum deposit
  • Fees for paper statement requests, wire transfers and checks
HIGHLIGHTS
Minimum Deposit
$1,500
APY
4.00% to 4.25%
Terms
1, 2, 3, 4 & 5 yr.
Grace Period
10 days

Why we chose this bank: Bread Savings provides some of the highest CD rates, including a 3.65% APY for 5-year CDs.

Bread Financial formerly known as Comenity DIrect, offers a wide range of CDs with higher APY than other banks and credit unions. It also features an app for mobile check deposits and transfer funds.

Bread Savings APY rates start at 4.00% for a 1-year term and go up to 4.25% for 5-year CDs. Interest is compounded daily and credited on a monthly basis.

Like most banks on our list, Bread Savings offers a 10-day grace period after the maturity date. During this period you can cash out your CD, renew it and/or change your CD term.

Aside from the typical early withdrawal fee, Bread Savings charges $25 for outgoing wire transfers, $15 for official check requests and $5 for paper statements. (Online statements, however, are free.) Additionally, there’s a minimum opening balance of $1,500 and a maximum of $10 million per account owner.

Bread Financial Best CD Rates:
4.00% — 1 year

4.00% — 3 years

4.15% — 4 years

Pros
  • Highly competitive APY rates,3.51% for 1-year CDs
  • No checking account required
  • Insured by the National Credit Union Administration (NCUA)
Cons
  • $5,000 minimum deposit
  • Dividends are credited quarterly
  • Must become a Connexus member
HIGHLIGHTS
Minimum Deposit
$5,000
APY
3.71% - 3.91%
Terms
1, 2, 3, 4 & 5 yr.
Grace Period
10 days

Why we chose this bank: Connexus Credit Union offers high APY rates, ranging from 3.71% to 3.91%, for short-term CDs of 12, 24 and 36 months.

Connexus Credit Union offers high-yield share certificates (traditionally called CDs at banks) for terms of one to five years. APYs range from 3.71% to 3.91%.

Unlike most banks and credit unions, Connexus offers higher rates for its short-term CDs. Current rates for a 1-year term is 3.91%, whereas 2- and 3-year certificates boost a 3.71%.

With Connexus, dividends (or interest) are compounded and credited on a quarterly basis. You may choose the option to have dividends deposited to a Connexus account or to receive it as a check.

Connexus share certificates require a minimum deposit amount of $5,000, which is comparatively higher than most competitors in our list. Many banks don’t require a particular minimum deposit, and those that do typically ask for deposits ranging from $500 to $1,000.

Connexus is available nationwide. However, you must become a member to open a share certificate account.

To join you must make a one-time donation of $5 to the Connexus Association and deposit $5 into a Connexus savings account. Members from affiliated organizations and residents of select counties in Illinois, Minnesota, Ohio and Wisconsin may also join without having to make a donation.

Connexus Credit Union Best CD Rates:

3.91% — 1 year

3.71% — 2 years

3.71% — 3 years

Pros
  • High APY rates on short-term CDs
  • Automatic monthly disbursements available
  • Co-owner or beneficiary can be added
Cons
  • $2,500 minimum deposit
  • Low returns on long-term CDs
HIGHLIGHTS
Minimum Deposit
$2,500
APY
2.00% - 3.75%
Terms
6 & 18 mo. 1, 2, 3, 4 & 5 yr.
Grace Period
10 days

Why we chose this bank: Live Oak Bank stands out for its high APY rates on short-term CDs.

Live Oak Bank offers seven different CD terms, from six months to five years with relatively high APY rates for short-term CDs.

Live Oak’s highest rates include 3.00% for 6-month CDs and 3.75% for 18-month, 1-year and 2-year CDs. However, longer terms have a lower fixed rate of 2.00%. In addition, it requires a minimum deposit of $2,500, which is relatively higher than most competitors.

Live Oak lets you set automatic interest disbursements of your returns every month. You can also add a co-owner or multiple beneficiaries to your account.

Live Oak is one of the few banks that discloses a maximum deposit amount. Customers can only deposit up to $250,000 per account, which is the amount insured by the Federal Deposit Insurance Corporation (FDIC). This may be a drawback if you’re looking to invest larger amounts.

