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No investment or savings vehicle is entirely without risk, but certificates of deposit (CDs) offer more security and predictability than most.
With fixed or upwardly adjustable interest rates, terms ranging from as short as one month to as long as 10 years, and FDIC insurance up to $250,000 per account, CDs are useful tools for saving funds you don’t need right away — and earning a yield in the meantime.
Although prevailing rates vary widely by bank, CDs tend to have higher yields (better rates) than other types of bank accounts, including checking, savings, or money market accounts. That makes them great savings tools for people who don’t need to access their funds right away.
Best Banks for High-Yield CDs (Highest CD Rates)
These are the best banks for certificate of deposit customers.
All offer above-average CD yields and each does at least one additional thing really well, whether it’s allowing customers to take advantage of rising rates during the CD term or providing greater-than-usual flexibility around withdrawals. The “best overall” offers the best all-around value, in our estimation.
Unless otherwise noted, each bank listed here has federal deposit insurance, meaning they’re insured by the FDIC or NCUA, the credit union equivalent. All have fixed interest rates on CDs and reasonable minimum deposit requirements. And most do not charge monthly fees, as is sometimes the case for online savings accounts that allow unlimited withdrawals.
Best Overall: Synchrony Bank
Synchrony Bank is an online-only financial institution that offers very competitive CD yields, especially on longer-term and higher-balance accounts. Term options include:
- 3 months (current yield: 1.00% APY)
- 6 months
- 9 months
- 12 months
- 13 months
- 14 months
- 15 months
- 18 months
- 24 months
- 36 months
- 48 months
- 60 months (current yield: 3.25% APY)
There’s no minimum deposit requirement and all Synchrony Bank CDs can be structured as Roth or traditional IRAs. Look out for the 10-day grace period at maturity and mind the early withdrawal penalties, which range from 90 days’ interest on shorter-term CDs to 180 days’ interest on longer-term CDs.
Learn more About Synchrony Bank
Best for High Yields: Quontic Bank
Quontic Bank has some of the best rates available on short-, medium-, and longer-term CDs. Rates range from 1.15% APY on the 6-month CD up to 2.20% APY on the 5-year CD.
- $500 minimum opening deposit for all CDs
- All-digital application takes 3 minutes to complete
- Choose from 1-year, 2-year, and 3-year CDs as well
- Early withdrawal penalties may reduce interest earnings
Open an Account With Quontic Bank
Best for No Early Withdrawal Penalty: CIT Bank
CIT Bank is an online savings bank that pays excellent yields on longer-term CDs and offers special high rates on CDs with higher balances. It really shines for its No Penalty CD, which charges no fees for early principal withdrawals at any point during its 11-month term.
- Choose from 6-month, 12-month, 13-month, 18-month, 24-month, 36-month, 48-month, and 60-month CDs
- Yields range from 0.30% APY to 0.50% APY, depending on term
- $1,000 minimum deposit on most CDs
- Jumbo CD terms range from 24 to 60 months with a minimum deposit of $100,000
- Withdraw interest at any time
Open an Account With CIT Bank
Best for Low Minimums: Barclays Bank
Barclays Bank is an online savings bank that offers a legitimate rarity for savers: no minimum balance on CDs. You can open a Barclays CD and earn interest on it with very little money down.
Needless to say, this makes Barclays Bank a great choice for frugal CD customers without much to save right now.
- Earn up to 3.20% APY on the 60-month CD
- Category-leading yields on the 12-month CD (currently 2.30% APY)
- No hidden monthly fees
- Daily compounding interest
Open an Account With Barclays Bank
Best Community Bank: Crescent Bank
Crescent Bank is a New Orleans-based community bank that’s been serving customers for more than 30 years. They are known nationally for their high-yield CD products, offering some of the best rates of any bank, online or off.
- Rates range from 2.05% Annual Percentage Yield (APY) on the 12 mo CD to 3.00% APY on the 60-month CD
- Your rate is guaranteed until the end of your term, no matter what happens in the market
- Get started with a $1,000 minimum deposit
- FDIC insured up to $250,000
- Apply online in just 10 minutes
Open an Account With Crescent Bank
Online CD rates are eligible for New Money only, funds must originate from a financial institution other than Crescent Bank. Minimum opening deposit $1,000. Annual Percentage Yield is subject to change at any time and is based on interest compounding quarterly. This is a limited time offer and can be withdrawn at any time without notice.
Best for Short-Term CDs: First Internet Bank
First Internet Bank, known simply as First IB, has some of the best short-term CD yields in the business. That makes it a great place to park your money for a year or less.
