Updated March 7, 2019

Top 5 Best CD Rates: June 2019

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CD accounts are fully secured and risk-free. Plus, they offer higher interest rates than traditional savings accounts. Read on for our list of the best high interest CDs to help you start saving.

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

We've made a list of the best banks that offer the highest rates on CD accounts.

But first, if you're considering opening a personal checking or savings account, check out these promotions.

What Is a CD?

CD stands for Certificate of Deposit. You literally get a certificate stating how much you have deposited and the maturity date when you open an account.

Unlike a normal savings account (where you can continuously deposit and withdraw funds), CD's require you to deposit a fixed amount of money for a fixed amount of time. You get a set interest rate that will be honored for the duration of that term.

Opening a CD is a commitment. 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' worth of interest).

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 a European vacation, you can put that money aside in a CD so you won't accidentally spend it before then.

    CIT Bank

    Term CDs

    • $1,000 Minimum Opening Deposit
    • Up to 2.40% APY
    • Up to 5 years
    • No monthly maintenance fee
    • FDIC insured
    • Daily Compounding Interest

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. All the banks on this list are FDIC insured, which means 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. Make sure you already have the money set aside and you're able to meet the deposit requirement.

  3. Yield rate & term
    You'll want the highest interest rate possible. Compare rates for the term length that suits your needs. We have picked CDs with the highest rates currently offered on the market.

If you withdraw a CD before maturity, you will be penalized. The amount 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

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The right CD for you depends on your goals. You may prefer flexibility or have a specific term in mind. Here's our list of the best high-yield CDs for every need.

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

TIAA Bank: Best CD Overall with Highest APY

    Yield Pledge CD

    • Up to 2.75% 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.

They promise the yield of the account will stay in the top 5% of similar accounts offered in the U.S. banking market. The downside? You need a minimum deposit of $5,000, which is higher than some other accounts.

If this amount is too high for you, read on for other options with lower minimums.

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

Synchrony Bank

    Certificate of Deposit

    • Up to 2.90% 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

    Online CDs

    • Up to 2.50% 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? There is no minimum balance, so even small savers can grow their money.

First Internet Bank: Best Short-Term CD

    High Yield CD

    • Up to 3.02% 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 2.85% 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

    • 2.50% 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

With Ally's Raise Your Rate CDs, you have the option to increase your interest rate once over a 2-year term (or twice over a 4-year term). This "bump up" 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
    • 2.15% APY with $5,000 minimum opening deposit
    • 2.30% 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 without a penalty. The rate isn't the highest, but if you're a commitment-phobe, you may appreciate the flexibility.

You may just want a normal savings account with a higher rate. Ally has that, too.

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 choices:

Banesco ($1,500 minimum): Banesco Bank has 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, choose an 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 2.40% APY
    • Up to 5 years
    • No monthly maintenance fee
    • FDIC insured
    • Daily Compounding Interest

Discover Bank ($2,500 minimum): Discover is best known for their credit cards, but 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.

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.

Wells Fargo ($5,000 minimum): Wells Fargo offers a special CD with high rates, but the minimum deposit required is high. It offers terms from 9 months to 58 months.

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 for the 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: Consider Jumbo CDs if you have a lot to save. They require a deposit of $100,000 or more. But you can usually get a higher interest rate as a reward for depositing such a huge sum of money.

Jumbo CDs are a great, safe way to store a large amount of money you'll need in the near future (like for a house down payment). They're also a good option for making some extra money fast. You can open a Jumbo CD for just 3 months and get some cash quickly from the high interest.

Why Open a CD

  • Fixed returns
    You get a guaranteed interest rate for the duration of your term. Even if interest rates fall in the economy, your money will still grow at a predictable rate.

  • Different terms
    Banks usually offer CDs with a variety of terms, from just a few months to even 10 years. You can choose the one that's right for you and know your money is safe.

  • Higher interest rates
    To reward you for the commitment, CDs offer higher interest rates. The longer the term, the higher the interest rate. Your money can grow more interest than it would in a normal savings account.

Are CDs Worth It?
CDs are a very secure vehicle to park your money and grow some guaranteed interest. When you sign up, you know exactly how much you will earn on your deposit.

If you are sure you won't need the money for a specific amount of time, then CDs are great to grow your money safely.

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. Even worse, you won't be able to access it for a set 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.

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%

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.

If need be, you can withdraw money every year. And hopefully interest rates will increase too, so you can always get the best current rate.

Tip: You can use CD ladders with 3-month, 6-month, and 9-month CDs as well. Just note that interest rates for short-term CDs usually aren't as high.

You might also consider 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.

You can select the highest yielding CD type for the longest duration (think compound interest here).

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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. If you chose a 2-year CD, make sure that you don't need the money before 2 years. There are penalties for withdrawing early.

    Tip: 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. An emergency fund is 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?
    Generally, CDs are only worthwhile if you are planning to hold them for one year or more (the longer your term, the higher the interest). If you only want to do a 3- or 6-month 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.

Other Options

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If you're not sure if a CD account is for you, consider these alternatives:

  • 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.

    NOTE:You're limited to 6 withdrawals per month without penalty under federal law. But that's still a lot more flexible than a CD.

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

  • A high-yield checking account is great 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 will work if you 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. Here's 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.

Generally, you should have a sound 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. Be sure to also have a savings account where you can continuously deposit (and withdraw) money as needed.

Who has the best CD rates now?

FAQs

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  • What is an APY?
    Let's start with the complicated answer: 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? 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

    Make sure to 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 also "bump-up CDs," which allow you to switch to a higher rate if the bank is offering one. But 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.

    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 will be greater than the interest you've earned.

  • What happens after the CD 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.

    With only a small amount to start with, you may be better off using 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 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.

CDs should be included 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. As always, 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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