CDs are similar to online savings accounts, money market accounts, and checking accounts in that they provide attractive returns while posing no risk.
CDs, on the other hand, “lock your money up” for a set amount of time. You’ll have to pay a penalty if you want to get your money before the term is up.
Although CDs have less liquidity than a conventional checking or savings account, they may offer a better rate of return. This is especially true if you open a CD with a longer maturity period, such as a 60-month CD rather than a twelve-month CD.
As of this writing, nationwide average CD rates range from 0.02 percent to 0.24 percent depending on the CD duration, according to the Federal Deposit Insurance Corporation (FDIC).
Consumers who do their homework will find that a number of banks offer significantly better CD rates. To get the best CD rates today, we compared hundreds of banks and financial organizations. Start your search here if you’re looking for a high-yield CD.
CDs’ Most Important Factors
- CDs are intended for long-term investment. CDs aren’t appropriate for money you might need access to in the short term because they lock your funds into the account for a set period of time (typically 12 to 60 months).
- CDs provide a safe haven for your money. Thanks to FDIC insurance, CD accounts are a safe location to keep your money and earn interest.
- Examine the costs of CDs. If you need to access your money sooner than expected, most CDs charge a fee. Before you open this bank account, make sure you understand the fees.
- Online banks may be able to provide better rates. Despite the fact that brick-and-mortar banks offer CDs, internet banks may offer superior rates. To discover the best CD rates, compare traditional banks and online companies.
The Best CD Rates for the Year 2022
If you’re looking for a better short-term investment, the best CD rates are worth looking into. We compared many of the biggest financial institutions and online banks to get the best rates and terms to aid you in your search. The banks listed below made our list based on their interest rates and other features.
- Marcus by Goldman Sachs
- Synchrony Bank
- CIT Bank
CD Ratings and Reviews
When deciding where to open a certificate of deposit, there are a few things to think about. These factors include whether you wish to open your CD in person or online, the applicable rates and conditions, and the costs for early access to your funds.
The following reviews cover the CD rates offered by each of the major banks we profile, as well as other important information.
BBVA offers a wide range of financial services, including certificates of deposit. Its CDs have no monthly maintenance costs, and you may check your account online or use the BBVA mobile banking app at any time.
CD periods span from seven days to fifteen years, with longer terms yielding greater CD rates. It’s important to keep in mind that if you take your money out too soon, you’ll face fines.
You’ll pay $25 + 1% of the amount withdrawn if you cash out your CD early with a period of one year or less. If you cash out a longer-term CD early, you’ll be charged $25 plus 3% of the amount you withdraw.
CD Rates: Currently, online CDs with durations ranging from 11 to 36 months yield 0.05 percent APY.
What Holds It Back: BBVA has a $500 minimum deposit amount, in addition to exorbitant penalties for cashing out your money early.
CIT Bank is well known for its popular Savings Builder high-yield savings account, but it also provides a variety of CDs with favorable terms. Its 11-month penalty-free CD stands out because of its high return rate. If you need to access your money sooner than expected, there are no penalties.
CIT Bank also offers jumbo CDs for deposits of $100,000 or more, as well as term CDs of various maturities. There are no account opening or account maintenance fees with any of its CDs.
CIT Bank’s 11-month no-penalty CD pays a 0.30 percent annual percentage yield. Their four-year and five-year CDs, which payout 0.50 percent APY, have the best rates.
What Holds It Back: Because CIT Bank has so few locations across the country, you’ll almost certainly have to open an account online. To get started, you’ll need to come up with a minimum of $1,000.
You can open a CD that lasts anywhere from three months to 120 months with Discover. There are no account opening or maintenance fees when you open a CD with us.
Discover is also notable for the moderate fees it imposes if you need to access your funds early. CDs with a period of less than one year are subject to a three-month simple interest penalty. The penalty for cashing out early on a CD with a term of one to four years is only six months of basic interest.
Rates on CDs: The most profitable CD is the 120-month (10-year) CD, which now pays 1.00 percent APY, but that’s a long time to wait. You can earn a rate of 0.65% if you’re ready to part with your money for just two years.
What Holds It Back: Discover CDs require a $2,500 minimum deposit, which is a hefty barrier to entry.
Goldman Sachs’ Marcus
Marcus by Goldman Sachs is a well-known online bank that specializes in personal loans and high-yield savings accounts, but it also offers lucrative CDs. The CDs’ terms range from six months to six years, with a $500 minimum deposit required to get started.
Marcus by Goldman Sachs even offers a 10-day guarantee, which states that if the advertised rates on the CD you purchased increase within 10 days, you can change your rate. Marcus by Goldman Sachs has among of the greatest CD rates, with five-year and six-year CDs paying 0.60 percent APY.
Marcus by Goldman Sachs also offers special CD rates for a limited period, such as 0.65% on a nine-month CD.
What Holds It Back: Because Marcus by Goldman Sachs is an online-only bank, you can’t open your CD in person.
Synchrony Bank is a financial institution based in the United States.
Synchrony Bank was chosen for our list because it does not demand a minimum balance and offers reasonable CD rates. It offers a 15-day guarantee, allowing you to boost your rate if the listed rate rises within 15 days of purchasing your CD.
Three-month to 60-month terms are offered. Their CD early withdrawal costs are likewise fair. Early cash-outs on CDs with durations of 12 months or less, for example, incur a 90-day simple interest penalty at the current rate.
CD rates are now 0.80 percent APY for five-year (60-month) CDs and 0.65 percent APY for four-year (48-month) CDs.
What Holds It Back: CDs are designed to be opened and maintained online, so if you want a more customized experience or prefer to bank in person, you should look for a different bank.
How Did We Discover the Best CD Rates?
If you want to maximize your savings, finding the greatest CD rates is critical, but there are additional variables to consider before opening an account. When developing this list of banks with the greatest CD rates in 2021, we took into account the following factors:
Rates and Terms of CDs
We focused on banks that offer at least one CD with an APY that is at least double the national average CD rate, despite giving favor to institutions that apply the greatest rates to multiple CD terms. Although BBVA did not perform well in this category, we included them because of their lack of account fees and high reputation among major US financial institutions.
Fees for Accounts
Only banks that do not charge a fee to start a CD account were evaluated. We also identified banks that do not impose account maintenance fees on a monthly basis.
Penalties for Early Withdrawal
If you cash out your CD early, most banks impose an early withdrawal fee, therefore we looked for banks that had fair penalties. We also prioritized accounts or CDs that do not impose penalties for early withdrawals.
Insurance provided by the Federal Deposit Insurance Corporation
Finally, only FDIC-insured institutions were considered in our rating. This insurance protects CD funds up to $250,000 per account holder.
Certificates of Deposit: What You Should Know
If you’ve never opened a certificate of deposit before, you might be curious about how they work and why individuals choose them. When selecting a CD account, keep the following points in mind.
- When compared to alternative deposit options, CDs offer better rates. The average national CD rate for a 60-month term is roughly four times higher than the average national savings account rate, according to recent FDIC data.
- CDs with longer maturities have higher yields. Investing for a longer period of time can result in significantly bigger profits. According to FDIC data, the average annual percentage rate (APR) for a one-month CD is only.02 percent, which isn’t much better than a simple savings account.
- CD rates might fluctuate over time. The current interest rate environment, including benchmark interest rates, is used to establish CD rates. This means that if benchmark interest rates rise, you could be able to receive a better CD rate.
- On greater sums, CD rates may be higher. You may be eligible for a “giant CD” if you have $100,000 or more to deposit. Although a large minimum deposit is required for this form of CD, banks are willing to provide greater APYs to lock in more funds.