Finding the Best CD Rates
One way to save and grow your money is to use a certificate of deposit (CD) account. These low-risk banking products essentially lock your money up for a specific period of time in exchange for an interest rate. CDs are offered at many financial institutions, including banks and credit unions, with their APYs typically being some of the strongest. To help you sift through the many options, SmartAsset did the research and put together this list of the best CDs on the market right now.
| Bank | APY | Minimum Deposit | Highlights |
|---|---|---|---|
Pen Air Federal Credit Union  Read More | 0.65% | $500 |
|
Ally Bank  Read More | 0.60% | $0 |
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| Pen Air Federal Credit Union Read More | 0.85% | $500 |
|
Marcus by Goldman Sachs  Read More | 0.55% | $500 |
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Navy Federal Credit Union  Read More | 0.65% | $1,000 |
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MAC Federal Credit Union  Read More | 1.10% | $1,000 |
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First Internet Bank  Read More | 0.96% | $1,000 |
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| Ally Bank Read More | 0.60% | $0 |
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How We Determine the Best CD Accounts
SmartAsset analyzed more than 150 CD accounts to create this list. We determined the best CD options based on each of their current APYs and minimum deposits, as well as the customer service of the bank that offers them. Other factors we considered in our analysis were how many other products the bank offers and whether they allow CD laddering.
Best 1-Year CD Account: Pen Air Federal Credit Union
Pen Air Federal Credit Union has some of the highest CD rates currently available. In fact, the credit union’s 12-month CD has a 0.65% APY, which is one of the best rates you’ll come across. You’ll only need to meet a $500 minimum to open a 12 month CD, and the credit union offers other CDs ranging from 90 days to five years if you’re interested in other products.
Although you’ll need to become a Pen Air Federal Credit Union member to open this account, its membership requirements are fairly easy to meet. Here are your options for membership:
- Join Friends of the Navy Marine Corps Relief Society by making a $1 donation, and keep $25 or more in a Pen Air savings account
- Work or belong to an eligible organization or association
- Have an immediate family member or member of your household who is a Pen Air member
- Hold one of the following statuses: active military, military reserve, retired military, coast guard, active civil service or retired civil service
Outside of the northwest Florida and southeast Alabama areas, Pen Air doesn’t have any physical locations. However, you can manage your CD account online through the credit union’s website or over the phone.
Best 1-Year CD Account With No Minimum: Ally Bank
Ally Bank has become known in the online banking space for its high interest rates and low fees and minimums. Its various CD offerings meet that reputation, with competitive rates on CDs ranging from three months to five years in length. Ally’s 1-year CD may be the sweet spot of this collection, with a 0.60% APY that you won’t need to meet a minimum to acquire.
To incentivize you to renew your CD when its term is up, Ally will provide you with a 0.05% APY loyalty reward. This rate is subject to change depending on a number of factors, so check with Ally before you renew to see what you could be in line to receive.
As an online-only bank, Ally customers will have to manage their accounts via the bank’s mobile app and website. Ally also operates a 24/7 phone support line, so you can call a representative if you have questions about anything.
Best 2-Year CD Account: Pen Air Federal Credit Union
Pen Air Federal Credit Union currently has some of the best CD rates in the country. However, only Pen Air members can open this account. Luckily, the stipulations for joining the credit union as a member are not too difficult to meet:
- Have an immediate family member or member of your household who is a Pen Air member
- Hold one of the following statuses: active military, military reserve, retired military, coast guard, active civil service or retired civil service
- Make a $1 donation to Friends of the Navy Marine Corps Relief Society and maintain at least $25 in a Pen Air savings account
- Work or belong to an eligible organization or association
Joining this credit union grants you access to all of Pen Air’s products, including its 2-year CD that features a 0.85% APY. Like many of its other CD products, Pen Air’s 2-year CD has a $500 minimum deposit. While Pen Air only operates branches in the northwest Florida and southeast Alabama areas, accounts can be managed online or over the phone.
Best 2-Year CD/Savings Account Combination: Marcus by Goldman Sachs
If you’re looking to save more, Marcus by Goldman Sachs is one of the best banks to move your money to. The core of its high-interest accounts includes a great CD and savings account combination.
More specifically, Marcus’ 2-year CD has an APY of 0.55%, while its online high-yield savings account boasts an APY of 0.50%. There is no minimum deposit for the savings account, and the CDs call for only a $500 opening deposit.
Where Marcus struggles compared to some of its major competitors is in its customer service. While the bank recently introduced a mobile banking app for Apple and Android devices, its customer support is only available 14 hours a day during the week and 10 hours a day on the weekends. This could make for a frustrating experience if you need help immediately.
Best High-Balance 2-Year CD: Navy Federal Credit Union
Navy Federal Credit Union offers a range of certificate of deposit (CD) products, and its high balance CDs really stand out. Navy Federal offers 24-month CDs with an APY of 0.65% for balances between $1,000 and $50,000. However, if you open a CD with $100,000 or more, you’ll have access to an increased APY of 0.70%. This is obviously a very high balance, but even the lower balance CDs will still earn a great rate.
