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Interest rates were just cut for the first time in a decade. That makes figuring out where to park your cash a hard decision.

One product that might be able to provide a higher rate than a savings account with the same kind of safety and guaranteed return is a 5-year CD.

Here are the top nationally available 5-year CD rates. Compare these offers, then calculate how much interest you would earn when your CD matures.

The best 5-year CD rates available from banks and credit unions pay more than 2.5 times the national average of 1.22 percent APY, according to Bankrate’s most recent national survey of banks and thrifts.

Today’s top nationally available 5-year CDs pay 3.15 percent APY (for balances of $25,000 or less). This may be a good place to invest money for long-term financial obligations, like your child’s college tuition.

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., you can rest easy knowing your deposits will be returned. The same goes for credit unions backed by the National Credit Union Administration.

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.

5-year CD FAQs

5-year CDs more versatile than you think

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.

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 five-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.

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 Federal Deposit Insurance Corp. (FDIC). The standard share insurance amount is $250,000 per share owner, per insured credit union, for each ownership category at National Credit Union Association (NCUA) institutions.

5-year CD benefits

A 5-year CD has some of the top long-term savings rates available. But consider inflation when looking at longer-term CDs.

“The current yields are barely ahead of what inflation is likely to be over the next five years,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “So there’s no guarantee of preserving your buying power, much less growing it by tying your money up for that long a period of time at this point.”

As an alternative, McBride says to look at CDs with shorter maturities.

“If you get 12 or 18 months down the road and all of a sudden the five-year is looking more favorable on a relative basis, then maybe that’s the time to jump in,” McBride says. “But it’s not a real compelling offer right now.”

Compare: Best 5-year CD rates for September 2019

Best Overall: US Senate Federal Credit Union – 3.05% APY

The credit union was founded in 1935. Formerly known as the United States Senate Employees Federal Credit Union, it currently serves employees of several government bodies, select employer groups and anyone who donates $8 to the American Consumer Council, Virginia Chapter, or $50 to the U.S. Capitol Historical Society when opening an account. The credit union earned five out of five stars in Bankrate’s review of its financial health.

Best High Rate: Signature Federal Credit Union – 3.00% APY

The credit union was founded in 1970. Membership is open to anyone who joins the American Consumer Council. The credit union, which is based in Alexandria, Virginia, earned four out of five stars in Bankrate’s latest review of its financial health.

Best High Rate: Affinity Plus Federal Credit Union – 3.00% APY

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

Best High Rate: Pennsylvania State Employees Credit Union – 3.00% APY

The credit union was originally founded in 1934 for Pennsylvania state workers struggling to make ends meet. Today, there are more than 450,000 members. The credit union is headquartered in Harrisburg, Pennsylvania and offers membership to anyone who joins the Pennsylvania Recreation and Park Society. In Bankrate’s review of its financial health, the credit union earned four out of five stars.

Recap: Best 5-year CD rates of September 2019

Bank APY Minimum Deposit
Prime Alliance Bank 3.15% $500
CommonWealth One Federal Credit Union 3.11% $1,000
US Senate Federal Credit Union 3.05% $20,000
Signature Federal Credit Union 3.00% $500
Affinity Plus Federal Credit Union 3.00% $500
Pennsylvania State Employees Federal Credit Union 3.00% $500

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