Best 5-year CD rates — April 2020

Thursday, April 09, 2020

A certificate of deposit, or CD, is an account that allows you to stash away some cash and earn fixed interest on it for a set period of time.

A 5-year CD can get you one of the highest savings rates while offering safety and a guaranteed return. In exchange for handing over your money for a longer term, banks are usually willing to offer you a higher interest rate. However, with the uncertainty over the future direction of interest rates, it makes figuring out where to park your cash a hard decision. The Federal Reserve isn't planning to cut rates again in the near future, but that could change.

Although average 5-year CD rates are hovering around 0.71 percent, we’ve shopped around to find some of the top nationally available CDs for you. Compare these offers, then calculate how much interest you would earn when your CD matures.

Summary of Best 5-year CD rates for April 2020

Financial Institution APY - 5 year Minimum Deposit for APY Bank Review
Delta Community Credit Union 2.00% $1,000
Marcus by Goldman Sachs 1.90% $500
Barclays Bank 1.85% $0
SchoolsFirst Federal Credit Union 1.85% $20,000
Randolph-Brooks Federal Credit Union 1.82% $1,000
Golden 1 Credit Union 1.80% $1,000
Comenity Direct 1.80% $1,500
Discover Bank 1.80% $2,500
American Express National Bank 1.70% $0

Note: The APYs (Annual Percentage Yield) shown are as of April 2, 2020. Bankrate’s editorial team updates this information regularly, typically biweekly. APYs may have changed since they were last updated. The rates for some products may vary by region. (*Review links for some online banks may point to the parent bank's most recent review by Bankrate.)

Finding the best 5-year CD rates

Savers looking for the best CD rates probably want to venture online. Even if a bank is relatively small or not well-known, as long as it's a member of the Federal Deposit Insurance Corp. (FDIC), you can rest easy knowing each depositor is protected up to at least $250,000 per insured bank. At a National Credit Union Administration (NCUA) credit union, the standard share insurance amount is up to $250,000 per share owner, per insured credit union, for each ownership category.

One thing to look for, though: ease of use. Banks that make it difficult or time-consuming to deposit and withdraw funds may waste so much of your time that it outweighs the benefit of a few extra basis points of interest on your savings.

Bankrate's best 5-year CD rates April 2020

  • Best Overall Rate: Delta Community Credit Union - 2.00% APY, $1,000 minimum deposit
  • High Rate: Marcus by Goldman Sachs - 1.90% APY, $500 minimum deposit
  • High Rate: Barclays Bank - 1.85% APY, $0 minimum deposit
  • High Rate: SchoolsFirst Federal Credit Union - 1.85% APY, $20,000 minimum deposit
  • High Rate: Randolph-Brooks Federal Credit Union - 1.82% APY, $1,000 minimum deposit
  • High Rate: Golden 1 Credit Union - 1.80% APY, $1,000 minimum deposit
  • High Rate: Comenity Direct - 1.80% APY, $1,500 minimum deposit
  • High Rate: Discover Bank - 1.80% APY, $2,500 minimum deposit
  • High Rate: American Express National Bank - 1.70% APY, $0 minimum deposit

Compare: Best 5-year CD rates for April 2020

Best Overall Rate: Delta Community Credit Union – 2.00% APY, $1,000 minimum deposit

Delta Community Credit Union began as the Delta Employees Credit Union in 1940. It was started by eight Delta Air Lines employees. Delta Community Credit Union has more than 400,000 members and has 26 branches in metro Atlanta and three branches outside of Georgia.

Anyone living or working in metro Atlanta and employees of more than 150 businesses are welcome at Delta Community Credit Union. Delta Air Lines, Chick-fil-A and UPS are some of the eligible businesses.

High Rate: Marcus by Goldman Sachs – 1.90% 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 by Goldman Sachs now has an app available on iOS and one coming to Google Play this spring, according to Marcus’ website.

High Rate: Barclays Bank – 1.85% APY, $0 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 of all levels.

The bank offers nine CD terms. Barclays also offers a savings account, which has a competitive APY.

Banks tend to have a 10-day grace period when your CD matures. But at Barclays, you have a 14-day grace period to withdraw your money without being penalized.

High Rate: SchoolsFirst Federal Credit Union – 1.85% APY, $20,000 minimum deposit

SchoolsFirst Federal Credit Union was formed during the Great Depression in 1934. The credit union, created by school employees, has 50 branches.

SchoolsFirst Federal Credit Union has low minimum balances and CD terms from as short as 30 days to as long as five years. The more money you put in your CD, the higher the APY.

High Rate: Randolph-Brooks Federal Credit Union – 1.82% APY, $1,000 minimum deposit

Randolph-Brooks Federal Credit Union has more than 55 branches. It has at least one location in Austin, Corpus Christi and San Antonio.

Randolph-Brooks Federal Credit Union was established in 1952 and has its headquarters in Live Oak, Texas. Besides its CDs, it offers a Really Free Checking account that doesn’t require a minimum balance and it doesn’t have a monthly fee.

