Deciding where to stick your savings is tricky.

Savings accounts and money market accounts are highly liquid but usually offer a low rate of return.

Long-term CDs usually offer better rates. But unless you’re willing to pay a premium for withdrawing your funds early, they’ll be locked in for years.

An 18-month CD offers the best of both worlds: a higher yield than a standard savings account and a low level of commitment.

How does an 18-month CD work?

With a CD, you agree to leave your money in the account for a set period of time — in this case, 18 months. In return for your commitment to leave the money alone, you receive a higher yield from your bank or financial institution.

With an 18-month CD, your interest rate is locked in, so you don’t have to worry about your bank potentially lowering the rate on your account.

An 18-month CD can be ideal for setting aside money for short-term goals, such as going on vacation or saving for a car down payment. You can also use an 18-month CD to build a CD ladder.

Don’t assume that the best 18-month CD rates are found at your current bank. Instead, compare CDs online. Look at some of the lesser-known financial institutions and online-only lenders that hope to attract new deposits with higher yields on CDs.

Here are Bankrate’s picks for the top nationally available 18-month CD rates:

The best 18-month CD rates for January 2020

Today’s top nationally available 18-month CDs pay 2.27 percent APY. This may be a good place to invest money for short-term financial obligations, like saving up for a down payment on a house.

[COMPARE: Best CD rates]

Finding the best 18-month CD rate

Finding the best 18-month CD may take some time. Besides the interest rate, you’ll need to compare early withdrawal penalties and minimum deposit requirements. Also, find out whether you’ll be responsible for any fees.

Here are the top nationally available 18-month CD rates. Compare these offers, then calculate how much interest you would earn when your CD matures.

Bank details: 18-month CD rates

Alabama Credit Union – 2.27% APY; $500 minimum deposit

The credit union is based in Tuscaloosa, Alabama and was founded in 1956 with ties to the University of Alabama. Today, membership is open to local residents, students and employees (including retirees) of certain companies. You can also qualify to join through a group like the Secret Meals Association.

Financial coaching and counseling is available for members in addition to loans, deposit accounts, credit cards and investment services that the credit union provides.

USALLIANCE Financial – 2.25% APY; $500 minimum deposit

The credit union is based in Rye, New York. In addition to regular share certificates and specials there are money market and savings accounts and banking options for kids.

Membership is open to anyone who joins an organization or association like the American Consumer Council or the Rye Arts Center. Investment and insurance products are available in addition to loans and various deposit accounts.

Pen Air Federal Credit Union – 2.20% APY; $500 minimum deposit

Pen Air Federal Credit Union’s 18-month share certificate also ranks as one of the best short-term CDs available to consumers nationwide who meet the qualifications to join. It’s possible to earn a decent amount of interest, especially if you have a lot of savings to sock away.

Founded in 1936, Pen Air Federal Credit Union is the largest and oldest local credit union in Pensacola, Florida with 15 locations in Florida and Alabama. Membership is open to anyone who asks the bank to make a $3 donation on their behalf to the Friends of the Navy-Marine Corps Relief Society.

Live Oak Bank – 2.15% APY, $2,500 minimum deposit

Live Oak Bank is an online bank continuing to offer competitive yields as CD rates stabilize after several rate cuts by the Federal Reserve in 2019. 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 and interest that compounds daily. Established in 2008, Live Oak Bank is a federally-insured financial institution. Supporting small business owners is part of its mission statement. It earned five out of five stars in the latest review of its financial health.

Prime Alliance Bank – 2.10% APY, $500 minimum deposit

Prime Alliance Bank is based in Woods Cross, Utah. In 2004, it was established to support consumers and local business owners.

The bank offers a competitive yield that’s accessible to more savers because of its low minimum deposit. There’s also the option to open a high-yield savings account or money market account.

Dow Chemical Employees’ Credit Union – 2.10% APY, $500 minimum deposit

Members of Dow Chemical Employees’ Credit Union have multiple options if they’re interested in opening a CD. Simple and bump rate CDs are available in addition to youth CDs for children under the age of 18. Account holders with standard CDs can qualify for a member saver reward handed out annually.

As its name suggests, the Dow Chemical Employees’ Credit Union, which was founded in 1937, was originally created by and for employees of the Dow Chemical Company. Membership today is open to anyone who qualifies through a family member, or association with a group like the Midland Center for the Arts.

Nationwide by Axos Bank – 2.10% APY, $500 minimum deposit

Nationwide Bank customers have been transitioned to Axos Bank. CDs are available across every standard term and the minimum deposit is relatively low.

Axos Bank, a federally chartered savings bank, offers a broad range of financial products. This includes checking, savings, money market accounts, CDs, mortgages, and personal loans.

18-month CD yields offered by popular banks – January 2020

Marcus by Goldman Sachs – 2.05% APY, $500 minimum deposit

Marcus by Goldman Sachs offers competitive yields on its savings accounts and CDs. Savings products from Marcus are provided through Goldman Sachs Bank USA. Marcus made its debut in October 2016 with just unsecured personal loans before it began offering a savings account and CDs under the Marcus by Goldman Sachs brand in November 2017.

The online bank has a wide variety of CDs. This includes nine regular term CDs and three no-penalty CDs. Marcus added a no-penalty CD to its lineup in November 2018.