Live Oak Best CD Rates:

3.00% — 6 months

3.75% — 18 months

3.75% — 1 year

Pros
  • No minimum opening balance
  • 14-day grace period
  • Allows interest monthly disbursements
Cons
  • Funds withdrawal must be requested over phone or in writing
  • No branch locations
HIGHLIGHTS
Minimum Deposit
No minimum
APY
4.00% - 4.25%
Terms
12 & 18mo. 2, 3, 4 & 5 yr.
Grace Period
14 days

Why we chose this bank: Barclays offers online CDs with competitively high yields and no minimum deposit requirements.

Barclays is an online bank that offers high-yield CDs, with terms ranging from 12 months up to 60 months and no minimum deposit requirements.

APYs start at 4.00% for a one-year CD and go all the way up to 4.25% for five-year terms. Barclays also features one of the highest APY rate for 18-month CDs, at a 4.05%

Barclays doesn’t require a minimum balance to open CDs nor does it charge monthly fees. However, like most banks, it charges an early termination fee if you withdraw your principal before maturity. This fee can vary depending on your term. For instance, the penalty for a 24-month CD is 90 days of simple interest on the amount withdrawn, whereas CDs of two years or longer have a penalty of 180 days of simple interest.

In addition, Barclays offers a longer-than-average 14-day grace period (most banks typically offer 10 days). This means that you have 14 days after maturity to renew or withdraw your funds without penalties.

Barclays Best CD Rates:

4.05% — 18 months

4.20% — 4 years

4.25% — 5 years

Pros
  • No minimum balance requirement
  • Can be opened online or at a branch office
  • Interest disbursement available
Cons
  • Doesn't offer no-penalty CDs
HIGHLIGHTS
Minimum Deposit
No minimum
APY
2.70% - 4.25%
Terms
6, 9, 18 & 30 mo. 1, 2, 3, 4 & 5 yr.
Grace Period
10 days

Why we chose this bank: Capital One has both online banking and nationwide brick-and-mortar presence, meaning you can open an account either online or in person.

Capital One has over 300 bank branches and cafés throughout the U.S., and offers solid online banking features. This makes it a great contender for customers who prefer having a place to visit when they need customer support, but also for those who mostly prefer an online bank.

Capital One offers 360 CD accounts, which are basically CDs with no minimum balance requirements and high fixed-rate returns. CD terms range from six months to 60 months with APYs starting at 2.70% up to 4.25%.

With Capital One interest is accrued daily but compounded and credited on your CD monthly. Interest disbursement may be requested on a monthly or yearly basis, which you can route to another Capital One account or an external account.

Capital One CDs renew automatically unless you redeem it at maturity or within the 10-day grace period. You also have the option of assigning up to 10 individuals as payable beneficiaries in case of death.

Like most banks, Capital One charges an early withdrawal penalty: three months of interest for CDs of 12 months or less, and six months of interest for longer terms.

Capital One Best CD Rates:

4.00% — 1 year

4.20% — 4 years

4.25% — 5 years

Pros
  • No minimum deposit required
  • 0.05% loyalty reward when you renew your CD
  • High-yield CDs have a 10-day best rate guarantee
  • Also available as an IRA
Cons
  • No penalty-CD is only available with an 11-month term
HIGHLIGHTS
Minimum Deposit
N/A
APY
1.50% to 4.10%
Terms
3, 6, 9, 12, & 18 mo. / 3 yr. & 5 yr.
Grace Period
10 days

Why we chose this bank: Ally Bank allows its clients to raise APY rates once or twice per term on its Raise Your Rates CDs.

Ally Bank offers three different types of CDs: High-Yield CD, Raise Your Rate CD, and No-Penalty CD. These CDs don’t require a minimum deposit, and offer competitive APY rates and access to online banking.

Ally’s high-yield products have a rate of 1.50% for a 3-month CD, 3.75% for a one-year term and 4.10% on a 5-year CD. No-penalty accounts are only available with a 11-month term and 3.10% APY.

The Ally Bank Raise Your Rate CD, on the other hand, gives you the option to bump up your CD’s interest rate if the APY were to increase during the term. This means you can increase your rate once or twice (depending on the term) without having to wait for their maturity dates to make changes. However, you can only choose between a 2-year CD and a 4-year CD at 3.00% APY for this type.

Other perks include a 10-day best rate guarantee that lets you claim the highest CD rate offered for your term and deposit amount if it goes up during that time, and a 10-day grace period after your maturity date. You can also get a 0.05% increase in your rate as a loyalty reward if you renew your CD with Ally Bank.