High Rate: Golden 1 Credit Union – 1.80% APY, $1,000 minimum deposit

Golden 1 Credit Union is a large credit union with one million members. Its main office is in Sacramento, California and it has been around since 1933. Golden 1 Credit Union has 72 branches in California. Membership to Golden 1 Credit Union is open to all Californians.

Non-Californians can join Golden 1 Credit Union if they are a registered domestic partner or family member of a member. They can also join if they’re a member of one of the select employee groups.

The credit union changed its name to Golden 1 Credit Union in 1977. It was founded in 1933 as California State Employees’ Credit Union #1.

High Rate: Comenity Direct – 1.80% APY, $1,500 minimum deposit

Comenity Direct launched in April 2019. It's an online-only bank that offers high-yield savings products and CDs. Comenity Direct offers five terms of CDs.

Comenity Direct is a brand of Comenity Capital Bank. Comenity Capital Bank is a brand that’s existed for around 30 years. Comenity is a bank behind many branded credit cards.

High Rate: Discover Bank – 1.80% APY, $2,500 minimum deposit

Discover Bank may be known for its credit cards. But it also offers a wide selection of banking products. It has been offering deposit products online since 2007.

Discover Bank offers CDs ranging in terms as short as three months to 10 years. It also offers a checking account, money market account and a savings account.

High Rate: American Express National Bank – 1.70% APY, $0 minimum deposit

American Express is known for its credit cards, but it also has been offering personal savings to the general public for more than 10 years. American Express National Bank offers seven terms of CDs and a savings account.

It features low minimum balance requirements and competitive APYs on its longer-term CDs.

5-year CD yields offered by popular banks – April 2020

  • CIT Bank - 1.70% APY, $1,000 minimum deposit
  • TIAA Bank - 1.70% APY, $5,000 minimum deposit
  • Synchrony Bank - 1.65% APY, $2,000 minimum deposit
  • Citizens Access - 1.65% APY, $5,000 minimum deposit
  • Ally Bank - 1.60% APY, $0 minimum deposit

High Rate: CIT Bank – 1.70% APY, $1,000 minimum deposit

CIT Bank is CIT’s national direct bank. CIT Bank, N.A. is a subsidiary of CIT Group Inc.

CIT Bank offers eight terms of CDs, four terms of jumbo CDs and an 11-month no-penalty CD.

In addition to its CDs, CIT Bank offers two savings accounts and a money market account -- so it has a variety of savings options for customers.

CIT Bank also launched its eChecking account in November 2019.

High Rate: TIAA Bank – 1.70% APY, $5,000 minimum deposit

TIAA Bank is a division of TIAA, FSB. TIAA Bank had 10 financial centers, all located in Florida.

TIAA Bank offers a Yield Pledge Checking account, a Yield Pledge Money Market, Yield Pledge CDs and other products. TIAA Bank’s CDs require a $5,000 minimum to open one. TIAA Bank does offer IRA-eligible CDs.

High Rate: Synchrony Bank – 1.65% APY, $2,000 minimum deposit

Synchrony Bank has many CD terms to choose from. It offers 12 CD terms with competitive yields.

In addition to CDs, Synchrony Bank also offers a savings account and a money market account.

High Rate: Citizens Access – 1.65% APY, $5,000 minimum deposit

Citizens Access launched in July 2018. It made its debut with a savings account and CDs. And then in November 2019 it added an 11-month liquid CD and stopped offering the six and 18-month CDs.

The bank offers a competitive yield on its CDs and savings account. All of its products require a $5,000 minimum deposit.

High Rate: Ally Bank – 1.60% APY, $0 minimum deposit

Ally Bank is an online-only bank that has been around for a little more than 10 years. Its CDs have competitive APYs and few require a minimum deposit to get the highest APY.

The bank offers a variety of different types of CDs. In addition to its standard CDs, it has a Raise Your Rate CD and a no-penalty CD. The Raise Your Rate CD allows the interest rate to increase once with the two-year CD or twice with the four-year CD if the balance tier increases on your CD.

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).

What to consider when choosing a CD

Looking at the following things will help you choose the right CD for you:

  • Early withdrawal penalties: Know what the penalty will be if you were to need your money before the CD matures.
  • Minimum required deposit: Some CDs might require a certain amount of money to open the account.
  • Annual percentage yield (APY): This will tell you the amount of interest you’re going to earn if you keep your money in the CD for the term. Compare APYs, instead of rates, to make an apples-to-apples comparison of CDs.
  • Term: Determine when you’ll likely need to access your money and choose a CD with a term shorter than this.
  • Insurance: Make sure the CD is through an FDIC-insured bank or at an NCUA credit union.

Pros and cons of 5-year CDs

Before getting a 5-year CD, consider the pros and cons to see if it's the right fit for you.

