Savers across the country should look to online banks for the best rates on short-term CDs.
TIAA Direct recently raised its 2-year CD rate by 11 basis points to 1.81 percent APY. A basis point is one-hundredth of a percentage point.
That’s the best 24-month CD deal available nationally, tying an offer from First Internet Bank of Indiana.
|First Internet Bank of Indiana||1.81%||$1,000|
|Live Oak Bank||1.70%||$2,500|
|Connexus Credit Union||1.70%||$5,000|
Who should buy this CD
TIAA Direct’s 2-year CD promotion could be great for new savers without much money to invest. The minimum opening deposit is just $1,000.
Everbank — which TIAA recently acquired — also has a 2-year CD that pays 1.81 percent APY. But you’ll need at least $5,000 to qualify.
If you’re trying to meet a short-term goal — like saving up for a family vacation — a 2-year CD could be worth buying. If you need something more liquid, consider a high-yield savings or money market account.
How to buy TIAA Direct CDs
You can purchase a TIAA Direct CD over the phone or by completing an online application. Account holders must:
- Be at least 18 years old
- Be a U.S. citizen or resident alien
- Have a Social Security number
- Have a mailing address in the District of Columbia or within the 50 U.S. states
There are multiple ways to fund your CD once you buy it. You can mail a check or money order or transfer savings from an external bank account.
Wiring funds from an outside account is also an option. While TIAA Direct won’t charge you, your other bank might.
The fine print
A penalty applies if you tap into your CD before it matures. For a 2-year CD at TIAA Direct, it’s 180 days of interest on the amount withdrawn.
Luckily, that rule only applies to your principal.
Interest compounds daily at TIAA Direct, and you can collect it at any time once it hits your account. But the bank’s website warns that there’s a catch based on the way compound interest works: “Withdrawals reduce what you earn on your CD, because the APY (annual percentage yield) you receive assumes that both principal and interest remain on deposit until your CD matures.”
Calculate how much interest you could earn by the end of your term.
About TIAA Direct
TIAA Direct is a division of TIAA, FSB, a company providing banking and lending products and services. It’s a member of the Federal Deposit Insurance Corp.
Headquartered in St. Louis, the TIAA-CREF Trust Company 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.