Best 6-month CD rates - July 2020 | Bankrate

Best 6-month CD rates — July 2020

Friday, July 10, 2020

Anytime you deposit into a CD, you promise to leave the money there for a set period of time. When you get a 6-month CD, the money remains in the deposit account for six months. Because you’re willing to lock the money away, a bank might be willing to pay you a higher yield on the money.

If you want to know how much interest you could earn on a 6-month CD, try Bankrate’s calculator, which is designed to help you estimate potential earnings. Six months may not be a long time, but it can be useful when it comes to staying on track with your savings goals or setting up an emergency savings ladder.

Summary of Best 6-Month CD Rates July 2020

Bank APY Minimum deposit for APY
SchoolsFirst Federal Credit Union 1.01% $20,000
EmigrantDirect 1.00% $1,000
MySavingsDirect 1.00% $1,000
Limelight Bank 0.95% $1,000
Sallie Mae 0.90% $2,500
First Internet Bank of Indiana 0.81% $1,000
Live Oak Bank 0.70% $2,500

Note: The APYs (Annual Percentage Yield) shown are as of June 30, 2020. The rates for some products may vary by region.

Above are the top widely available 6-month CD rates. Compare these offers, then calculate how much interest you would earn when your CD matures.

Savers looking to get a little extra boost and lock in a yield for a set period of time often look into certificates of deposit (CDs). A CD can help you work toward your savings goals, whether they’re long-term or short-term.

CD yields tend to follow the path of Treasurys and may be impacted by the Federal Reserve’s actions. However, once you lock in a yield, you can expect it to be consistent for the entire term of the CD — even if rates fall.

Here’s what you need to know about using a 6-month CD to your advantage.

Bankrate's guide to choosing the right cd rate

Why you can trust Bankrate

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Methodology for Bankrate's Best CD Rates

At Bankrate, we strive to help you make smarter financial decisions. We follow strict guidelines to ensure that our editorial content is unbiased and not influenced by advertisers. Our editorial team receives no direct compensation from advertisers and our content is thoroughly fact-checked to ensure accuracy.

Bankrate regularly surveys around 70 widely available financial institutions, made up of the biggest banks and credit unions, as well as a number of popular online banks.

To find the best CDs, our editorial team analyzes various factors, such as: annual percentage yield (APY), the minimum needed to earn that APY (or to open the CD) and whether or not it is broadly available. All of the accounts on this page are insured by Federal Deposit Insurance Corp. (FDIC) banks or by the National Credit Union Share Insurance Fund (NCUA) at National Credit Union Administration (NCUA) credit unions.

When selecting the best CD for you, consider the purpose of the money and when you'll need access to these funds to help you avoid early withdrawal penalties.

Top banks offering 6-month CD rates for July 2020

SchoolsFirst Federal Credit Union: 1.01% APY, $20,000 minimum deposit for APY

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. CDs at this credit union have four balance tiers: $500, $20,000, $50,000 or $100,000.

EmigrantDirect: 1.00% APY, $1,000 minimum deposit

EmigrantDirect is a division of Emigrant Bank.

In addition to its six-month CD, EmigrantDirect has CDs with terms ranging from 16 months to 10 years. All of these CDs require a $1,000 minimum deposit.

On the savings side, EmigrantDirect has its American Dream Savings Account.

MySavingsDirect: 1.00% APY, $1,000 minimum deposit

Besides a six-month CD, MySavingsDirect also offers a 30-month CD and CDs with terms ranging from five years to 10 years.

The CDs have a $1,000 minimum, but the MySavings Account doesn’t have a minimum balance requirement or fees.

Limelight Bank: 0.95% APY, $1,000 minimum deposit

Limelight Bank is a division of Capital Community Bank. It 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.

Sallie Mae Bank: 0.90% 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 has its headquarters in Salt Lake City, Utah. In 2014, Sallie Mae became a standalone consumer banking business.

First Internet Bank of Indiana: 0.81% APY, $1,000 minimum deposit

First Internet Bank of Indiana was the first FDIC-insured financial institution to operate entirely online, according to the bank’s website. First Internet Bank of Indiana opened in 1999.It doesn’t have any branches and is available in all 50 states.

First Internet Bank offers eight terms of CDs, a money market savings account with a competitive yield, a savings account and two checking accounts.

Live Oak Bank: 0.70% APY, $2,500 minimum deposit

Live Oak Bank was established in 2008 and its headquarters is located in Wilmington, North Carolina. It offers seven terms of CDs.