Ally Bank Best CD Rates

3.10% — 11 months (No-Penalty CD)

3.75% — 1 year

3.00% — 2 and 4 years (Bump-up CD)

Pros
  • High APY rates for 5- and 7-Year terms
  • IRA Certificates and Education Savings Certificates also available
Cons
  • 6-month CDs don't use compound interest
  • Must become a PenFed member
HIGHLIGHTS
Minimum Deposit
$1,000
APY
2.00% - 3.85%
Terms
6, 12, 15 & 18 mo. 2, 3, 4, 5 & 7 yr.
Grace Period
N/A

Why we chose this bank: PenFed offers some of the highest APY rates for long-term CDs.

PenFed Credit Union has three different types of certificates: Money Market Certificates, IRA Certificates and Education Savings Certificates.

Its Money Market Certificates — otherwise known as CD in most banks — require a $1,000 minimum deposit and are available in nine different term options, ranging from six months up to seven years.

PenFed yield rates are highly competitive, with 3.50% for CD terms of 12 months, 3.75% for 18 months, and 3.65% for 5- and 7-year certificates. This is higher than what most banks and credit unions pay for terms of five and seven years.

Education Savings Certificates have a $500 minimum opening deposit and have terms of one to seven years with rates ranging from 3.45% to 3.80%. IRA certificates have the same terms and APY rates, but a $1,000 minimum balance.

With the exception of 6-month certificates (which don’t accrue compounded interest), dividends are compounded daily and credited monthly. During the application, you can decide if periodic dividend payments should be added to the certificate itself, a PenFed account or sent to you in a check. You can also decide beforehand whether you want to automatically renew your certificate at maturity or to transfer the principal and its dividend to a specific PenFed account.

As is the case with most credit unions, PenFed requires you to become a member in order to apply for any of its products or services. To join you need to open a member savings account with at least $5.

PenFed Credit Union Best CD Rates

3.75% — 18 months

3.85% — 2 years

3.65% — 5 years

Pros
  • Offers high-yield and no-penalty CDs
  • Competitive APY rates, up to 3.50%
  • 30-day period to fully fund your CD after opening an account
Cons
  • No physical branches
  • No IRA CDs
HIGHLIGHTS
Minimum Deposit
$500
APY
3.00% - 3.50%
Terms
6, 7, 9, 12 & 18 mo. / 2, 3, 4, 5 & 6 yr.
Grace Period
10 days

Why we chose this bank: Marcus by Goldman Sachs provides multiple CD options, including no-penalty CDs with APYs of up to 2.55%

Marcus by Goldman Sachs is one of the few online banks that offers three types of CDs: high-yield, no-penalty and bump-up. All of them require a $500 opening deposit and have a 10-day CD-rate guarantee, so you can claim any published rate if it changes within 10 days of opening your account.

Unlike most CDs, no-penalty CDs let you withdraw your full balance at any time without paying penalties.

Marcus offers fairly high returns across all CD terms. High-yield CDs start at 3.00% APY for a 6-month CD; its 6-year CD rates, on the other hand, are currently at 3.50%. No-penalty CDs also boast a pretty competitive APY of 2.55% for a 13-month CD.

Marcus Rate Bump CDs are available for a 20-month term at 3.25% APY. Bump-up CDs let you increase your rate at least once over the life of your CD. The amount of times you can request a rate increase depends on the length of the CD term. To increase your CD rate, you simply need to submit a request by logging in to your account. According to Marcus, requests are typically processed within a business day if you make them before 6:00pm ET, but may take up to two days.

We like that Marcus offers the option of transferring the interest you earn from your CD principal to any Marcus Online Savings Account or an external bank account before the maturity date without penalties.

In addition, CD accounts have a 10-day grace period after their maturity date. During this period you can make changes to your plan and/or renew with different terms using their CD Maturity Center online.

Marcus by Goldman Sachs Best CD Rates

2.55% — 13 months (No-Penalty CD)

3.05% — 9 months

3.60% — 12 months

Pros
  • No minimum deposit required
  • Terms from three to 60 months
  • Offers IRA CDs
Cons
  • No checking account available
HIGHLIGHTS
Minimum Deposit
No minimum
APY
2.25% - 4.26%
Terms
3 - 24 mo. / 3, 4 & 5 yr.
Grace Period
10 days

Why we chose this bank: Synchrony Bank offers a 15-day Rate Guarantee, one of the longest in the market.