Rates range from 0.60% APY on the 3-month CD to 3.25% APY on the 60-month CD. You’ll find 6- and 12-month CDs here as well in addition to medium-term products:
- 18 months
- 24 months
- 36 months
- 48 months
- $1,000 minimum to open CDs here
- Structure any CD with a term of 12 months or above as a traditional or Roth IRA with yields identical to corresponding non-IRA CDs
- Early withdrawal penalties range from 3 to 12 months
- 10-day grace period after maturity
Open an Account With First Internet Bank
Best for Medium-Term CDs: Sallie Mae Bank
Sallie Mae Bank has two CDs right in the medium-term sweet spot: 10 months and 14 months. That’s short enough not to worry about tying up your money forever — but if you do change your mind, neither charge early withdrawal penalties.
Currently, the 10-month CD yields 1.85% APY and the 14-month CD yields 2.20% APY. Those are among the best yields in the business for term lengths between 10 and 20 months.
- Open with just $1
- Withdraw after the first 7 days with no penalty
- Interest compounds daily
Open an Account With Sallie Mae Bank
Best for High Balances: TIAA Bank
TIAA Bank offers off-the-charts CD yields — up to 2.85% APY on the 5-year CD. But it really shines for a different reason: its above-standard deposit insurance on a special type of CD known as a CDARS.
While CDARS rates are typically a bit lower than corresponding CDs’, you can get deposit insurance many times higher than the standard FDIC limit of $250,000 per account, per institution. If you have a lot of money to store with TIAA, that’s a valuable perk.
- CD terms range from 3 months to 60 months
- Minimum deposit requirement of $1,000 for all Basic CD accounts
- Option to raise your rate once during the term with a Bump Rate CD
- 20-day maturity alert period, longer than typical
- Early withdrawal penalty equal to 25% of total interest, regardless of term
Open an Account With TIAA Bank
Best for Tax-Advantaged CDs: Ally Bank
Ally Bank offers solid regular CD yields and special CDs with flexible features and top rates for their respective categories.
One such special CD has tax advantages. You can structure any regular Ally Bank CD as a traditional, Roth, or SEP IRA — the last of which is not a very common offering in the world of consumer CDs. If you’re looking to minimize your tax bill for CD funds, Ally is your bank.
- Choose from CD terms ranging from 3 months to 60 months
- Yields range from 0.60% APY to 2.90% APY
- No minimums or maximums on any CDs
- 11-month No Penalty CD allows penalty-free withdrawals at any time
- Raise Your Rate CD allows up to 2 rate increases during the term if prevailing rates allow
- 10-day grace period at maturity
- Early withdrawal penalties on regular CDs range from 60 days’ interest to 150 days’ interest
Of note: Ally Bank also has a full range of deposit accounts, including high-yield checking, savings, and money market accounts, plus an auto lending arm and 24/7 customer service.
Open an Account With Ally Bank
Best for Longer-Term CDs: Discover Bank
Discover Bank features a wide range of CD terms with attractive yields. It’s particularly appealing for folks seeking longer-term CDs, thanks to a roster that includes 5-year, 7-year, and 10-year CDs.
Yields range as high as 3.00% APY on these long-term products, against 0.50% APY on the 3-month CD. These rates are current as of July 22, 2022.
- Intermediate terms include 6-, 9, 12-, 18-, 24-, 30-, 36-, and 48-month CDs
- Minimum of $2,500 to open an account
- Structure any CD as a traditional or Roth IRA
- Early withdrawal penalties range up to 24 months
- 10-day grace period on non-IRA CDs
Open an Account With Discover Bank
Best for Raising Your Rate: Ally Bank
Ally Bank earns a rare second mention here because it has the best rate-raising option of any CD provider on this list.
Ally’s Raise Your Rate CD comes in 2 term configurations: 2-year and 4-year. If prevailing rates allow, you get to raise your rate once with the 2-year term and twice with the 4-year term.
The Raise Your Rate CD currently yields 2.00%, but rates are of course subject to change.
Open an Account With Ally Bank
Methodology: How We Select the Best High-Yield CDs
We use several key factors to evaluate banks offering high-yield CDs and select the best products for our users. Each relates in some way to the cost or accessibility of these CDs.
Yield (Interest Rate)
Every certificate of deposit pays interest. The question prospective account holders have to ask themselves is: Is that rate of return worth tying up my money for?
We believe it should be. That’s why we give preference to banks that pay above-average interest rates on their CD balances. Bear in mind that no matter how good a bank’s CD rates are, shorter-term CDs tend to have lower interest rates than longer-term CDs.
A CD’s term is the length of time between the account opening date and the maturity date. That is, the period between the account holder’s initial deposit and the day the bank must repay that deposit with interest.