Pros:

  • Limited liquidity. This can be a benefit to those who might be tempted to spend their savings. Keeping money that shouldn’t be touched out of easy reach in a CD can help some keep their savings intact. Just make sure this is money that you don’t expect to need for at least five years. It’s also important to understand the early withdrawal penalty that you’d incur if you did end up needing that money sooner.
  • Safety. CDs from FDIC-insured banks and credit unions are backed by the full faith and credit of the U.S. government up to $250,000.
  • High returns. Banks generally provide a higher APY than you could find in a traditional savings account or a CD with a shorter maturity.
  • Wide selection. You can choose from thousands of banks and credit unions to find a CD with the interest rate, maturity date , minimum deposit amount and terms that fit your needs.
  • Fixed, predictable returns. Once you put your money in a CD, you're guaranteed a set return at a specified date — which can help you plan your financial goals.

Cons:

  • Limited liquidity. Although a pro for some savers, this is a drawback for those who need to access their funds before the CD's term is up. You'll typically have to pay a penalty for making early withdrawals. You’ll want to look at a shorter-term CD or a savings account if you think it’s likely you’ll need this money in less than five years.
  • Inflation risk. The money in your CD may lose its purchasing power over time, if inflation overtakes your interest gains.
  • Low relative returns. There are other investment options to consider where you could earn a higher return on your investment. But many times these investments could involve a risk of principal. As long as you leave your money in the CD for the full five years -- and you’re within FDIC guidelines if it’s at an FDIC-insured bank -- then a CD with a fixed APY will earn that yield.
  • Reinvestment risk. When you park your money in a 5-year CD, it's a long wait before you can tap those funds. If interest rates rise in the meantime, you'll miss out on investing in a higher-rate CD.

Alternatives to 5-year CDs

  • CDs with a shorter maturity: These allow you to earn interest and potentially take advantage of rising rates once they mature. Check out 1-year and 18-month CDs if you don't want to lock away your money for five years.
  • Savings accounts: These offer total liquidity, so you can get your hands on your money as soon as you need it and pay no penalties. These usually have lower APYs and these APYs are usually variable.
  • Money market accounts: These accounts allow you to access your money (with no penalties) while still providing a higher return than most savings accounts. To open a money market account, many institutions require a relatively high minimum balance—but that can also mean getting a higher interest rate. Some of these accounts may have an early closeout fee if you close the account within 90 to 180 days.
  • Bonds: If you’re interested in taking a bigger risk, you may consider investing in bonds. There are many types available, including municipal, corporate and agency bonds.

5-year CD FAQs

Who should open a 5-year CD?

The Fed cut interest rates three times in 2019. CD rates. In 2020, CD APYs are expected to stabilize, but could soon rise slightly. Long-term investment vehicles like 5-year CDs technically offer a higher yield than their shorter-term counterparts. But due to the flat yield curve, you won't be earning much extra interest by opting for a long-term CD over a mid-term account.

A 5-year CD is best for retirees and savers who don't need access to a portion of their funds for half a decade. It all depends on your time horizon and financial goals. A 5-year CD could also be a good addition to a CD ladder for savers who want to take advantage of the opportunity to earn a higher yield but still want liquidity and access to cash at set intervals.

Why should I get a 5-year CD?

You should get a 5-year CD if you want some of the best CD yields available. Usually, the longer the time horizon, the higher the APY is on a CD. If you’re satisfied with the APY on the 5-year CD and like to know that you have a certain amount of money at a fixed rate for the next five years, a 5-year CD may be a good option for you.

A 5-year CD could also be a part of a CD ladder, which contains shorter-term CDs. For instance, a 1-year, 2-year, 3-year, 4-year and a 5-year CD could be a part of a ladder that staggers maturities and APYs.

Is a 5-year CD versatile?

With a 5-year CD, savers earn a premium in addition to the normal risk-free rate they get on a conventional savings account. The catch, of course, is that you'll pay a penalty if you try to withdraw your money.

But assuming you can find a CD with a low penalty of just a few months' interest, higher interest rates offered on 5-year CDs may make them a good pick over shorter maturities, even if you think you might need to cash in the CD early.

Is a 5-year CD worth it?

There are two factors that determine whether a 5-year CD makes sense for you: your time horizon for this money and whether you’re getting a competitive annual percentage yield (APY).

The length of time is important because you want to make sure that you don’t incur an early withdrawal penalty. You also want to be aware of inflation and try to have a CD that is earning a yield that can keep up.

Can a 5-year CD lose value?

A 5-year CD could lose value if you incur an early-withdrawal penalty. That fee could eat into your principal amount. But if you keep the 5-year CD for the full term, you will earn the stated interest – assuming the product you’re in is a fixed-rate CD.

Each depositor is insured to at least $250,000 per FDIC-insured bank by the FDIC. The standard share insurance amount is $250,000 per share owner, per insured credit union, for each ownership category at NCUA institutions.

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