Updated July 30, 2018

Top 5 Best CD Rates: December 2018

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The best CD accounts pay a good interest rate, are fully secured, and are risk-free. Find the best high interest CDs to consider.

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So you have some money to save. And you want the highest interest possible with very little risk.

Consider a CD account. CDs are virtually risk-free and usually have a guaranteed rate of return. And there are usually no fees to open or maintain an account.

If you're considering opening a personal checking or savings account, you must check out these promotions.

Who has the best CD rates now?

What Is a CD and Why Get One?

CD stands for Certificate of Deposit. You literally get a certificate stating how much you have deposited and the maturity date. Unlike a normal savings account (where you can continuously deposit and withdraw funds), you must agree to deposit a fixed amount of money for a fixed amount of time. You get a fixed interest rate that will be honored for the duration of your term.

Opening a CD is a commitment. CDs have fixed terms. They can be as little as just 3 months to as long as 10 years. Whatever term you choose, you must keep your funds there until maturity. If you want to take your money out sooner, you'll face steep penalties (usually a few months' interest).

But to reward you for the commitment, CDs give higher interest rates. The longer the term, the higher the interest rate. This makes a CD a good choice to let your money grow more interest than it would in a normal savings account.

CDs are best for short-term savings goals. They remove the temptation of easily available funds. For example, if you know that in 1 year, you are taking your kid to Europe as a graduation gift, you can put that money aside in a CD and not accidentally spend it before then.

Online banks usually give you much better rates on CDs than traditional banks. The average rate for traditional banks is just 0.05% APY (Annual Percentage Yield; explained below) for 1 year. But you can get a rate well over 2% with online banks, which is (sadly) high in this day and age.

Are CDs Worth It?
CDs are a very secure vehicle to park your money and grow some interest. You're guaranteed interest. When you sign up, you know exactly how much interest you will earn on your deposit. It will not change for the entire term. If you are sure you won't need the money for a specific amount of time, then CDs are great to grow your money a little safely.

    CIT Bank

    Term CDs

    • $1,000 Minimum Opening Deposit
    • Up to 2.50% APY
    • Up to 5 years
    • No monthly maintenance fee
    • FDIC insured
    • Daily Compounding Interest

It's a good investment vehicle to consider if you don't need the money anytime soon. Here is our list of the top CD rates.

What to Look for in an Online CD Account

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Before we get into the recommendations, there are some factors to consider when choosing a CD:

  1. Security. CDs are virtually risk-free because they are insured deposits. And the banks on this list are all FDIC insured, which means that if the bank defaults, the government will pay you back everything you had in the account (up to $250,000).

  2. Minimum deposit. CDs often have higher minimum deposits. And you cannot make additional deposits once you have opened an account. So make sure you already have the money set aside and you're able to meet the deposit requirement.

  3. Yield rate & term. Of course, you want the highest interest rate you can get. Compare rates for the term length that you're interested in. We have picked CDs with the highest rates currently offered on the market.

If you withdraw a CD before maturity, you will be penalized. This is usually a few months of interest, depending on your term length. The longer the term, the heavier the penalty. If you're not sure about committing your money, then look for a bank that offers a No Penalty CD. Or choose a shorter term.

Best Online CD Accounts

After considering these factors, picking the best CD is all about comparing the rates and terms. Maybe you have some special requirements, like more flexibility. We have pulled together a list of the best CDs that fit each need while maintaining a high yield rate. Here are the top online CD accounts.

What bank has the highest interest rates? If you like doing your banking all in one place, these banks offer some of the highest rates for all their deposit products, including savings, money markets, and CDs.

TIAA Bank: Best CD Overall with Highest APY

    TIAA Bank

    Yield Pledge CD

    • Up to 3.10 APY
    • Up to 5 years
    • $5,000 Minimum Opening Deposit
    • No monthly service fee
    • Top 5% yields always
    • Daily Compounding Interest
    • FDIC insured

TIAA Bank (formerly Everbank) consistently offers the one of the best rates for every term length. TIAA Bank has terms starting at 3 months to 5 years. Their promise is that the yield of your account will stay in the top 5% of similar accounts offered in the U.S. banking market.