This online-only bank has terms ranging from three up to 60 months and competitive APY rates that start at 2.25% for a three-month term, 4.01% for a 12-month term and 4.26% for a 60-month term.

You also have the option of withdrawing the interest earned during the term of your CD before the maturity date without penalty. In addition, you get a 15-day rate guarantee period during which you can claim the highest available interest rate if the published rate increases.

A drawback is that Synchrony doesn’t offer a checking account, which means you have to fund your CD via an electronic transfer from an external bank, a Synchrony Bank High-Yield Savings account or a Money Market Account. This applies to transfers of interests earned as well.

Synchrony Bank Best CD Rates

2.25% — 3 months

3.25% — 6 months

4.16% — 18 months

Pros
  • Wide range of maturity terms — from three months to 10 years
  • IRA CD available
Cons
  • $2,500 minimum deposit
  • Doesn't offer no-penalty CD
HIGHLIGHTS
Minimum Deposit
$2,500
APY
1.00% - 3.50%
Terms
3, 6, 12, 18, 24 & 30 mo. / 3, 4, 5, 7 & 10 yr.
Grace Period
9 days

Why we chose this bank: Discover offers a wide-range of CD terms, giving customers multiple options for CD laddering.

Discover Bank is about more than just credit cards — it offers great CDs too, compared to other major banks. While most banks offer only three or four different increments, Discover offers 12 different terms ranging from three months up to 10 years.

Discover’s wide-range of CD terms are a good option if you’re interested in setting up a CD ladder, which consists of opening multiple CDs with varying maturity dates or terms (usually in monthly increments). This way you can earn interest and have more frequent access to your money, while your high-yield CDs mature.

You can choose rates of between 3.27% and 3.80% APY on terms of 12 to 24 months, between 3.80% and 3.90% APY on CDs of 30 to 48 months, and 4.00% APY on a 5-year term or higher. However, you need a minimum deposit of $2,500, which may be a drawback for some.

Discover Bank Best CD Rates

3.75% — 1 year

3.75% — 18 months

3.80% — 30 months

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Other banks we considered

We looked at an array of financial institutions in order to find the best CD rates. The following list includes some of the companies we reviewed that, while they didn’t make the final cut, we still consider noteworthy.

Quontic

Pros
  • APY ranging from 1.70% - 3.20%
  • Low minimum deposit — $500
  • Account can be open online within minutes
Cons
  • Only offers five CD terms

As is typically the case with online banks, Quontic offers higher yields than many brick-and-mortar banks. APY ranges from 2.25% to 3.95%. However, Quontic only offers five CD terms — from six months to five years — and currently doesn’t feature four-year CD terms. It also requires a $500 minimum deposit.

CommunityWide FCU

Pros
  • Certificates don't renew automatically
  • IRA Certificate available
Cons
  • Physical branches are located in Indiana only
  • Must become a member

CommunityWide Federal Credit Union members can invest a minimum of $1,000 for anywhere from six months up to five years. APY rates range from 3.25% to 3.75%. However, while anyone in the U.S. can become a member through CommunityWide online portal, physical branches are only available in Indiana.

First National Bank of America

Pros
  • Wide variety of CD terms, including 72 and 84 months.
  • High APYs in most CD terms
  • IRA certificates of deposit available
Cons
  • $1,000 minimum deposit
  • Interest compounds quarterly
  • Only three branch locations

First National Bank of America (FNBA) is one of the few banks that offers CD terms of 72 and 84 months. FNBA offers consistently high APY across all terms, with rates ranging from 2.55% for 6-month CDs to 4.30% for 7-year CDs. FNBA’s main drawbacks is that it requires a minimum deposit of $1,000 and that interest is compounded quarterly. FNBA has three physical branches, however all three are located in Michigan.

Citibank

Pros
  • Minimum opening deposit is $500
  • No penalty CD
Cons
  • Rates for regular CDs are somewhat lower that the competition
  • Rates vary across regions

Citibank features fixed-rate, no penalty and step up CDs. Its no-penalty CDs are available for a 12-month term at a competitive 3.75% APY. However, fixed-rate CDs have lower APYs than most competitors, ranging from 0.05% to 2.85% for terms of three months to five years.

