Bread Savings is an online bank formerly known as Comenity Direct. Bread Savings offers five terms of CDs. They range from a one-year CD to a five-year CD.
Best available rates across different account types for Wednesday, February 01, 2023
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A certificate of deposit (CD) generally earns savers a fixed annual percentage yield (APY) on money that’s deposited for a set period. Typically, the APY on a CD is higher than a bank’s savings account since it requires your funds to be locked in for the term of the CD. Try not to touch your money before the CD matures, as you can be hit with a costly early withdrawal penalty.
Bankrate conducts market research on over 4,000 banks and credit unions nationwide to find accounts with the best CD rates. Here is Bankrate's list of top banks with overall great rates:
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The following accounts can be found at most banks and credit unions. They’re federally insured for up to $250,000 and offer a safe place to put your money while earning interest.
CDs are best for individuals looking for a guaranteed rate of return that’s typically higher than a savings account. In exchange for a higher rate, funds are tied up for a set period of time and early withdrawal penalties may apply.
Checking accounts are best for individuals who want to keep their money safe while still having easy, day-to-day access to their funds. ATM and other transactional fees may apply.
Savings and MMAs are good options for individuals looking to save for shorter-term goals. They’re a safe way to separate your savings from everyday cash, but may require larger minimum balances and have transfer limitations.
Before opening a certificate of deposit, be sure to read expert advice and tips below to ensure a financially safe decision. Here are Bankrate's top picks for banks with the best CD rates:
Bread Savings is an online bank formerly known as Comenity Direct. Bread Savings offers five terms of CDs. They range from a one-year CD to a five-year CD.
Bread Savings has been known to pay top-tier yields on its CDs. It offers terms that should help most people with their savings goals.
Bread Savings has a higher minimum deposit requirement than some other online banks.
Marcus by Goldman Sachs offers a competitive yield on its CDs. It offers a variety of CD terms and CD types. Its regular CD terms range from a six-month CD to a six-year CD.
In addition to its nine terms of regular CDs, it also offers three no-penalty CDs and a rate-bump CD.
All of these CDs have a $500 minimum deposit requirement.
Capital One offers CDs with terms as short as six months or as long as five years. These CDs have no minimum opening deposit. The bank offers competitive yields, and it doesn’t have a minimum balance requirement.
Synchrony Bank offers many regular CDs ranging from three months to five years. It also added a no-penalty CD and a bump-up CD earlier this year. Synchrony Bank also offers IRA CDs.
|2 years **||3.70%||$0|
Citizens Access offers five terms of CDs that all require at least a $5,000 deposit. Citizens’ CD terms range from one-year to five-years.
Citizens Access requires at least $5,000 to open a CD. The bank also no longer offers a no-penalty CD.
While American Express is perhaps most known for its credit cards, the company also provides savings accounts and CD options. American Express National Bank offers seven terms of CDs. The online bank’s CD terms range from six months all the way to five years.
Amerant Bank offers six terms of CDs. Its shortest CD is one year and its longest CD is five years. You’ll need at least $10,000 to open a CD at Amerant Bank.
|Note: Rates aren't valid in Florida or Texas.|
|* This is a promotional CD that requires new money to be deposited into Amerant Bank by Feb. 2, 2023.|
Ally Bank offers seven terms of regular CDs. They range from a three-month CD to a five-year CD.
|**Raise your Rate CD|
CIT Bank, an online-only bank, is a division of First Citizens Bank. You can open a CIT Bank CD with $1,000 or more. CIT Bank has eight terms of CDs ranging from six months to five years.
When you open a CD, selecting a term is an important step. The term is the length of time that the money stays stashed in the account. For example, opening a CD with a one-year term means you’re making a commitment to the bank that you’ll keep your money in the account for one year.
Here’s where you’ll find some of the top yielding CDs by term. (Note: Annual percentage yields (APYs) shown are as of Jan. 20, 2023, and may vary by region for some products.)
Researching average interest rates provides insight into the CD rate environment and can help in finding a CD with a yield that's much higher than average.
Here are the current average rates for the week of Jan. 20, 2023, according to Bankrate's weekly survey of institutions:
|CD term||CD national average APY|
Note: Average APYs are shown. See the table at the top of the page for APY comparisons.
CDs are a good option for longer-term goals or for money that you’re comfortable locking away for a set period of time.
A CD can help you save for longer-term goals when you know just when you’ll need this money in the future. Follow the steps below to choose the right CD for you:
Bankrate regularly analyzes banks, gets insights from top financial experts, and compiles industry data to provide the information you need to make an informed financial decision when selecting a CD.
A CD is a type of account offered by banks and credit unions that pays interest on a deposit amount for a set period of time. These accounts typically pay a guaranteed fixed rate of return for the duration of the CDs term.
