Best 3 Month CD Rates for May 2024

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Make the most of your time and money. Choose the best 3-month CD rates today.

Top 3-month CD Rates:

Short on time but looking to grow your savings? If you don't want to lose your money to quick and risky investments, try exploring 3-month CD rates.

CDs can yield good earnings in the short term. And for little to no risk. But getting one might not work for all scenarios. Find out if 3-month CDs would suit your plans.

What is a 3-Month CD?

A 3-month certificate of deposit (CD) is a short-term savings account that holds a fixed amount of money for a fixed 3-month term. In exchange, you get a fixed rate that is usually higher than most regular savings accounts.

But if you close your 3-month CD before it matures, you might need to pay early withdrawal penalties. For short-term CDs, penalties can cost a few months' worth of interest–sometimes even a full term's worth.

How Much Does a 3-month CD Pay?

An APY of 4% can pay $10 on a 3-month CD with $1,000. The higher your APY and deposit are, the higher the interest you earn.

Here's a convenient table to show you what it would look like.

Rate$1,000$2,000$5,000$10,000
0.00%$1,000$2,000$5,000$10,000
0.50%$1,001$2,002$5,006$10,012
1.00%$1,002$2,005$5,012$10,025
1.50%$1,004$2,007$5,019$10,037
2.00%$1,005$2,010$5,025$10,050
2.50%$1,006$2,012$5,031$10,062
3.00%$1,007$2,015$5,037$10,074
3.50%$1,009$2,017$5,043$10,086
4.00%$1,010$2,020$5,049$10,099
4.50%$1,011$2,022$5,055$10,111
5.00%$1,012$2,025$5,061$10,123
5.50%$1,013$2,027$5,067$10,135

Check out how much you can earn on CDs with different terms and APY using this CD calculator.

CD Calculator

Is a 3-Month CD Worth It?

3-month CDs are good for short-term goals. They are best for those who want to earn high interest and don't need their money in the next few months.

If you want to curb spending, keeping your funds in a 3-month CD could be an effective method. Having to pay early withdrawal penalties can stop you from using your money.

Ultimately, whether a CD is worth it or not depends on what your goal is. There may be other investment options that are more suitable for your situation.

A high-yield savings account, for example, might be the better choice if you want easy access to your money.

Can I Lose Money on a 3-Month CD?

In general, you won't lose money on a 3-month CD. Funds deposited in a CD are federally insured by the FDIC or NCUA.

Thus, should your bank or credit union fail, you are guaranteed to get your money back up to $250,000.

However, you can lose money when you withdraw your funds pre-maturely. You'll have to pay a penalty which can reduce your earnings and sometimes your principal.

Pros and Cons of a 3-Month CD

If you want to know what's good and bad about getting a 3-month CD, check out these pros and cons:

Pros:

  • Short-term commitment
  • Higher rates than regular savings account
  • Federally insured up to $250,000 by the FDIC or NCUA
  • Promotes better spending habits

Cons:

  • Early withdrawal penalties
  • Missed investment opportunities due to lock-in period

Can I withdraw money from my 3-month CD?
Typically, you cannot withdraw from your 3-month CD without paying penalties. CDs can give high rates when tying up a fixed amount of money for a specific term. If you need your funds before maturity, check how much the early withdrawal fees will cost first.

What appeal do 3-month CDs hold for you compared to other financial products?

How to Choose a 3-Month CD?

If you're set on getting a 3-month CD, here are some factors you can consider when choosing one:

  1. APY
    You'll want to get a good APY for a 3-month CD. So, make sure to check out online banks and credit unions to see the rates offered today.

  2. Minimum Deposit Requirement
    Some 3-month CDs may require a minimum deposit. It would be best to find a CD that fits your budget (if you have one). The minimum deposit averages from $500 to $1,000, but some may have lower or higher requirements.

  3. Early Withdrawal Penalties
    The fees for closing a 3-month CD early can be heavier because of its short timeframe. Some banks may even charge you the full term's worth of interest. Thus, find a CD with low early withdrawal penalties.

Which is better: Short-Term CD or Long-Term CD?
If you want high APY, these days you might see great offers on both short-term and long-term CDs. If you need quicker access to your funds, short-term CDs can be good but there may be long-term CDs with no-penalty features that could give you more flexibility.

Both short-term and long-term CDs have their own merits, but whether one is better depends on your investment goals.

What is the most important factor you consider when choosing a 3-month CD rate?