CIT Bank

Pros
  • Offers Jumbo, No-Penalty and rising rate CDs
  • No fees for account opening or maintenance
Cons
  • Rates are below the competition's (0.30% APY for a 1-year CD)

CIT Bank is another online-bank that offers multiple CD options with terms ranging from three months up to five years. CIT Bank offers a considerably high APY rate of 4.50% for 18-month CDs and 3.65% for no-penalty CDs of 11 months. However, most CD terms, including its 1-year CD, feature lower-than-average APY rates, ranging from 0.30% to 0.50%.

Navy Federal Credit Union

Pros
  • Terms from 3 months up to 7 years
  • 21-day grace period
  • Offers Jumbo CDs
Cons
  • Standard CDs require a $1,000 minimum deposit
  • Membership is only available for veterans and their family members

Navy Federal offers multiple CD term lengths and share certificate accounts options, which tend to have lower minimum deposits and more flexible terms. However, its services are only available for veterans and their family members.

Best CD Rates Today

Most of the financial institutions in our top list offer competitive CD rates for multiple terms. Below are the best current CD rates by terms, alongside the bank and its minimum deposit requirements.

Best 6-Month CD Rates

Financial institution APY Minimum deposit
Community Wide FCU 3.25% $1,000
Synchrony 3.25% No minimum
Live Oak Bank 3.00% $2,500

Best 1-Year CD Rates

Financial institution APY Minimum deposit
Synchrony 4.01% No minimum
Bread Savings 4.00% $1,500
Barclays 4.00% No minimum

Best 18-Month CD Rates

Financial institution APY Minimum deposit
CIT Bank 4.50% $1,000
Synchrony 4.16% No minimum
Barclays 4.05% No minimum

Best 2-Year CD Rates

Financial institution APY Minimum deposit
Synchrony 4.26% No minimum
Barclays 4.10% No minimum
Capital One 4.10% No minimum

Best 3-Year CD Rates

Financial institution APY Minimum deposit
Synchrony 4.26% No minimum
Barclays 4.15% No minimum
Capital One 4.15% No minimum

Best 4-Year CD Rates

Financial institution APY Minimum deposit
Synchrony 4.26% No minimum
Capital One 4.20% No minimum
Barclays 4.20% No minimum

Best 5-Year CD Rates

Financial institution APY Minimum deposit
Synchrony 4.26% No minimum
Bread Savings 4.25% $1,500
Barclays 4.25% No minimum

Best No-Penalty CD Rates

Financial institution APY Term Minimum deposit
CIT Bank 3.65% 11 months $1,000
Ally 3.10% 11 months No minimum
CitiBank 3.10% 12 months No minimum

Best Bump-Up CD Rates

Financial institution APY Term Minimum deposit
Marcus 3.25% 20 months $500
Synchrony 3.25% 2 years No minimum
Ally 3.00% 20 months No minimum

Best CD Rates Guide

Read our guide to learn more about certificates of deposit (CD), how they work and what strategies you can use to take advantage of the best rates.

What is a CD?

A Certificate of Deposit, or CD, is essentially a type of savings account where you deposit a lump sum for a term length ranging from three months to six years at a fixed interest rate.

During the fixed term, your money earns interest at a higher annual percentage rate (APY) than what you usually find in checking accounts or online saving accounts.

The main difference is that you can’t withdraw your money unless you pay a penalty fee or the CD reaches its fixed withdrawal date, otherwise known as the maturity date.

At the maturity date, you can also renew your CD, change its terms or claim any higher rates the bank may be offering. Some banks may offer more flexibility and let you make changes to your CD before its maturity.

Types of CD accounts

Depending on the bank, you may choose different types of CDs to grow your money. Here’s an overview of what each type offers.

High-Yield CD

High-yield CDs feature higher-than-average APY rates. These are typically available from online banks and credit unions, which tend to offer better rates than traditional banks. In most cases, high-yield CDs also have low (or no) minimum opening deposit requirements

No-penalty CD

No-penalty CDs let you withdraw your money before its maturity date without incurring in early withdrawal penalty fees. This type of CD offers more flexibility in terms of accessing your money, however, it offers lower rates than high-yield CDs

Bump-up CD

Bump-up CDs, also called step-up or raise-your-rate CDs, let you increase your rate around the middle of your term if a higher rate is available. For instance, if after two years of opening a 4-year bump-up CD the bank offers a higher rate, you would be able to request a boost to the current rate. Some banks may let you increase your rate up to two times, depending on your term length.