Generally, the longer the term, or amount of time you agree to lock up your money, the higher the interest rate. However, withdrawing your money before the term ends will likely result in an early withdrawal penalty.
Financial institutions offer a wide range of CDs to fit different financial situations. Take time to consider which type of CD is best for you.
Traditional CDs are the most common and have a fixed APY for the CD’s term. These CDs usually don't let you deposit additional funds before the CD matures and also tend to have strict early withdrawal penalties.
When this CD makes sense: You know exactly when you need the money and there’s no chance you need it before. Great for CD ladders or another CD investing strategy where timing is important.
Traditionally, CDs are known as time deposit accounts. So if you withdraw from a CD before it matures, you’ll usually incur a penalty that’s equal to a certain amount of interest earned during a period of time. For instance, a bank may impose a penalty of 90 days of simple interest on a one-year CD if you withdraw from that CD earlier than a year. However, some banks offer no-penalty CDs — also known as liquid CDs — which allow you to withdraw your money early without having a penalty fee cut into your interest earnings.
A bank may require that you wait at least some time, generally around six or seven days, before you’re able to withdraw from a no-penalty CD and some banks may not allow for partial withdrawals. No-penalty CD rates tend to be lower than regular CDs but can be higher than some high-yield savings accounts or money market accounts.
When this CD makes sense: You’re mostly confident that you won’t have to withdraw the money before the CD matures, but you want to keep some flexibility in case you have to tap it. As a result, you’re willing to give up a little return for added liquidity.
These types of CDs allow you to request an increase in your rate during the CD term under certain conditions. Institutions that issue this CD option usually only allow one bump-up per term. For example, imagine purchasing a three-year CD at a given rate, and one year into the term, the bank offers an additional half-point rate increase. With a bump-up CD, you're allowed to request a rate increase for the remainder of the term. The disadvantage is that bump-up CDs often pay lower initial rates than traditional CDs.
When this CD makes sense: A bump-up CD could be a good option if rates are expected to rise significantly during the term of the CD. Otherwise, you’re likely accepting a lower rate for limited potential upside.
CDs at either a FDIC-insured bank or at a credit union regulated by the NCUA and insured by the NCUSIF are safe as long as it’s within insurance guidelines. These accounts are safe at online banks, brick-and-mortar banks and credit unions because they’re backed by the full faith and credit of the U.S. government. Just make sure you’re not exceeding the insurance limits. The standard insurance limit is $250,000 per depositor, per insured bank, for each account ownership category at an FDIC-insured bank. For federally insured credit unions, the standard share insurance is $250,000 per share owner, per insured credit union, for each account ownership category.
Someone looking for a low-risk place to stash cash and get a guaranteed rate of return should consider getting a CD. They can be good, safe investments for short- to medium-term goals, like saving for a new car or for a down payment on a home.
Before you choose a CD, weigh the pros and cons to ensure you're making the right investment choice for your financial situation.
It's important to consider the interest rate you're getting, how often the interest compounds and whether you're more comfortable with a CD from an online bank or from a traditional institution with branches.
Here are some of the pros and cons of CDs:
The Federal Reserve's interest rate decisions can impact the rates that banks offer on CDs. When the Fed raises or lowers the federal funds rate, banks typically respond by moving savings and money market account yields in the same direction. CDs tend to track Treasurys closely. In 2019, a year when the Fed lowered rates three times, CDs generally decreased before or after a Fed rate cut.
Two emergency Fed rate cuts in March 2020, and decreasing Treasurys that year, caused high-yield CDs to decrease.
In 2022, the U.S. central bank raised rates several times in a bid to rein in inflation. Even before the Fed's first move in March 2022, some banks that pay competitive yields began offering higher APYs on CDs.
The national average for CD rates has been increasing during most of the year. The Federal Reserve and competition among banks are two reasons CD rates have been increasing rapidly this year.
The Fed, whose policies directly affect savings account rates and can also influence CD rates, continues to raise rates –– causing competitive banks to raise CD APYs to attract deposits.
Savings and money market accounts are more liquid than CDs. That means the funds you store in those types of accounts are easier to access and have fewer withdrawal penalties and limitations. This makes savings accounts better for your emergency fund. You could withdraw the savings you’ve stashed in a CD, but be prepared to pay a penalty if you take your money out before the CD’s maturity date (unless you’ve purchased a no-penalty CD).
At some banks, it’s common to see a one-year CD with a higher APY than a high-yield savings account.
The differences between CDs and high-yield savings accounts are:
The gap between interest rates tied to CDs and savings accounts has narrowed. But CDs are more likely to pay a higher yield than savings accounts or money market accounts.