How to Maximize Earnings on a 3-Month CD

Here are ways you can maximize earnings on a 3-month CD:

Use a 3-month CD in a CD ladder
A CD ladder is when you divide your funds into multiple CDs with varying terms and rates.

To use a 3-month CD in a ladder, you must make it the shortest term in the ladder or open several 3-month CDs over time.

The goal is to have a CD mature regularly (in intervals), giving you flexibility on whether to use the funds or reinvest it. This way, you can also take advantage of better rates as they become available.

Find the highest rate on a 3-month CD
Getting a high rate on your 3-month CD is the most straightforward way to increase your earnings. When searching for institutions to invest with, prioritize those known for offering competitive rates.

Online banks are often a top choice due to their lower overhead costs. Credit unions are also a solid option, thanks to their non-profit nature, allowing them to provide attractive offers to their members.

Lastly, if you're a loyal customer of a bank or a credit union, you can ask about relationship rates or promos for better rates.

What are relationship rates?
Relationship rates are exclusive offers for existing customers or account holders at a bank or credit union. These are often better rates on deposit or loan products—that is, higher APY or a lower APR than what they offer to new customers. Ask your bank if they have relationship rates on their CDs for higher earnings.

Avoid withdrawing your 3-month CD too early
A rule of thumb when getting a CD is to keep your money locked in until it matures.

The reason why you can get a good rate on a 3-month CD is because you agree to tie up your fund during a certain timeframe.

To maximize your earnings on CDs, don't touch them for as long as you can. Otherwise, you would lose your earnings to early withdrawal penalties.

What happens at the end of a 3-month CD?
Near the end of the 3-month term, your bank or credit union will typically send you a reminder days before your CD matures. When you do receive it, you can choose to do either of the following:
  • Automatic renewal with the same terms
  • Renew CD with a different principal balance, term, or both
  • Close the CD and withdraw all funds

Alternatives to 3-Month CDs

A 3-month CD may not be for everyone. Here are other short-term options that you can consider.

High-Yield Savings Accounts
Some online high-yield savings accounts can offer competitive interest rates. Plus, you get easy access to your money, unlike CDs.

Compare Savings Account Offers

Money Market Accounts
Like savings accounts, you get more flexibility with a money market account. Some also come with a debit card, ATM access, and check-writing abilities. But, the rates are variable and might not be as competitive.

Compare Money Market Account Offers

Treasury Securities
Treasury bills are quite like CDs in that your funds are back in full faith by the government. You also get a fixed rate regardless of the changes in the market. These make them a safe and reliable investment for the next 3 months.

Longer CD Terms
Long-term CDs often give higher rates than short-term CDs. Times when the Fed Funds rate is increasing is the best time to shop for long-term CDs. If you don't mind committing more time, try looking for long-term CDs.

Compare Long-term CD Rates:

3-Month CD FAQs

How high will 3-month CD rates go?
The rate of a 3-month CD depends on the Fed Funds rate or Treasury Yield. If they rise, 3-month CD rates tend to follow suit.

However, note that some banks and credit unions may have rate limits. You can check these limits or national rate caps published by the FDIC[1].

How long should you keep money in a CD?
There really is no correct answer for this because it depends on your financial goals and circumstances.

If you're saving for retirement, you'll want to look at long-term CDs. But, if you have a financial goal you want to achieve in next few months, a 3-month CD could be the better choice.

Is a 3-month CD safer than a savings account?
Both 3-month CDs and savings accounts are equally safe. They are usually federally insured for up to $250,000. The FDIC or the NCUA will cover your CD or your savings account in case your bank or credit union fails.

What other CD terms are available?
CD terms can range from as short as 1 month and up to 10 years in length. But, not all banks will offer the same CD terms. If you can't find a 3-month CD at your usual institution, try shopping around other banks and credit unions.

What are the types of CDs?
Here's a list of different types of the common CDs available.

  • Term CD: standard CDs with a fixed rate for a fixed term
  • No-Penalty CD: allows you to withdraw money early without any withdrawal penalties
  • Bump-Up CD: includes an option to increase your rate during the term of the CD
  • Add-on CD: includes an option to add more deposits to your CD balance
  • Jumbo CD: for large deposits of usually $100,000+
  • IRA CD: offers tax advantages for retirement savings

Bottom line

3-month CDs could be good if you're looking for stable and guaranteed returns. But, ultimately, it will depend on your financial goals and situation.

The smartest thing to do is to sit down and assess what you want to achieve before you commit to any investment.

References

  1. ^ FDIC. National Rates and Rate Caps, Retrieved 08/05/2023

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