Barclays Bank – 2.00% APY, no minimum deposit

Barclays Bank doesn’t have minimum balance requirements to open its CDs and savings account. That means it’s an option for savers across all income levels. The bank offers nine CD terms. It has competitive yields, but it doesn’t tend to offer the highest available APY. Barclays also offers a savings account, which has a competitive APY.

The bank is headquartered in the U.K. and has a global presence. In the U.S., its products are limited, but the bank overall rates well for its lack of monthly fees and deposit products.

Discover Bank – 2.00% APY, $2,500 minimum deposit

Discover Bank offers a wide selection of banking products. It has been offering deposit products online since 2007.

This includes 12 CD terms, a money market account, a savings account and a checking account. It also features an 11-month no-penalty CD.

Its products tend to offer competitive APYs. But there are higher yields available. So this account offers both a competitive yield and encourages you to keep adding to your savings account.

Synchrony Bank – 1.99% APY, $2,000 minimum deposit

Synchrony Bank offers competitive yields across 12 terms. All standard CD terms typically offered by banks and credit unions are available. The bank also offers a savings account and a money market account. The savings account has a competitive APY and has no minimum balance requirement.

The bank is an online-only financial institution that’s part of a company that also issues credit cards. The bank’s relatively new mobile app makes it possible to transfer funds and check account balances at any time from anywhere.

PurePoint Financial – 1.95% APY, $10,000 minimum deposit

PurePoint Financial is a division of MUFG Union Bank. It offers nine regular CD terms and three terms for its no-penalty CDs. It also offers an online savings account with a competitive yield.

All of PurePoint Financial’s products have one thing in common: they require a $10,000 minimum deposit to open. So these accounts aren’t a good fit if you’re not ready to deposit that much.

Can you lose money in a CD?

For the most part, as long as your money is deposited at an insured institution, you won’t lose money. Double-check that your CD is in an FDIC-insured bank or in a credit union insured by the NCUSIF. These entities insure bank deposits against failure, protecting your money for typically up to $250,000.

Because CDs are cash deposit accounts, your principal, or initial deposit amount, is safe. You don’t have to worry about losing money to market crashes, either. However, your account could lose value due to inflation. Depending on the situation, the yield you earn in a CD might not keep up with inflation, resulting in a loss of spending power.

Also, if you withdraw money out of a CD before it matures, you will likely have to pay a fee, such as a few months’ worth of interest.

If you’re looking to protect your principal, though, your money is safe in a CD.

18-month CD vs. other short-term investments

An 18-month CD is a relatively short-term investment. While your money is locked up for a year and a half, you’ll have access to it — plus interest — when the term expires. When comparing your savings options, it’s important to take into account liquidity as well as yield.

18-month CD vs. 12-month CD

When you get a 12-month CD, you’re likely to see a smaller yield than an 18-month CD. Because a 12-month CD doesn’t lock your money away as long, the yields are often a little lower.

However, with the shorter-term CD, you can access your money six months earlier. So, if you think you want penalty-free access to your money before an 18-month CD matures, it makes sense to take the lower yield in return for slightly better liquidity.

Consider savings accounts with higher yields

You can find high-yield savings accounts that pay rates similar to top-yielding shorter-term CDs, like those with terms of 12-18 months.

However, with a savings account, you have more immediate access to the money, and you typically won’t be penalized for making withdrawals. If you have short-term goals you’re saving for, or if you want a more accessible emergency fund, a savings account can be a smart choice.

Consider money market accounts with high yield

Another possibility, especially if you want check-writing privileges, is a money market account. There are money market accounts with much higher yields than traditional savings accounts, as well as quick, easy access to your money when you need it.

With a top-yielding money market account, you might find a similar yield compared with top-yielding 18-month CDs. However, if you’re looking for penalty-free liquidity and accessibility, a money market account can be a good choice.

When you choose money market or savings accounts, you have to be aware of the fact that your rate could drop at any time. With a CD, you lock in a rate, so you don’t have to worry about falling rates. The flip side, though, is that rates could go up, and if your money is in a CD, you can’t take advantage of the higher rate until after the term expires.

Short vs. long-term CDs

When considering an 18-month CD, compare it to longer-term accounts. There are CDs that will lock up your money for two years or more, but they also pay higher yields.

If you’re willing to avoid touching your money for a longer period of time, you could take advantage of yields that provide you with much better returns than an 18-month CD. In fact, a 5-year CD often has better yields, and your money remains safe.

There are even 10-year CDs, sometimes designed to be held in an IRA, that can provide you with safe yields.

Before making a decision about what type of CD you want, consider your financial needs and situation. Think about when you might need to access the money and weigh it against the yield you receive.

Before taking the plunge

An 18-month CD is a low-risk investment. But before you purchase one, it’s important to know what you’re getting yourself into.

Ask if you’ll have to maintain a certain balance to earn the APY. While you’re at it, find out how often you’ll receive the interest you’re earning from your bank or credit union. That way, it’ll be easier to hit your savings target or another financial goal.

[READ: Best low-risk investments]

Best 18-month CD rates, January 2020

Bank APY Minimum Deposit
Alabama Credit Union 2.27% $500
USALLIANCE Financial 2.25% $500
Pen Air Federal Credit Union 2.20% $500
Live Oak Bank 2.15% $2,500
Prime Alliance Bank 2.10% $500
Dow Chemical Employees’ Credit Union 2.10% $500
Nationwide by Axos Bank 2.10% $500

Learn more about other CD terms:

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