Use this free CD calculator to find out how much interest is earned on a CD.
Certificates of Deposit (CDs) are safe vehicles for investors hoping to avoid taking on too much risk. If you keep your funds locked up in the bank for an entire term (such as three months or one year), you can expect to end up with your initial deposit plus interest.
A 12-month CD won’t pay the highest CD rates in the market. But right now, there isn’t much of a difference between the annual percentage yields (APYs) on many one-year CDs and five-year CDs. The benefit to a short-term CD, such as a one-year CD is when your account comes due, you’ll have an opportunity to see if a higher-yielding option is available.
Calculate how much interest you can earn using Bankrate’s calculator, and use that information to compare offers to see what works best for you.
|Financial Institution||1-Year APY||Minimum Deposit||Learn More|
|Live Oak Bank||1.35%||$2,500|
|Marcus by Goldman Sachs||1.30%||$500|
|First Internet Bank of Indiana||1.24%||$1,000|
Note: The APYs (Annual Percentage Yield) shown are as of May 31, 2020. Bankrate’s editorial team updates this information regularly, typically biweekly. APYs may have changed since they were last updated. The rates for some products may vary by region.
* Review links for some online banks may point to the parent bank's most recent review by Bankrate.
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Bankrate regularly surveys around 70 widely available financial institutions, made up of the biggest banks and credit unions, as well as a number of popular online banks.
To find the best CDs, our editorial team analyzes various factors, such as: annual percentage yield (APY), the minimum needed to earn that APY (or to open the CD) and whether or not it is broadly available. All of the accounts on this page are insured by Federal Deposit Insurance Corp. (FDIC) banks or by the National Credit Union Share Insurance Fund (NCUA) at National Credit Union Administration (NCUA) credit unions.
When selecting the best CD for you, consider the purpose of the money and when you'll need access to these funds to help you avoid early withdrawal penalties.
Live Oak Bank is an online bank that offers competitive yields. Though the minimum deposit may be slightly steep for new savers without much money to lock up, it’s still accessible to others looking for a safe place to park their short-term funds.
In addition to CDs, the bank offers a high-yield savings account with no monthly maintenance fees. Established in 2008, Live Oak Bank is a federally-insured financial institution. Supporting small business owners is part of its mission statement.
Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA. Marcus offers nine terms of CDs, three no-penalty CD terms and a savings account.
The CDs require a $500 minimum to open one, but Marcus’ savings account doesn’t require a minimum deposit.
Citizens Access launched in July 2018. It made its debut with a savings account and CDs. And then in November 2019 it added an 11-month liquid CD and stopped offering the six and 18-month CDs.
The bank offers a competitive yield on its CDs and savings account. All of its products require a $5,000 minimum deposit.
TIAA Bank is a division of TIAA, FSB. TIAA Bank has 10 financial centers, all located in Florida.
TIAA Bank offers a Yield Pledge Checking account, a Yield Pledge Money Market, Yield Pledge CDs and other products. TIAA Bank’s CDs require a $5,000 minimum deposit to open one. TIAA Bank also offers IRA-eligible CDs.
Ally Bank is an online-only bank that has been around for a little more than 10 years. Its CDs have competitive APYs and few require a minimum deposit.
The bank offers several different types of CDs. In addition to its standard CDs, it has a raise your rate CD and a no-penalty CD. The raise your rate CD allows the interest rate to increase once with the two-year CD or twice with the four-year CD if the balance tier increases on your CD.
Ally Bank's early withdrawal penalties are less harsh than those that apply at most other banks. For example, the penalty applying to CDs maturing in five years is 150 days of interest (usually it's equal to at least 180 days of interest).
CIT Bank is CIT’s national direct bank. CIT Bank, N.A. is a subsidiary of CIT Group Inc.
CIT Bank offers eight terms of CDs, four terms of jumbo CDs and an 11-month no-penalty CD.
In addition to its CDs, CIT Bank offers two savings accounts and a money market account -- so it has a variety of savings options for customers.
CIT Bank also launched its eChecking account in November 2019.
Comenity Direct launched in April 2019. It's an online-only bank that is a brand of Comenity Capital Bank.