CDs and money market accounts have some similarities. Both are types of savings products that banks and credit unions offer. Both are considered safe, as long as they’re insured by the FDIC at banks or the NCUSIF at credit unions. Savers opening a CD or money market account might have to meet higher minimum deposit requirements than they would with a savings account.
However, money market accounts offer more liquidity than CDs, often providing the ability to write a limited number of checks per month directly out of the account. Some money market accounts offer a debit card. Those liquidity features aren't something you'll find with CDs.
In exchange for less liquidity, however, CDs typically offer a higher interest rate than money market accounts.
Investors have a lot to consider when deciding between a CD and a bond. Traditional CDs from banks are insured by the Federal Deposit Insurance Corp. (FDIC), or from the National Credit Union Share Insurance Fund if you’re getting a CD from a National Credit Union Administration (NCUA) credit union. CDs are safe investments that typically pay a fixed interest rate. In other words, you know how much you’re earning upfront. You’re also guaranteed to receive that amount of interest for the term and get your full principal amount back, as long as you don’t make any premature withdrawals.
If you’re interested in having more flexibility and you want the chance to earn a higher yield, you may want to consider investing in a bond. A bond is a loan you make to a government or a corporation to receive a rate of return. You can sell a bond before it matures without getting hit with an early withdrawal penalty, but you may get back more or less than your original investment if interest rates have moved. With municipal bonds, the interest you earn is often exempt from taxes.
There are many different types of bonds, and some are riskier than others. Bonds aren’t protected by FDIC or NCUSIF insurance like CDs are. And the value of your bonds will vary depending on what’s happening with interest rates. If interest rates are rising, the price of your bonds will likely fall and vice versa.
Yes, you will be taxed on the interest earned on a CD that contains non-qualified money –– money that you already paid income tax on. However, if the money is in a traditional IRA CD, you will pay taxes when the money is withdrawn. This is because traditional IRAs are tax-deferred accounts.
In some cases, you can deduct your CD on your taxes. If you’re eligible to contribute to a traditional IRA CD, you may be eligible for a full deduction up to your contribution limit or a partial deduction. Your modified adjusted gross income, your marital status and whether you’re covered by a retirement plan at work are some of the factors that will determine if you’re eligible for an IRA deduction.
Interest earned from CDs is an example of taxable interest, according to the Internal Revenue Service. When you earn $10 of interest or more, you should receive Copy B of Form 1099-INT or Form 1099-OID. Even if you don’t receive a 1099, all taxable and tax-exempt interest must be reported on your federal income tax return. Also, interest may be called dividends.
One exception to this would be, for instance, if the funds were rolled over from a 401(k) into a traditional IRA CD and those funds have never been taxed. If you’re withdrawing from a traditional IRA CD in that situation, the money that you withdraw will count as income.
CD laddering is a method to space out maturity dates on your CDs. This investment strategy involves savers buying multiple CDs at once that mature at different intervals. It’s a way to both spread out when the money is available and protect yourself from being stuck in a long-term CD if rates rise.
"Looking for a regular stream of interest income? Consider a CD ladder where your money is diversified over a range of maturity dates, structured so you get to reinvest at consistent intervals."
- Greg McBride, CFA, Bankrate’s Chief Financial Analyst
Generally, the longer your CD term, the higher your rate of return. One way to grow your savings and earn as much interest as possible is to build a CD ladder. You could buy several CDs with different term lengths at one time, giving you the chance to invest in a longer-term CD with a higher yield and short-term CDs that will mature within a shorter period of time, like six months or one year. For instance, a CD laddering plan of three CDs might have a one-year CD, a two-year CD and a three-year CD.
If you have $15,000 to invest, you could invest $5,000 in each rung:
CD laddering can also shield you from interest rate changes. If rates are rising, you’ll be able to take advantage of higher yields when your existing CDs mature. And if interest rates are falling, you’ll be happy that you locked up your savings when your bank was paying a higher rate. Consider keeping your CD ladder focused on CDs with shorter-term maturities during a rising interest rate environment, so you can more quickly take advantage of higher rates. Conversely, locking into CDs with longer terms makes more sense when rates are moving lower because it enables you to continue earning higher CD yields than the market currently offers.
CDs generally have an early withdrawal penalty for taking your money out before the CD matures. No-penalty CDs are the exception, though they may also impose a penalty, should the funds be withdrawn during the first six calendar days after the account is opened.
A good CD rate depends on a few factors, but the true answer is framed by your personal needs. If you need to access your money in a year, for example, your best CD options will be for a year or less. If you’re able to lock up your money for longer, then you may be able to achieve a higher yield with a longer-term CD. Typically, longer terms pay more.