CD term lengths can be as short as 1 month and as long as 10 years. All else being equal, we prefer banks that offer as wide a range of CD terms as possible, the better to appeal to investors seeking short-, medium- and long-term places to park their funds.
Early Withdrawal Penalties
Most CDs charge early withdrawal penalties. These penalties apply if you withdraw part or all of your principal amount before the CD’s maturity date. Usually, you can withdraw interest without penalty.
Early withdrawal penalties are expressed as a percentage of interest accrued on the CD. On shorter-term CDs, they’re often equal to 3 months’ interest. On longer-term CDs, they can exceed 6 months’ interest. If you make a withdrawal before you’ve accrued enough interest to cover the penalty, you may lose principal.
While recognizing that few banks waive early withdrawal penalties entirely, we prefer institutions that offer special “no penalty” products for customers seeking greater flexibility.
Minimum Deposit Requirements
Most CDs require a minimum opening deposit. In some cases, this deposit is manageable for the average saver — say, $100 to $500. But some deposits can be stiff — upwards of $2,500, straining lower-income savers’ ability to pony up.
All else being equal, we’re fans of banks with modest minimum deposit requirements.
Account Types (Taxable or Tax Advantaged)
The default tax treatment for CDs is the same as for other interest-bearing accounts. Accrued interest is taxed as regular income, subject to IRS and state regulations.
Some banks offer special CD products that offer favorable tax treatment. Usually, these are IRA CDs — most often Roth or traditional — that allow account holders to reduce or avoid taxation on eligible balances. We’re fans of banks that offer this option but encourage would-be account holders to consult their tax advisor for guidance.
All of the CDs on this list come with the standard level of deposit insurance coverage: $250,000 per account type, per institution.
That’s plenty for most account holders. However, higher-asset customers might need more — and some banks are happy to give it to them. We’re fans of institutions that use sometimes-creative methods to boost deposit insurance coverage and protect clients’ hard-earned funds.
Midterm Rate Increases
Traditionally, CD rates remained fixed for the entire term. Your interest rate on Day 1 was the same as your interest rate on Day 364.
Today, that’s no longer the case. Most CDs still have fixed rates, but more and more are more flexible. Known as “raise your rate” or “bump rate” CDs, they allow you to take advantage of rising interest rates by raising your rate at least once during the term.
Of course, they can’t help if rates fall during the CD term. But it’s nice that they give you the option, and we therefore give preference to banks that offer them.
Certificate of Deposit FAQs
You have questions about CDs and CD yields. We have answers.
How Is Interest Calculated on CDs?
Depending on the issuing bank’s policy, CD interest may be calculated on a daily, weekly, monthly, quarterly, or annual basis.
Usually, the default option is for accrued interest to be deposited back into the CD balance, allowing it to compound. However, banks generally give you the option to have interest paid into another account — generating income before the CD matures.
How Much Is a CD Early Withdrawal Penalty?
The biggest drawback of CDs is that most banks charge a significant penalty if you withdraw part or all of your funds before the term ends. These penalties typically range from 3 to 12 months’ interest, depending on the length of the CD term and the policies of the issuing bank.
But some banks now offer special CDs that allow you to make midterm interest — and, in some cases, interest and principal — withdrawals without paying a penalty. These CDs are marketed as “no penalty” or “flexible” CDs. If you want the option to access your funds before the end of the term, these are useful.
Can You Have More Than One CD With the Same Bank?
Yes. While every bank is different, you should expect to be allowed to open multiple CDs with the same institution.
This is a great way to take advantage of the relationship between CD term length and yield. You can open a short-term CD to park funds you’ll need soon-ish while committing a portion of your wealth to longer-term CDs that earn more interest.
What Are Some Common Certificate of Deposit Fees?
Other than the early withdrawal penalty, which only kicks in if you make a withdrawal before the CD matures, you shouldn’t expect your CD to cost much. Few CDs charge annual fees or monthly maintenance fees, for example.
How to Choose the Best Certificate of Deposit
To narrow down your CD options, you’ll need to consider factors like:
- How long you expect to (or can afford to) keep your money tied up
- Whether you want to sacrifice flexibility (in terms of ability to withdraw funds during the CD term) in exchange for a higher return on investment
- How much you can afford to commit to your CD
- Whether you expect rates to rise or fall during the CD term
So, if you’re looking for a place to park your funds for a few months and don’t care about maximizing your return, you might choose a 6-month CD with a low APY. If you’re building a CD ladder that you expect to endure for the better part of a decade, you’ll want to load up on 5-, 7-, and maybe even 10-year CDs.