If you’re sick of low interest rates on savings accounts and you won’t need to access your money for a while, it might be time to branch out and explore 2-year CDs.
You can think of CDs as a higher-paying savings account that’s stashed in a safe with a time lock. While you may be able to withdraw the interest before the end of the term, you can’t touch the principal without incurring an early withdrawal penalty.
The higher interest rate comes because banks pay CD account holders a liquidity premium—the additional return an investor expects in exchange for giving up the ability to liquidate their investment quickly—in addition to their normal deposit rate.
Here are the top nationally available 2-year CD rates. Compare these offers, then calculate how much interest you could earn when your CD matures.
| Institution | APY | Minimum deposit |
|---|---|---|
| CD Bank | 3.07% | $10,000 |
| Georgia Banking Company | 3.00% | $500 |
| Partner Colorado Credit Union | 3.00% | $500 |
| USALLIANCE Financial | 3.00% | $500 |
| Greenwood Credit Union | 3.00% | $1,000 |
The best 2-year CD rates pay more than 2.5 times the national average of 1.14 percent APY, according to Bankrate’s most recent national survey of banks and thrifts.
Today’s top nationally available 2-year CDs pay 3.07 percent APY. This may be a good place to invest for mid-term financial obligations, like paying off credit card debt.
Finding the best 2-year CD rates
When looking for a 2-year CD, it might be easier to just sign up with the bank that handles your checking account. But if you want to get the best rate, you’re more likely to do so if you cast a wide net than to just accept what your current bank offers.
“Brick and mortar banks have a lot of overhead to cover, plus they have a lot of competition from online banks,” says Sheryl Garrett, CFP professional and founder of the Garrett Planning Network. “Don’t just settle for the first CD rate that’s offered by ‘your bank.’ Focus on the fact that it’s ‘your money!’
No matter the size of the bank that’s offering the best terms, as long as it’s a member of the Federal Deposit Insurance Corp., or FDIC, you can feel secure parking your money there. That’s because consumer deposits at all FDIC-insured banks are backed by the full faith and credit of the U.S. government up to $250,000, so if the bank fails, you won’t be on the hook. The same goes for credit unions backed by the National Credit Union Administration.
Top account details
1. CD Bank, $10,000 minimum deposit
Details: CD Bank is the online division of TBK Bank. Its 24-month CD currently pays the highest rate available to savers across the country.
It parent company earned four out of five stars in Bankrate’s latest review of its financial health. Founded in 1981, TBK Bank is based in Dallas.
2. Georgia Banking Company, $500 minimum deposit
Details: Georgia Banking Company is based in Atlanta. Its 2-year CD pays 3 percent APY.
In addition to banking products, the institution offers loans, wealth management services and insurance products and services. In Bankrate’s latest review of its financial health, it earned three out of five stars.
3. Partner Colorado Credit Union, $500 minimum deposit
Details: Partner Colorado Credit Union was founded in 1931 and is based in Arvada, Colorado. Anyone making a $5 donation to Partner Colorado Foundation when opening an account can become a member.
The credit union received four out of five stars in Bankrate’s latest review of its financial health.
4. USALLIANCE Financial, $500 minimum deposit
Details: USALLIANCE Financial is a credit union based in Rye, New York. It has branches in several states and more than 100,000 members around the world.
Membership is open to anyone who joins an organization like the American Consumer Council, Unite Here or the Rye Arts Center. The credit union earned four out of five stars in Bankrate’s latest review of its financial health.
5. Greenwood Credit Union, $1,000 minimum deposit
Details: Greenwood Credit Union was founded in 1948. Membership is open to anyone who opens a Share Account and deposits at least $5.
The credit union, which is based in Warwick, Rhode Island, earned four out of five stars in Bankrate’s latest review of its financial health.
A rung in the ladder
In addition to helping you meet your mid-term financial goals, two-year CDs can be used as a “rung” when you’re building a CD ladder.
Done correctly, laddering allows you to benefit from high rates on longer maturities while still getting regular infusions of cash to spend or reinvest.