The main downside is that the minimum is $5,000, which is higher than some other accounts. If this amount is too high for you, we have other options with lower minimums.

TIAA Bank also makes our lists of top online savings and online checking accounts.

Synchrony Bank

    Synchrony Bank

    Certificate of Deposit

    • Up to 3.10% APY
    • Up to 5 years
    • $2,000 minimum opening deposit
    • Daily Compounding Interest
    • FDIC Insured

Synchrony Bank has one of the highest rates for a 1-year CD. The rate for their 1.5-year and 2-year CDs are also competitive. The minimum deposit for Synchrony is only $2,000.

Capital One 360: Best No Minimum CD

    Capital One

    Online CDs

    • Up to 3.10% APY
    • Up to 5 years
    • $0 minimum opening deposit
    • Daily Compounding Interest
    • FDIC Insured

Capital One 360 offers CDs from 6 months to 5 years. Their 1-year CD rate is competitive. The best part is that there is no minimum balance, so even small savers can grow their money.

First Internet Bank: Best Short-Term CD

    First Internet Bank

    High Yield CD

    • Up to 3.35% APY
    • Up to 5 years
    • $1,000 Minimum Opening Deposit
    • No monthly service fee
    • FDIC insured

For just $1,000 minimum, the First Internet Bank offers the highest rate for 6-month CDs that we can find. This is great if you don't want your money tied up for a long time. If you have a lot to save, it's a good way to generate some extra money fast.

Ally Bank: Best CD with Flexibility

    Ally Bank

    Term CDs

    • Up to 3.10% APY
    • $0 Minimum Opening Deposit
    • Up to 5 years
    • No monthly maintenance fee
    • FDIC insured
    • Daily Compounding Interest

Ally Bank doesn't offer the highest rates for their Standard CD, but it does have some flexible CD options. If you don't want to be locked in, then these are worth looking into. And there is no minimum deposit requirement.

    Ally Bank

    Raise Your Rate CDs

    • 2.60% APY
    • 2 or 4-Year Terms
    • Opportunity to increase your rate once over the 2-year term or twice over the 4-year term
    • $0 Minimum Opening Deposit
    • No monthly maintenance fee
    • FDIC insured
    • Daily Compounding Interest

Their Raise Your Rate CDs have the option to increase your interest rate once over a 2-year term (or twice over a 4-year term). This "bump up" rate is great if the rate happens to increase during your term and you want to avoid losing money due to inflation.

    Ally Bank

    No Penalty CD

    • Withdraw Full Balance and Interest After 6 Days of CD Funding Date Without Penalty
    • 1.80% APY with less than $5,000 opening deposit
    • 2.10% APY with $5,000 minimum opening deposit
    • 2.25% APY with $25,000 minimum opening deposit
    • 11 Months
    • No monthly maintenance fee
    • FDIC insured
    • Daily Compounding Interest

Ally Bank also offers a No Penalty CD, where you can withdraw the funds anytime you want without a penalty. The rate isn't the highest, but if you're a commitment-phobe, you may appreciate the flexibility. Though in this case, you may just want a normal savings account with a higher rate.

What is the best 5-year CD rate? For high rates on 5-year CDs, check out: First Internet Bank, M.Y. Safra Bank, and Marcus by Goldman Sachs.

Other CDs to Consider

Here are a few more to consider if you need more options:

Banesco ($1,500 minimum): Banesco Bank offers very competitive rates, including one of the highest rates for 2-year CDs. It offers terms from 6 months to 3 years. You may not have heard of Banesco before, but it has strong roots in the South Floridian banking community and is FDIC insured.

CIT Bank has a traditional CD with competitive rates for just a $1,000 minimum deposit. If you're not sure about committing your money, it also offers a 11-month No Penalty CD with a great rate. You can withdraw your money with no penalty anytime after 7 days from funding.

