Best 18-month CD rates — February 2020

Wednesday, February 19, 2020

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 widely available 18-month CD rates:

The best 18-month CD rates for February 2020

Note: The APYs (Annual Percentage Yield) shown are as of Feb. 1, 2020. The rates for some products may vary by region.

Today’s top widely available 18-month CDs pay around 2.20 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.

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

Limelight Bank - 2.20% APY; $1,000 minimum deposit

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.

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

Live Oak Bank is an online bank continuing to offer 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 and interest that compounds daily. Established in 2008, Live Oak Bank is a federally-insured financial institution.

Amerant Bank - 2.15% APY; $10,000 minimum deposit

Amerant Bank has 26 banking centers -- 18 in South Florida and eight in Houston. Though this Amerant Bank CD yield here isn't available in Florida and Texas. This CD yield is available online.

Amerant Bank offers some of the highest CD APYs. But the high minimum amount to get that APY is $10,000, which may be a tough requirement for some savers to meet.

Sallie Mae Bank - 2.10% APY; $2,500 minimum deposit

Sallie Mae Bank offers CDs, a savings account, money market account, credit cards and private student loans. Sallie Mae Bank offers competitive yields on both its CDs and its savings deposit accounts.

Sallie Mae Bank was established in 2005 and is headquartered in Salt Lake City, Utah. In 2014, Sallie Mae became a standalone consumer banking business.

Marcus by Goldman Sachs - 2.05% APY; $500 minimum deposit

Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA. Marcus offers a variety of CDs, three no-penalty CD terms and a savings account. Marcus also offers lending options with its debt consolidation loans, home improvement loans and personal loans.

The bank recently launched the Marcus app for mobile banking. It’s available on the App Store for iPhones and is scheduled to be available on Google Play this spring.

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.

Navy Federal Credit Union - 2.05% APY; $1,000 minimum deposit

Navy Federal Credit Union has more than 8.8 million members and is the world’s largest credit union. It has a global network of 340 branches. Navy Federal Credit Union has its headquarters in Vienna, Virginia.

Membership at Navy Federal Credit Union is open to all Department of Defense and Coast Guard active duty, civilian, contract personnel, veterans and their families.

In addition to CDs, Navy Federal Credit Union also offers checking and savings accounts, loans and credit cards.

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

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.

Synchrony Bank – 2.00% 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.

Ally Bank – 2.00% APY, $5,000 minimum deposit

Ally Bank has been around for a little more than 10 years. Ally Bank features low minimum balances and competitive APYs. But its APYs are usually not the absolute highest.

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).

BMO Harris Bank – 2.00% APY, $5,000 minimum deposit

BMO Harris has both a regional presence and it also offers online accounts. The bank operates more than 500 branches in Arizona, Florida, Illinois, Indiana, Kansas, Minnesota, Missouri and Wisconsin. Its headquarters is located in Chicago.

There is only a $1,000 minimum balance required to open a BMO Harris 18-month  CD. However, you’ll want to put at least $5,000 into the CD to earn a much more competitive yield.

American Express National Bank – 1.95% APY, $0 minimum deposit

American Express has been offering personal savings to the general public for more than 10 years. American Express features low minimum balance requirements and competitive APYs on its savings account and CDs. But there are banks that offer higher rates. The savings account doesn’t have a minimum balance requirement or monthly fees. It also lets you link a bank account at another bank to your American Express savings, as long as you have the same ownership on both accounts.

American Express has seven terms of CDs. But the APYs get more competitive starting with the 18-month CD and the other longer-term CDs.

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 National Credit Union Administration (NCUA) credit union. The NCUA manages and operates the National Credit Union Share Insurance Fund (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.

Best 18-month CD rates, February 2020

Bank APY Minimum Deposit
Limelight Bank 2.20% $1,000
Live Oak Bank 2.15% $2,500
Amerant Bank 2.15% $10,000
Sallie Mae Bank 2.10% $2,500
Marcus by Goldman Sachs 2.05% $500
Navy Federal Credit Union 2.05% $1,000

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