Knowing for certain that you won’t need your cash for a specific time period also typically allows you to earn a higher rate. The bank is willing to pay you more for the certainty that your money will be there when needed.
Compare CD rates to the national average to assure you are getting a competitive return. For example, the national average yield for 1-year CDs is 1.42 percent APY as of Jan. 18, 2023, while some top-yielding banks are currently offering rates higher than 4.75 percent APY.
Online banks tend to offer higher APYs than brick-and-mortar banks. These online-only institutions typically have lower overhead costs and are able to pass the savings along to their customers in the form of higher rates. In addition, unlike your bank located on the corner of Main Street, online banks may need a higher APY to get your attention and earn your business.
There currently isn’t a CD that’s close to keeping up with inflation. Beating inflation, or at least keeping up with it, is important. If you’re not, you’re losing purchasing power. This means as time passes, your money won’t be able to buy as much as it does today.
But the safety of a CD at an FDIC insured bank may be more important than keeping up with inflation for some of your savings. Just make sure your balances are within FDIC limits and guidelines.
You can keep your money in a CD and let it renew over and over. CDs generally automatically renew. However, unclaimed CDs can be escheated, subject to each state’s laws. To avoid your CD being escheated if it’s considered abandoned property, make sure you keep in touch with your bank and keep a valid mailing address on file.
Banks give account holders with CDs the opportunity to name a beneficiary, or a specific person who will inherit your savings in the event that you die. While naming a beneficiary for your CD may be the last thing on your mind, experts say it’s an important step to take.
If you don’t have a beneficiary designated to receive the funds in your CD, your savings will go through probate, the court process for deciding what happens to the property of an individual after their death.
A long-term CD, such as a 10-year CD, could be worth it if rates were extremely high and you didn’t need this money for a decade or longer. For instance, if rates went negative in the future, a 10-year CD paying a positive rate for a long time could be a smart move.
As long as your CD is at an FDIC-insured bank or an NCUA credit union and it’s within insurance limits and guidelines, you won’t lose money with a regular CD. You may lose some of your interest — and potentially some of your principal — by making an early withdrawal, however.
Bankrate’s editorial team regularly updates rates featured on this page about every two weeks. We mainly look for the highest APYs and break ties using the minimum balance to open a CD. Bankrate’s editorial team has reviewed nearly all of the banks and credit unions that it tracks, and researches rates weekly for more than 70 popular banks and credit unions. These institutions were selected because they offer competitive APYs, are larger (based on the amount of deposits or assets), frequently appear in internet searches or other possible factors. These banks and credit units typically offer accounts that are available nationwide. All of these banks are insured by the Federal Deposit Insurance Corp. (FDIC) and all of the credit unions are National Credit Union Administration (NCUA) credit unions, insured by the National Credit Union Share Insurance Fund (NCUSIF). Choosing an FDIC-insured bank or NCUA-backed credit union ensures your money is safe as long it’s within insurance limits and guidelines.
These financial institutions are featured in our CD rate research:
Bank5 Connect, Barclays, Bask Bank, BECU (Boeing Employees Credit Union), Bethpage Federal Credit Union, BMO Harris Bank, Bread Savings (formerly Comenity Direct), BrioDirect, Capital One Bank, Chase Bank, CIBC USA, CIT Bank, Citibank, Citizens, Citizens Bank (Rhode Island), Credit One Bank, Comerica Bank, Customers Bank, Delta Community Credit Union, Discover Bank, Emigrant Direct, Fifth Third Bank, First Citizens Bank, First Internet Bank, First Technology Federal Credit Union, FNBO Direct, Golden 1 Credit Union, Huntington National Bank, Investors Bank, Investors eAccess, KeyBank, Limelight Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Morgan Stanley Private Bank, MySavingsDirect, Navy Federal Credit Union, NBKC Bank, PenFed Credit Union, PNC Bank, Popular Direct, PurePoint Financial, Quontic Bank, Randolph-Brooks Federal Credit Union, Regions Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, SchoolsFirst Federal Credit Union, Security Service Federal Credit Union, State Employees' Credit Union, Suncoast Credit Union, Synchrony Bank, TD Bank, TIAA Bank, U.S. Bank, UFB Direct, Union Bank (California), USAA Bank, Vio Bank, VyStar Credit Union, Wells Fargo and Zions Bank.
Note: Bankrate doesn’t include callable CDs or brokered CDs on this page and compares regular CDs and no-penalty CDs separately.
The "Bankrate.com National Average," or "national survey of large lenders," is conducted weekly. The results of this survey are quoted in our weekly articles and national media outlets. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We've conducted this survey in the same manner for more than 30 years, and because it's consistently done the way it is, it gives an accurate national apples-to-apples comparison.