In addition to CDs, the bank offers a high-yield savings account with no monthly maintenance fees and interest that compounds daily.

Coronavirus and Your Money

The COVID-19 pandemic is deepening financial hardships for millions of Americans.

While CD rates are not likely to rise in this environment, their stability can offer some comfort to those who still have extra cash on hand. The rate on a CD stays the same during the deposit term and the account holder knows exactly when that term will end. With their locked-in interest rates, CDs are also a great choice to avoid the stock market’s ups and downs.

Finding the best 6-month CD rates

To find the best 6-month CD rates, savers need to answer two questions:

  • How much yield can I reasonably expect to earn?
  • What direction are interest rates headed?

Rates are stabilizing. If you're looking for a short-term CD, it's best to shop around for the best CD rates.

The lower the CD term length, the less interest you can expect to earn. To find the best 6-month CD rates, evaluate offers from online banks and credit unions. Try to avoid accounts with high fees and minimum deposit requirements.

6-month CD FAQs

Who should open a 6-month CD?

Six months is one of the shortest terms available for savers interested in CDs. It's a product that's best for consumers with specific short-term goals who are looking for a temporary place to keep money that will be used soon for a specific purpose, like funds for an upcoming wedding, vacation or home down payment. A six-month CD could also be a place to keep cash that you're hoping to put into a riskier investment vehicle.

The longer the term of your CD, the higher the yield you'll likely have at your disposal. That means 6-month CD yields are typically relatively low. Consider whether it makes more sense to keep your money in a more liquid account, like a savings or money market account. That way, you won't run the risk of losing interest if you need the money you stashed away before the six month time clock runs out.

Comparing 6-month CDs vs. other savings vehicles

When considering a 6-month CD, it’s a good idea to compare it to other available accounts and understand when it might be the right choice for you — and when other options might turn out to be a better decision.

6-month CD vs. savings account

Because you’re willing to keep your money in a CD for a set period of time, you usually end up with a higher rate with a CD than a savings account. In fact, you might have a rate that is up to 10 basis points higher on a 6-month CD than on a savings account.

However, savings accounts are easier to access as needed. With a savings account, you won’t face the early withdrawal penalty that comes with tapping your 6-month CD before it matures.

6-month CD vs. money market account

There’s a good chance you’ll get a better yield on a 6-month CD than on a money market account. So, if you’re looking for a better yield in a safe account, it can make sense to use a CD instead of a money market account.

On the other hand, a money market account is much more accessible than a 6-month CD. You might even be able to use a debit card to access the funds in the money market account — something you can’t do with a CD.

6-month CD vs. 1-year CD vs. 5-year CD

Better yields are generally available on CDs with longer maturities. So, if you’re willing to lock up your money for a year — or even up to five years — you could receive a better rate.

However, the advantage of a 6-month CD is that you know you’ll be able to access the money in a shorter time frame. Because a CD typically comes with an early withdrawal penalty, you have to be willing to keep your money in the CD until the end of the term or lose out on some of the interest earnings.

How to make the most of a 6-month CD

A 6-month CD works well with short-term savings goals. If you want to set money aside for a specific purpose, but you’re worried that you’ll be tempted to tap into the funds, a 6-month CD can help make the money harder to get to. You can keep the money safe in an FDIC-insured (or NCUA-insured) account until it’s needed.

You can also make use of a 6-month CD in an emergency fund ladder. By setting up a CD ladder that includes shorter-term CDs, it’s possible to take advantage of slightly higher yields while knowing that a portion of your money will be available for unexpected expenses in the near future.

Maximize the power of compound interest

Anyone struggling to save money could benefit from having a 6-month CD. Because you could face an early withdrawal penalty, you may be less tempted to tap into your savings prematurely.

Annual percentage yield, or APY, includes the effect of compounding.  It’s the interest earned on your initial deposit in addition to the interest earned on top of other interest earnings.

Things to keep in mind with a 6-month CD

Before you get a 6-month CD, it’s important to understand the potential drawbacks. The early withdrawal penalty is probably the biggest issue. If you access your funds before the six months is up, you’ll pay a penalty.

Plus, the yield often isn’t much higher on a 6-month CD than you’d see with a traditional savings account. You can shop around for the highest rates, but you might need to meet deposit minimums in order to take advantage of the best yields.

Carefully consider your options before you move forward with a 6-month CD.

Recap: Best 6-month CD rates

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