    CIT Bank

    Term CDs

    • $1,000 Minimum Opening Deposit
    • Up to 2.50% APY
    • Up to 5 years
    • No monthly maintenance fee
    • FDIC insured
    • Daily Compounding Interest

Discover Bank ($2,500 minimum): Though Discover is best known for their credit cards, it also offers excellent banking products. Discover's CDs have very competitive rates, especially for longer terms. Terms go all the way up to 10 years, so you can lock in a great rate for a long time.

Barclays (no minimum): Barclays also offers some of the best rates, and they have no minimum deposit. This is another decent option if you have a very low amount.

Marcus by Goldman Sachs ($500 minimum): Goldman Sachs, the investment banking giant, also offers savings and CDs accounts with great rates. CD terms go from 6 months to 6 years. Rates are hard to beat for longer term CDs.

SallieMae ($2,500 minimum): SallieMae is known as a student loan lender, but it also provides consumer banking. It offers 6-month to 5-year CDs with very competitive rates.

PurePoint Financial ($10,000 minimum): The minimum opening deposit is high, but Purepoint offers incredible rates for their 2-year and 3-year CDs. PurePoint is a division of MUFG Union Bank, U.A. and is backed by Mitsubishi UFJ Financial Group.

M.Y. Safra Bank ($5,000 minimum): This is a newer bank based in New York, NY. It offers CD terms from 3 months to 6 years. The rates are some of the highest on the market, if you can meet the minimum deposit requirement.

PenFed Credit Union ($1,000 minimum): Often, credit unions can offer higher rates. PenFed offers some of the best rates on the market and it has terms going up to 7 years. Membership is free if you serve in the military or work in U.S. government. Otherwise, you can join by joining Voices for America.

United States Senate Federal Credit Union ($1,000 minimum): The USSFCU offers a top rate for their 4-year and 5-year CDs - among the best of the nation. Anyone can join by joining the American Consumer Council, Virginia Chapter (you can even get the membership fee waived with the code USSFCU) or the U.S. Capitol Historical Society.

Greenwood Credit Union ($1,000 minimum): Greenwood offers CD terms from 3 months to 5 years. In general, the rates aren't too good, but it does offer an amazing rate for their 2-year CD - one of the best we can find. Membership is open to anyone who opens and maintains a Share Account with at least $5 balance.

Connexus Credit Union ($5,000 minimum): Connexus's 5-year CD rate is among the highest in the nation. It offers terms from 1 year to 5 years, all with excellent rates. Anyone can join this credit union with a one-time $5 donation to Connexus Association.

Veridian Credit Union ($1,000 minimum): Veridian's 2-year and 3-year CDs have great rates. Veridian also offers a 41-month Bump-Up CD with an excellent rate, as well as Jumbo CDs for even higher rates. Anyone can join by becoming a registered user of Dwolla (a payment system).

KS StateBank ($500 minimum): Although this bank serves residents of Utah, Missouri, and Arizona, you can open a CD account online. KS offers term CDs from 1 year to 7 years. Rates are among the highest we've seen, and the opening deposit is low.

Tip: If you have a lot you want to save, look at Jumbo CDs. Jumbo CDs require a deposit of $100,000 or more, but you can usually get a higher interest rate as a reward for leaving such a huge sum of money in the bank. Jumbo CDs are a great way to safely store a large amount of money you'll need in the near future (like for a house down payment). Or they're also a good way to make some extra money fast. You can open a Jumbo CD for just 3 months and get some cash quickly from the high interest.

Best CD Strategy: Build a CD Ladder

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If you have more than just a few hundred to invest, putting it all into one CD is not the smartest strategy. You'll have all your cash tied up into a single account with a fixed interest rate, and you cannot access it for a certain period of time.

Instead, use a strategy known as CD laddering. In a nutshell, you split up your investments into different CDs with different rates and terms. This ensures that you can always get the best current rate available and regular access to your money. You can also add more money regularly too.

