Interest rates are on the rise from their rock-bottom lows following the last recession, but they’re nowhere near great.

That makes figuring out where to park your cash a hard decision.

One product that might be able to provide a higher rate than a savings account with the same kind of safety and guaranteed return is a 5-year CD.

The best 5-year CD rates available from banks and credit unions pay more than two times the national average of 0.99 percent APY, according to Bankrate’s most recent national survey of banks and thrifts.

Today’s top nationally available 5-year CDs pay 2.6 percent APY. This may be a good place to invest money for long-term financial obligations, like your child’s college tuition.

Savers looking for the best CD rates probably want to venture online. Even if a bank is relatively small or not well-known, as long as it’s a member of the Federal Deposit Insurance Corp., you can rest easy knowing your deposits will be returned. The same goes for credit unions backed by the National Credit Union Administration.

One thing to look for, though: ease of use. Banks that make it difficult or time-consuming to deposit and withdraw funds may waste so much of your time that it outweighs the benefit of a few extra basis points of interest on your savings.

Finding the best 5-year CD rates

Here are the top nationally available 5-year CD rates. Compare these offers, then calculate how much interest you would earn when your CD matures.

Best 5-year CD rates
Institution APY Minimum deposit
Mountain America Credit Union 2.60% $500
Utah First Federal Credit Union 2.55% $500
Garden Savings Federal Credit Union 2.53% $500
Latino Community Credit Union 2.45% $500
Langley Federal Credit Union 2.43% $1,000

Top account details

  • Membership in Mountain America Credit Union is open to anyone who joins an association such as the American Consumer Council. The credit union, based in West Jordan, Utah was founded in the 1930s as the Salt Lake Telephone Employees Credit Union. It earned four out of five stars on Bankrate’s latest Safe & Sound Ratings, which measures the financial health of banks and credit unions throughout the United States.
  • Utah First Federal Credit Union is based in Salt Lake City. Membership is open to anyone who joins the Community Volunteers of Utah. The credit union earned four out of five stars from Safe & Sound.
  • Langley Federal Credit Union was founded in 1936 as the National Advisory Committee for Aeronautics (NACA) Laboratory Federal Credit Union. Membership is open to anyone who joins one of seven different organizations, including the Virginia Association of Museums. The credit union, which is based in Newport News, Virginia, earned four out of five stars from Safe & Sound.
  • Garden Savings Federal Credit Union is based in Parsippany, New Jersey. Founded in 1968 as a financial institution for AT&T Bell Laboratories employees, it now offers membership to anyone who joins the American Consumer Council. The credit union earned four out of five stars from Safe & Sound.
  • Latino Community Credit Union was established in 2000 and is based in Durham, North Carolina. Membership is open to anyone who joins the Latino Community Development Center. The credit union earned four out of five stars from Safe & Sound.

5-year CDs more versatile than you think

With a 5-year CD, savers earn a premium in addition to the normal risk-free rate they get on a conventional savings account. The catch, of course, is that you’ll pay a penalty if you try to withdraw your money.

But assuming you can find a CD with a low penalty of just a few months’ interest, higher interest rates offered on 5-year CDs may make them a good pick over shorter maturities, even if you think you might need to cash in the CD early.

 

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