Comenity Direct offers five terms of CDs. The terms range from one year to five years. Comenity Direct also has a high-yield savings account. Unlike the Comenity Direct CDs, which have a $1,500 minimum requirement, the high-yield savings account only requires $100 to open an account.
Amerant Bank offers some of the highest online CD APYs available. Amerant Bank has 26 banking centers -- 18 in South Florida and eight in Houston.
However, the Amerant Bank CD yield mentioned here isn't available in Florida and Texas. Plus, the high minimum amount to get that APY is $10,000, which may be a tough requirement for some savers to meet.
First Internet Bank of Indiana was the first FDIC-insured financial institution to operate entirely online, according to the bank’s website. First Internet Bank of Indiana opened in 1999 and is available in all 50 states.
First Internet Bank offers eight terms of CDs, a money market savings account with a competitive yield, a savings account and two checking accounts.
Limelight Bank is a division of Capital Community Bank. Limelight Bank calls itself a conscientious bank that actively ties its business to eco-friendly initiatives, according to its website.
Limelight Bank has its headquarters in Provo, Utah.
Limelight Bank only offers CDs on its website and requires a minimum deposit of $1,000 on all four of its CD terms. You’ll have to look elsewhere if you’re looking for a CD with a term of longer than three years. Its CDs range from a six-month term to its 3-year offering.
Traditional CDs typically come with early withdrawal penalties that can significantly reduce your earnings. To avoid forfeiting interest for closing out your account before the term officially ends, consider looking for liquid or no-penalty CDs. A no-penalty CD might be a good option during uncertain times. This applies to both the uncertainty of the economy due to coronavirus and the uncertainty of future rates.
Just keep in mind that the yields associated with no-penalty CDs tend to be lower than the rates tied to traditional CDs.
The following four banks offer no-penalty CDs:
The COVID-19 pandemic is deepening financial hardships for millions of Americans.
While CD rates are not likely to rise in this environment, their stability can offer some comfort to those who still have extra cash on hand. The rate on a CD stays the same during the deposit term and the account holder knows exactly when that term will end. With their locked-in interest rates, CDs are also a great choice to avoid the stock market’s ups and downs.
Having a 1-year CD means that your savings will be tied up for 12 months. Generally, you won’t be able to access your funds during that period of time (unless you don’t mind getting hit with an early withdrawal penalty). In exchange, you’ll earn a higher yield than you would from a standard savings account or money market account.
If you’re not planning to touch your money for a year and believe the benefits of a 1-year CD are more attractive than the yield associated with a liquid savings account, then it’s a good time to consider getting a 1-year CD. And if you’re constantly dipping into your savings, a 1-year CD could help you save more money.
Today’s top nationally widely available 1-year CDs pay 1.35 percent APY. That’s not enough to retire on, but it’s a good vehicle to meet short-term financial obligations (like saving for a down payment on a mortgage) that can let your money grow near the rate of inflation without having to worry about missing out on better deals that arrive after you invest.
Banks and credit unions set their own CD rates based on multiple factors, including inflation, and the rates set by competitors. Changes in treasury yields and Federal Reserve interest rate decisions are taken into account as well.
Some banks have a 10-day best rate guarantee, meaning you could end up with a better rate if the bank raises theirs within days of your decision to open and fund your account. But generally, once you open and fund a fixed-rate CD, you’re stuck with that APY until your term ends. Over time, the bank may raise or lower the advertised rate for new account holders, but your rate will remain the same.
If you do your research, you’ll find that some institutions offer bump-up or step-up CDs that allow rates to change either upon request or at certain intervals during the term. Rates for these CDs, however, tend to be lower than those tied to fixed-rate CDs.
When reviewing CD rates, pay close attention to the annual percentage yield (APY). The APY includes the effects of compounding. Compound interest is the interest you earn on interest.
Calculate how much interest you’ll earn as you compare APYs.
Right now, average CD rates remain at historic lows. However, if you shop around, you can find better deals than what’s offered by the primary bank managing your checking account. Researching rates at several local banks, as well as reputable online banks, will usually yield the best rate.