Jumbo CD

A jumbo CD is a certificate of deposit that requires a larger opening deposit, typically of $100,000 or more. Because you’re investing a higher amount, jumbo CDs tend to offer a higher rate of return than traditional CDs.

IRA CD

An IRA CD is a savings vehicle that lets you invest a portion of your IRA retirement investment money in certificates of deposit. Do note that both IRA accounts and CDs charge penalties for early withdrawals, meaning you may end up paying two penalties if you break the term length.

How does a certificate of deposit work

CDs are time-bound deposits used to save money while earning some interest back. In exchange for agreeing to lock your money for a fixed term, the bank pays you a higher interest rate than it does with regular accounts.

CDs are a fairly safe saving tool. They’re federally insured up to $250,000 by the Federal Deposit Insurance Deposit (FDIC) and the National Credit Union Administration.

Most CDs have the following features:

Opening Minimum Deposits. CDs tend to have higher minimum deposit requirements than most savings accounts, usually $500 or more. However, some banks don’t have an established minimum requirement at all.

Fixed Term Lengths. Common CD term lengths rane from six months up to 72 months, at most banks.

Higher APYs for Longer Terms. CD rates depend on the term and the amount deposited. Generally, longer-term CDs have higher APY rates, giving you more substantial returns on your principal investment than shorter-term CDs.

Penalties for Early Withdrawals. You’ll usually be charged a penalty if you choose to withdraw money before the CD reaches its maturity date; however, some banks do feature no-penalty CDs.

What is the difference between a CD and an IRA?

A certificate of deposit (CD) is a deposit account where you keep funds for a specific period of time at a fixed APY. Funds in a CD are not invested in the stock market — they’re simply kept in the account, collecting interest.

An Individual Retirement Account (IRA), on the other hand, is a retirement account. The funds deposited there can be invested in bonds, stocks, money market accounts or other investment vehicles, including CDs.

What happens when a CD matures?

When a CD reaches its maturity date you generally get a grace period that ranges from seven to 21 days depending on the bank. During this period you can decide whether you want to open a different CD account, renew your CD or withdraw your money.

If you let the grace period pass, the bank will most likely automatically renew your CD for the same term but with the current interest rate, which might be lower than your original rate. If this happens and you want to withdraw your money, you may have to pay a penalty fee or wait until the CD’s new term ends.

How APY works

The Annual Percentage Yield (or APY) represents how much money you would earn in one year, taking into account the compounding interest.

CD accounts offer pre-established or fixed APYs, currently ranging from as little as 0.05% up to 4.26%. This means that the money you deposit into the account will earn that amount of interest monthly for the entire term of the CD.

Naturally, the higher the APY, the higher the return you’ll have when your CD matures.

Difference between compound interest and simple interest

Most certificate of deposit accounts accrue interest in one of two ways: simple interest or compound interest. The difference between these two types of interest is how your yield is calculated.

Simple interest generates interest on the principal amount only. This type of interest is more commonly found on amortized loans, such as mortgages and car loans. Some banks may also offer simple interest on short-term CDs.

To calculate returns using simple interest, just multiply the interest rate with the principal amount. For example, a 1-year CD with an initial deposit of $10,000 at an 0.65% APY rate would earn $65 at maturity. For CDs of more than one year, multiply the interest rate by the time period involved and then by the principal amount.

Compound interest, on the other hand, is calculated based on both the principal and the accumulated interest from previous periods.

Compound interest is typically used in longer-term investment products, such as CDs, mutual funds and high-yield savings accounts. Depending on the financial institution, the compounding frequency can be daily, monthly, quarterly or yearly.

Following the previous example, a 1-year CD with an initial deposit of $10,000 at an 0.65% APY rate would earn about $66 using compounding interest.

CDs with longer terms would yield higher returns. Remember, compounding interest offers exponential growth, so the longer the term, the higher your return at maturity.

Pros and cons of a certificate of deposit

Certificates of deposit are a reliable investment, ideal for those looking to earn some return with very little risk. Since most banks offer higher interest rates for CDs than for high-yield savings accounts, opening a CD might be a good option if you have money that you don’t need to use right away.

