How to get the best CD rates

Calculator and pen on chart
  • Compare CD rates online, and check out local banks for special deals.
  • Don't assume that a longer maturity pays more than a shorter one.
  • Pay attention to notices that your bank sends when your CD matures.

In these troubled times, it's comforting to park cash in a CD that is insured by the Federal Deposit Insurance Corp. At least no bank shakeup or roiling stock market is likely to leave you facing a loss. Getting a good CD rate, though, can be challenging in this environment.

The ground rules are simple: When you buy a certificate of deposit, you pay a fixed amount for a defined period of time -- 30 days, six months, 12 months, five years or more. The bank pays interest at regular intervals. When you redeem your CD, you get the amount you initially invested, plus accrued interest. If you redeem your CD before its maturity date, you'll probably have to pay a penalty and forfeit some of the interest you earned.

CDs are safe investments, but it's still smart to read the fine print as you seek out the best return. Consider these factors when you are looking for a good deal and a good rate of return.

Compare CD rates. The best place to start, of course, is right here at, where you can quickly compare CD rates available nationally and locally in various denominations. But don't stop your search there. Check rates at your own bank and other banks in your neighborhood. They could be offering special deals that you won't find online.

Do due diligence. Banks price CDs based partly on their own cash-flow issues, says Daniel Penrod, senior industry analyst for the California Credit Union League. Sometimes that means that you'll get a higher rate of return on a shorter maturity date than you'll get if you buy a CD that you have to hold for a longer period of time. The only way to spot these discrepancies is to be diligent in your comparisons. Don't just assume that the longer maturity pays more than a shorter maturity.


Look for quirky deals. Financial institutions want your money and that makes them willing to pay extra or, occasionally, throw in some other spiff to get you in the door. Especially in bank-congested areas, you may spot some oddball offers, such as a 13-month CD that pays significantly better than a 12-month CD. That could be because 13 sounded catchier to the marketing department, says Joel Hornstein, chief investment officer for Structural Wealth Management, which specializes in investing institutional money in CDs.

Do the math. If letting the bank keep your money an extra month or getting it back a month or two early works for you, then go for it. Use the Bankrate's calculator to figure out the difference in earnings. For instance, a regional bank in the Detroit area recently offered 1.75 percent on an 11-month CD, but was only paying 0.4 percent on a 12-month CD with a $1,000 minimum investment. With monthly compounding, the 12-month CD paid $4.01 at maturity, while the 11-month CD paid $16.16. Neither return is going to make you wealthy, but who would turn down an extra $12.15?

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