As long as you choose a 1-year CD with a fixed rate – and keep the funds in the CD for the duration of the term – you won’t lose money. If you withdraw before the term of the CD allows, you may be subject to an early withdrawal penalty.
Also, each depositor at a Federal Deposit Insurance Corp. (FDIC) bank is insured to at least $250,000 per FDIC-insured bank. According to FDIC.gov, no depositor has lost a single cent on FDIC-insured funds as a result of a bank failure. If you’re concerned about your FDIC insurance eligibility, you can use the FDIC’s Electronic Deposit Insurance Estimator.
The standard share insurance amount is $250,000 per share owner, per insured credit union, for each ownership category at National Credit Union Administration (NCUA) institutions.
It’s also important to factor in inflation. If the rate of inflation is higher than your CD yield, your purchasing power goes down.
The Federal Reserve made two emergency rate cuts in March. These decisions, which were caused mainly by the coronavirus and global economic uncertainty, make it unlikely that CD rates will go up in 2020. However, the Fed didn't anticipate changing rates in 2020. So it's impossible to predict the future.
Before you buy a 1-year CD, it’s important to find out how it stacks up against other types of investment vehicles. Read on to find out how 1-year CDs compare to more liquid accounts, like savings accounts and money market accounts.
CDs with terms lasting for one year often pay more interest than traditional savings accounts. Here’s why: You’re rewarded with a higher yield in exchange for agreeing to leave your money tied up for a set period of time.
What’s more, if you keep money locked up in a CD, it’s harder to access those savings. With a liquid savings account, there is usually no consequence for withdrawing funds (unless you make more than six withdrawals or transfers per statement cycle). Since your CD may have an early withdrawal penalty, you’ll probably think twice about raiding your savings.
Another benefit 1-year CDs have over savings accounts is the guaranteed rate that applies for the full term. Savings account rates can change at any time as a result of changes in an interest rate environment or a bank’s priorities. That means over time, your rate of return could decline.
Note that there are downsides to choosing a 1-year CD over a savings account. Because CDs traditionally are not liquid accounts, it’s best to keep your emergency fund in a savings account. That way, you can easily access the funds you need to cover an unexpected expense without paying a penalty. Additionally, just as savings account interest rates can go down, they can also go up. By locking your money up in a CD, you could miss out on an opportunity to earn more interest.
Another option is parking your cash in a money market account. At some banks, the money market account requires a higher minimum deposit and pays more interest than the institution’s savings account.
Compared to money market account rates, however, 1-year CD rates tend to be higher. In many cases, you can qualify for one of the top 12-month CD deals without having to fork over a large amount of cash. At banks with a tiered interest rate structure, you may have to deposit more money to earn the top money market account rate.
Like savings accounts, money market accounts are worth considering if you’re not interested in tying up money for months or years at a time. You can easily withdraw your savings at any time without penalty, and at some banks, you’ll have access to a debit card. Keep in mind that money market accounts are usually limited to a maximum of six convenient transfers or withdrawals per month or per statement cycle because of Regulation D. There may be a fee for exceeding this limit.
While a 5-year CD might have a higher APY, a shorter-term CD can be a better option. CD rates could change significantly in a year and you might not want to miss out on a good deal. Given the current interest rate environment, however, going with a long-term CD like a 4-year or 5-year CD doesn’t make sense for many people.
“The current yields are barely ahead of what inflation is likely to be over the next five years,” McBride says. “So, there’s no guarantee of preserving your buying power, much less growing it by tying your money up for that long a period of time at this point.”
Carefully weigh the pros and cons, and consider using a CD laddering strategy to take advantage of different CD term lengths.
Banks usually offer CDs across multiple terms. Depending on the institution, you may have the option of choosing an account maturing in less than a year. There are also CDs that mature in as many as 10 years.
Carefully consider your financial goals and needs. Weigh your options and make an informed decision about what CD is right for you. You might be perfectly fine with a short-term, 1-year CD. Or you may find that you’re better off opting for an account with a longer term.
Use this free CD calculator to find out how much interest is earned on a CD.
Find out how to maximize returns on your CD with CD laddering.
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