Compared to savings accounts and short-term time deposits, 10-year CDs offer more competitive interest rates.

They’re also virtually risk-free. Once your account matures, you’ll earn a specific rate of return.

But a 10-year CD isn’t a good fit for every saver. Before buying one, consider why you should lock up your savings for a decade.

The best 10-year CD rates for January 2020

  • MySavingsDirect: 2.30% APY; $1,000 minimum deposit to open
  • LegacyTexas Bank: 2.26% APY; $1,000 minimum deposit to open
  • Discover Bank: 2.20% APY; $2,500 minimum deposit to open
  • EmigrantDirect.com: 1.50% APY; $1,000 minimum deposit to open
  • Vio Bank: 1.40% APY; $500 minimum deposit to open

Today’s top nationally available 10-year CDs pay 2.30 percent APY. This may be a good place to invest for long-term financial goals, like funding your child’s college education or leaving them money to use post-graduation.

Finding the best 10-year CD rates

Since few banks and credit unions offer 10-year CDs, finding the best rates may be challenging.

Compare offers with deposits backed by the federal government. Look closely at deals from online financial institutions.

Remember, few institutions offer certificates in this term, but you may find a better deal in your own search.

Best 10-year CD details

MySavingsDirect – 2.30% APY; $1,000 minimum deposit to open

MySavingsDirect offers the top nationally available 10-year CD yield. But the yield is just as high as the rate that would apply if you were to purchase a 5-year CD from the bank. That’s something worth considering — whether it’s necessary to lock up funds for an additional five years without any added benefit.

The bank is an online division of Emigrant Bank, a New York-based institution founded by Irish emigrants as a mutual savings bank in 1850.

LegacyTexas Bank – 2.26% APY; $1,000 minimum deposit to open

This Plano, Texas-based bank offers a highly competitive 10-year CD rate. The institution consistently makes the list among those offering competitive long-term rates for conservative savers. A relatively low minimum deposit is needed to open the account.

The bank’s focus is commercial, business and consumer banking as well as mortgages. In 2015, it merged with another North Texas-based financial institution called ViewPoint Bank.

Discover Bank – 2.20% APY; $2,500 minimum deposit to open

Few well-known banks offer 10-year CDs. One exception is Discover Bank, which offers CDs across all standard terms. The bank’s 10-year CD yield is higher than the rates tied to the rest of its accounts. Still, it’s best for savers to proceed with caution before making a long-term investment in a CD.

Discover is an online bank headquartered in Greenwood, Delaware. One of its core values is to help bring financial education to students nationwide. Until August 2000, it was known as the Greenwood Trust Company, which was incorporated in 1911.

EmigrantDirect.com – 1.50% APY; $1,000 minimum deposit to open

EmigrantDirect.com also offers CDs and allows customers to choose their term within the range of 60 to 120 months. And like with MySavingsDirect, the same yield applies for every term within that range. Shorter terms are available ranging from 16 to 59 months.

The bank is another online division of Emigrant Bank, a New York-based bank that has been around for more than 160 years.

Vio Bank – 1.40% APY; $500 minimum deposit to open

Vio Bank is an online-only financial institution serving savers from coast-to-coast. Consumers in the market for a high-yield savings account or CD have access to competitive rates. CD terms range from six months to 10 years.

The bank is a new online division of MidFirst Bank, a financial institution based in Oklahoma City.

Who does a 10-year CD work best for?

How you invest your money depends in part on your risk tolerance. A 10-year CD could be a good fit for someone who’s afraid of taking risks with money and would prefer to have a guaranteed rate of return. Anyone in that camp should ladder CDs, or pair a 10-year CD with short-term certificates of deposit.

As the CDs mature, consider rolling your savings into accounts with better rates. Use a CD ladder calculator to maximize your returns.

When a 10-year CD may be a good idea

By going with a 10-year CD, you can be certain that the money you put into your account will be returned to you with the initial principal amount, plus interest.

The Federal Reserve cut rates three times in 2019. No rate cuts are expected in 2020, but if rates eventually decline again, investing in a 10-year CD could work in your favor.

“If interest rates were going down, then a 10-year CD would be more beneficial because they’re locking into a higher interest rate,” says Danielle Howard, owner of Wealth By Design, a boutique firm in Basalt, Colorado offering financial planning and investment advice.

When a 10-year CD may be a bad idea

In many cases, you can earn more money with a 60-month CD than with one of the best 10-year CD rates. So leaving your funds tied up for five additional years doesn’t make sense.

Inflation is another concern. “If inflation is higher than the interest that you’re earning, you are actually losing buying power as the money sits in there for 10 years,” says Alan Dole, a wealth manager and financial planner with Equity Concepts, an investment and financial services firm in Richmond, Virginia.

Consider the opportunity cost

Don’t purchase a 10-year CD without evaluating other low-risk investment products like high-yield money market accounts. “Where else could you put that money that would earn you more?” Dole asks.

Savers could buy a 10-year CD and close the account before it matures. Just make sure the benefit of an early exit outweighs the cost of the withdrawal penalty.

“Worst case scenario, if I need to get out of this, am I comfortable with either paying that penalty or losing the interest along the way?” Howard asks.

Best 10-year CD rates — January 2020

Institution APY Minimum deposit
MySavingsDirect 2.30% $1,000
LegacyTexas Bank 2.26%  $1,000
Discover Bank 2.20% $2,500
EmigrantDirect.com 1.50% $1,000
Vio Bank 1.40% $500

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