It's best explained in an example. Here's what your ladder strategy may look like:

  • $1,000 in a 1-year CD at 2.30%
  • $1,000 in a 2-year CD at 2.50%
  • $1,000 in a 3-year CD at 2.70%
  • $1,000 in a 4-year CD at 2.80%
  • $1,000 in a 5-year CD at 2.90%

So after the first year, you can withdraw the money plus interest in your 1-year CD. You can then reinvest all that into a 5-year CD. Another year later, your 2-year CD will have matured, and you can re-invest that into another 5-year CD. Every year, you do the same and thus keep the ladder going.

This means that every year, you can withdraw money if you need it. And hopefully interest rates have increased too, so you can always get the best current rate.

Tip: If you don't want to wait a year, you can do this with 3-month, 6-month, and 9-month CDs as well. Just note that interest rates for short-term CDs aren't as high.

A final best practice is gifting a CD to a young member of your family. This is great for a new niece or nephew since children usually do not need access to such funds immediately. This allows you to select the highest yielding CD type for the longest duration (think compound interest here).

Is an Online CD Account Right for You?

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Before you stash your money into one of the above CD accounts, here are some things to consider:

  • Do you need the money in the near future? A CD account has specific terms where you cannot withdraw the money before a certain period of time. So if you have chosen a 2-year CD, make sure that you don't need the money before 2 years. There are penalties for withdrawing early.

    Tip: Make sure you have already set up an emergency fund savings account before you tie up funds into a CD. Ideally, your emergency fund should contain enough for 3-6 months of living expenses in case of a job loss. Having an emergency fund is important because it's available when you need it, and you don't have to pay any penalties for withdrawing from a savings account.

  • How long do you want to hold it for? Generally, CD's are only worthwhile if you are planning to hold it for one year or more (the longer your term, the higher the interest). If you only want to do a 3 months or 6 months CD, then you may find that a high-yield savings account offers better rates.

  • How much money do you have right now? Remember, you cannot make additional deposits once the account is opened. Make sure you have all the money available to deposit at once.

What about my local bank or credit union? Online banks can offer higher interest rates because they have less physical overhead. However, if you prefer to use a traditional bank or credit union, there are a few that offer Promotional CDs with very competitive rates. Check out Wells Fargo, US Bank, Huntington Bank, SunTrust Bank, and Fifth Third Bank.

There Are Other Options Too

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If you're not sure if a CD account is for you, some other options include:

  • An online savings account will allow you to deposit and withdraw funds. A savings account is good for everyone to have to save for short-term goals and emergencies. Generally, if you only need to save the money for a very short time (less than one year), you're better off with a savings account that offers a higher rate.

    Check out our list of the top 5 high-yield online savings accounts.

    By federal regulation, you're limited to 6 withdrawals per month without penalty, but it's still a lot more flexible than a CD.

  • A money market account acts like a savings account, but gives you freer access to your money. You'll get a debit card, ATM access, and checkwriting abilities. But the interest rate may be lower.

  • A high yield checking account if you need quick and frequent access to your money. a high yield checking account offers no restrictions on accessing your money anytime you need. Most brick-and-mortar checking accounts don't give you any interest, so this is another area where it pays to bank online (literally). Check out our list of the top high-yield online checking accounts.

  • Roth IRA account if you don't need the money in the near future and are ready to save for retirement. You can get much higher gains by investing your money long-term. Roth IRAs also have great tax benefits because all interest earned is tax-free. There are restrictions on how much you can invest in Roth IRAs depending on your income, so check with your tax advisor first. Check out our list of the top Roth IRA providers.

  • Traditional IRA account This is another good long-term investment option if you don't need the money in the near future and are ready to save for retirement. Unlike a Roth IRA, there are no limits to how much you can invest, but your interest earned will be taxed when you take it out.

In general, it's always best to have a portfolio strategy when it comes to investment products. A CD is good for saving toward a specific goal that you want to reach by a given date. But you cannot add to the funds in a CD, so it's good to also have a savings account where you can continuously deposit more money.