Here are some benefits and drawbacks to consider when deciding whether a CD is right for you:

Benefits of a CD

  1. Low-risk investment: Because it’s not subject to the ups and downs of the stock market, a CD account can help you grow your money safely, as long as your bank or credit union is insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).
  2. Great for long-term savings: CD accounts are useful saving tools for money you won’t need until a later date. Because CD accounts have an early withdrawal penalty, it can help savers stay on track with their goals by discouraging withdrawals.
  3. Higher interest rates than most savings accounts: CDs provide higher interest rates than most high-yield savings accounts, which can make a big difference when committing larger amounts to long-term CDs. This is especially so in the case of jumbo CDs, which have high minimum deposit requirements of $100,000 or more.

Drawbacks of a CD

  1. Early withdrawal penalty. Depending on the terms you choose, you could be locking away your money for years at a time, which makes CD accounts a less than ideal place to keep an emergency fund. You’ll have to pay a penalty if you want to withdraw the money early, and the amount of this fee varies from bank to bank.
  2. Accessibility. CD accounts usually don’t offer debit cards or ATM access as is often the case with savings and money market accounts. Some banks may let you withdraw the interest you accrue every month, but generally accessing your money involves additional fees. However, this can also work in your favor, as it reduces the temptation to tap into your savings.
  3. Fixed rates. If you sign up for a 5-year CD now, there’s a good chance that rates will rise at some point over the next few months and you could end up missing out on higher APYs. Of course, the opposite could also be true and we might see lower rates.However, do note that, as of October 2022, we’re in a high-interest-rate environment and CDs are offering somewhat higher rates compared to rates a year ago.
  4. Higher APYs elsewhere. You may be able to find high-yield savings accounts and money market accounts offering similar or higher APYs.

What is a CD Ladder?

A CD ladder is a savings strategy that consists of spreading your money across multiple certificates of deposit (CDs) with different maturity dates — typically with a 1-year interval between each CD. The goal is to space out your maturity dates evenly so you can have access to your money more frequently and benefit from any higher interest rates available at the end of each term.

How CD Ladders Work

Long-term CDs pay higher rates than short-term CDs; however, losing access to that money for five years or more can be a big risk. This is where a CD laddering strategy might come in handy: you can earn money at relatively high rates while still having periodic access to your savings.

Let’s say you have $5,000 to open a new CD. Using a CD laddering strategy, you can open five certificates, each for $1,000 and each with a different maturity term.

You’d place $1,000 each in a 1-year, 2-year, 3-year, 4-year, and 5-year CDs respectively. Then, each time a CD matures, you can either withdraw the money if you need it or roll it over, with the compound interest, into a new 5-year CD. After five years, all of your money will be locked away in 5-year CDs. However, because of the staggered maturity dates, you’ll still be able to withdraw a portion of the deposited money yearly — all without paying any penalties and while benefiting from the higher yields of long-term CDs.

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Best CD Rates FAQ

What is a certificate of deposit?

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A certificate of deposit or CD is a type of savings account where you deposit a lump-sum that's later locked in for a predetermined period at a fixed annual percentage yield (APY).

When will CD rates go up in 2022?

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As of November 2022, we're in a rising interest rate environment. This is partly due to the Federal Reserve having raised interest rates several times this year. As a consequence, CD rates have been a bit volatile, slightly increasing every few months. We can expect rates to keep climbing this year and next, especially as the Fed continues to take further measures to tame inflation. If you worry about interest rates rising while your money is locked in a fixed interest rate, you can look into CD laddering.

Which banks have the best CD rates?

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From the banks and credit unions on our list, Bread Savings and Connexus Credit Union consistently offer the highest rates for most CD terms. Live Oak Bank and Synchrony also offer highly competitive rates.

How We Chose the Best CD Rates

To find the best CD accounts, we gave preference to banks offering the highest APY rates and low to no monthly fees. We considered the type of products each offered, such as whether no-penalty CDs, rising-rate CDs, CD laddering and CD IRAs were available.

We evaluated minimum deposit requirements, CD terms and compounding schedule. In addition, we looked for banks offering grace periods after maturity and perks such as best rate guarantees, loyalty reward programs alongside online banking and mobile apps services.

All of our choices are either NCUA or FDIC insured.

Summary of Money’s Best CD Rates of November 2022