Deciding where to stick your savings is tricky.

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

Long-term CDs 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 in the account, 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 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 October 2019

  • Affinity Plus Federal Credit Union: 2.5% APY; $500 minimum deposit
  • First National Bank of America: 2.45% APY; $1,000 minimum deposit
  • CommunityWide Federal Credit Union: 2.45% APY; $1,000 minimum deposit
  • CIT Bank: 2.40% APY; $1,000 minimum deposit
  • Merrick Bank: 2.40% APY; $25,000 minimum deposit

Today’s top nationally available 18-month CDs pay 2.5 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. 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

Affinity Plus Federal Credit Union: Founded in 1934, Affinity Plus is based in Saint Paul, Minnesota. The credit union earned four out of five stars in Bankrate’s latest review of its financial health. Membership is open to anyone who makes a one-time $25 donation to the Affinity Plus Foundation, which supports financial education across the state.

First National Bank of America: It’s a community bank based in Michigan with three physical branches. The financial institution opened in 1955 as First National Bank of East Lansing. The company transitioned to First National Bank of Michigan in 1978 before ultimately becoming First National Bank of America in 1988.

CommunityWide Federal Credit Union: The credit union was established in 1967 as the West Washington Association Federal Credit Union. Its purpose was to provide services to people of modest means in South Bend, Indiana, where it is currently based. With 11 offices in the Michigan area, the credit union offers its products nationwide.

CIT Bank: CIT Bank is an online bank that offers competitive annual percentage yields (APYs) on its savings accounts, with its Savings Builder in the top tier of APYs. CIT Bank doesn’t offer a checking account, but it does have a money market account – though the money market account doesn’t offer check-writing privileges or a debit or ATM card for ATM access. Read the full review of the bank’s products and offerings.

Merrick Bank: Founded in 1997, the FDIC-insured institution is based in Utah and earned five out of five stars in the latest review of its financial health.

Can you lose money in a CD?

For the most part, as long as your money 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 banks against failure, protecting your money 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 annual percentage yield. 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, October 2019

Bank APY Minimum Deposit
Affinity Plus Federal Credit Union 2.50% $500
First National Bank of America 2.45% $1,000
CommunityWide Federal Credit Union 2.45% $1,000
CIT Bank 2.40% $1,000
Merrick Bank 2.40% $25,000

Learn more about other CD terms