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  • What is an APY?
    Let's do the complicated answer first: APY stands for Annual Percentage Yield, which is the return you get over a 1-year period based on the interest rate and compounded interest (which means that your interest earns interest). APY is calculated based on the assumption that the funds will remain in the account for exactly 1 year.

    The simple answer is that, basically, you can think of 1.00% APY as 1% yearly interest.

  • Why do online banks usually offer higher interest rates for savings accounts and CDs?
    Online banks don't have physical locations, which means that they have much lower operating costs than brick-and-mortar banks. This means they can save on overhead and pass those savings onto customers by offering better rates. A downside (for some people) is that you can't go to a branch for specialized services or personal attention.

  • Can I make withdrawals from my CD?
    Yes, you may withdraw, but there will be a penalty for withdrawing early (before the term is up). Usually, the penalty is a few months of interest, depending on your CD, so make sure you read the fine print. If you think there is a good possibility you may need the money, either get a shorter term CD or just open a regular savings account.

  • Can I deposit additional funds once I've opened a CD account?
    No. CDs are opened with a fixed amount for a fixed period of time. You usually cannot make more deposits into your account. There are very few CDs with options to make an additional deposit.

  • Can the interest rate change during the CD term?
    Generally, no. CDs are opened with a previously determined fixed interest rate. All banks clearly disclose the interest rate on their website. You are stuck with the interest rate for the entire term of your CD. Then you can choose to roll it over with a new rate.

    There are some kinds of CDs, called "bump-up CDs," that allow you to switch to a higher rate if the bank is offering one. But the downside of this is that they generally start at a lower rate. And, of course, it's not guaranteed that the rate will increase during your term. Ally Bank has a Raise Your Rate CD where you can increase the rate once over 2 years, with no minimum deposit.

  • What term should I choose?
    Choose your term carefully since your money will be tied up the entire term (unless you open a No Penalty CD). Make sure you absolutely do not need the money for the entire term. If you open a CD and close it quickly, the penalty could even cause you to lose principal. If you think you may need the money, then choose a shorter term or just open a high-yield savings accounts.

    For example, let's say the early withdrawal penalty for a 2-year CD is 6 months of interest. You open a 2-year CD, but have to close it in 4 months, because you need the money for an unforeseen emergency. The penalty is greater than the interest you have earned.

  • What happens after the term is up?
    When you have completed the term, you can withdraw your money and all interest. Or you can choose to roll it over into another term. Most banks will give you alerts, so pay attention. In most cases, if you don't withdraw the funds during a certain period, it'll automatically renew for the same term.

  • Is a CD or Savings Account better for me?
    This really depends. If you don't need the money anytime soon, then a CD will generally offer a better rate. And it'll also ensure that you won't accidentally spend that money. If you're not sure when you'll need the money, a savings account gives you more flexibility to withdraw.

    Of course, the more you have to deposit, the more interest you'll earn. So if you only have a very low amount, then you may be better off with a high-yield savings account where you can keep depositing money.

  • Are you taxed on CDs?
    Unfortunately, yes. The interest you earn on your CD is considered income and is taxable at State and Federal levels. Usually, your bank will send you a 1099-INT form at the end of the year. You have to report the interest income you earned when you file your taxes.

  • What is a Jumbo CD?
    Jumbo CDs require a deposit of $100,000 or more. They usually offer a higher interest rate as a reward for leaving such a huge sum of money in the bank. Jumbo CDs are a great way to safely store a large amount of money you'll need in the near future (like for a house down payment). Or they're also a good way to make some extra money fast. You can open a Jumbo CD for just 3 months and get some cash quickly from the high interest.

Bottom Line

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A CD is one of the safest ways to grow your money diligently over time with a low, predictable rate of return. The rates offered are just about the highest you can get nowadays, for FDIC-insured accounts.

A CD is a good account to include as part of your financial planning strategy. It's a low-risk way to make your money grow a little. Just make sure that you absolutely will not need that money for the term you select. We have compiled the list of best CD rates, but feel free to shop around, compare, and see what you're comfortable with.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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