The catch is that not just anyone can open an account with Navy Federal. In order to be eligible, you’ll need to meet at least one of the following criteria:
- Be an active or former military or national guard member
- Be a Department of Defense officer candidate, reservist or civilian
- Be an immediate family member of a current member
If you decide to open a CD account with Navy Federal, you’ll also have access to a wide range of other banking products, such as savings accounts and checking accounts. Navy Federal also offers mortgages, credit cards, personal loans, student loans, home equity loans, auto loans and more.
Best 3-Year CD Account: MAC Federal Credit Union
MAC Federal Credit Union’s 3-year CD is a great option for anyone looking for a high APY CD who doesn’t mind jumping through a few hoops to get there. In fact, with a 1.10% APY, you currently won’t find a better rate on the market. MAC FCU’s accounts require a $1,000 minimum deposit, which is fairly normal for a CD.
MAC Federal Credit Union only runs a couple of branches in Alaska. However, you can bank anywhere with MAC FCU via its online and mobile platforms.
You can join MAC Federal Credit Union if you live, work, use services or attend school in the Fairbanks North Star Borough, are a member of the AUSA Polar Bear Chapter or have an immediate family member who’s a member. But really anyone can join if they donate $40 to the Association of the U.S. Army and maintain at least a $10 balance in their MAC FCU savings account.
Best 5-Year CD Account: First Internet Bank
Although First Internet Bank may not be a household name, the bank is an extremely reputable online financial institution that has account holders all over the U.S. To open a 5-year CD here, you’ll need to deposit at least $1,000, which is on the higher end when it comes to account minimums. But if you can meet this requirement, you’ll be rewarded with a higher than average APY of 0.96%.
Most online banks work just like a normal brick-and-mortar bank, and First Internet Bank is no exception. Simply meet the bank’s minimum, and you’ll be able to open an account. First Internet Bank’s mobile app is highly rated as well, as it boasts a 4.8-star rating out of 5 on the Apple app store and 4.4-star rating out of 5 on the Android app store.
Best Bump-Up CD: Ally Bank Raise Your Rate CD
Ally’s bump-up certificate of deposit is an account that functions like a normal CD, only it allows the account holder to increase their APY during the account’s term should rates rise. So if you own an Ally Raise Your Rate CD, and the interest rate that’s offered for your account goes up, you can initiate a rate increase to take advantage of that benefit. Note that you can only use this option once during the term of your CD, so if rates start to rise, you’ll need to decide the best time to pull the trigger.
This CD comes in two term length variations: 2-year and 4-year. In both cases, the starting APY is 0.60%. There are no minimum initial deposits for either account, meaning you can take advantage of them regardless of how much you have to invest. There is also a 0.05% APY loyalty reward waiting for any Ally customers that renew their CD to another Ally CD upon maturation.
Once your account’s term matures, you’ll have a 10-day window to withdraw your money. Otherwise, it will be reinvested into the same CD again.
Is a CD the Right Choice for You?
Certificates of deposit (CDs) are a worthwhile investment when market conditions are right. However, you must also be in a solid financial state if you're able to lock up your money for an extended period of time. CDs can be a safe way to grow money, but you must be comfortable not having access to the funds for the duration of the account's term. CDs are worth it when the following circumstances apply:
• Interests rates are high, and you don't expect them to rise significantly over the course of the CD's term.
• You have extra money sitting in a bank account.
• You already have a separate emergency fund in place.
• You are trying to save up for something big, like a home or car, and want to earn a good return without market risk.
• You are looking for ways to grow money without the temptation of spending it.
In low interest rate markets, CDs are less enticing because returns are often fairly miniscule. As interest rates rise however, CDs become a much more attractive method of investing money.
Another advantage of a CD is that your starting rate is guaranteed. Therefore, you cannot lose money with a CD (though you could lose accrued interest if you withdraw money early). This is as opposed to investing in equities and other securities, where you can end up losing your investment if things go poorly. CD deposits also have the backing of FDIC insurance, up to $250,000. So if your banking institution were to fail, you would still be covered.
CDs are a solid option if you have extra money sitting in your accounts, as long as said account is not your emergency fund. Excess cash that is either not accruing interest or accruing low interest could likely be better served in a CD. The fee associated with withdrawing from a CD before the maturity date also acts as a strong deterrent from spending the money you're saving. It makes CDs ideal for anyone trying to save up for something in the long-term.
What CD Term Should You Go With?
It’s important to create a clear set of savings goals when determining the correct CD term for your needs. Opening up a CD and having to withdraw from it early can mean you lose money, so don't open one unless you're sure you won't need the money until the term is up. The penalty can also be great enough where you could have ended up earning more in a liquid savings account, so don't discount the fact that maybe a CD is no the right option at all. You need to be honest about your finances and what your short- and long-term objectives are before committing to a term.
If your goal with a CD is just to grow money in a safe environment, then building a CD ladder with multiple accounts of varying lengths may be the optimal way to go. Laddering $10,000 across five accounts spanning one- to five-year terms can yield you about $1,200 after five years. In comparison, reinvesting $10,000 in a 1-year account for five years (which gives you the same liquidity as the ladder) would yield you about $300 less over the same time frame.
If you have a more focused goal in mind, like saving up for a car or home, you need to determine when you would like to make those purchases and pick the appropriate term. It’s a good idea to consider your job stability in your decision as well. Investing a significant amount of money in a 5-year CD could put you in a bind if you end up needing liquidity before the account matures.
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