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 November 2019
- Discover Bank: 2.30% APY; $2,500 minimum deposit to open
- LegacyTexas Bank: 2.26% APY; $1,000 minimum deposit to open
- MySavingsDirect: 1.65% APY; $1,000 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 him 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
Discover Bank – 2.30% APY; $2,500 minimum deposit to open
An internet-only 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.
LegacyTexas Bank – 2.26% APY; $1,000 minimum deposit to open
Headquartered in Plano, Texas. Its 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.
MySavingsDirect – 1.65% APY; $1,000 minimum deposit to open
An online division of Emigrant Bank, a New York-based institution founded by Irish emigrants as a mutual savings bank in 1850. Customers who purchase MyTerm CDs can choose a term length between 60 and 120 months.
EmigrantDirect.com – 1.50% APY; $1,000 minimum deposit to open
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
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. If rates continue to decline, 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 is 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, November 2019