Why You Can Trust the MarketWatch Guides Team
Here’s a breakdown of how we reviewed and rated top banks and credit unions
130
Institutions MonitoredOur team reviewed more than 100 of the country’s largest and most prominent financial institutions, from big banks like Chase and Bank of America to credit unions like Navy Federal Credit Union and PenFed Credit Union.
688
Products StudiedTotal number of checking, saving, CDs, and money-market accounts that inform our review ratings.
719
Rates TrackedThe accounts with an annual percentage yield (APY) several times the national average rate receive the highest scores. Accounts with the lowest APY offering (under 1%) earn the least points.
10
Professionals ConsultedBefore we began our research process, we consulted with financial advisors and industry experts to ensure our evaluations covered the banking product aspects that matter most to potential customers.
Our Picks for CDs with High Rates
CDs are a safe investment, especially for savings you may need in the short-to-medium term, a few months to several years from now. Unlike high-yield savings accounts (HYSAs), CDs lock in your interest rate, so if rates drop, your interest rate will stay fixed until your CD matures.
We at the MarketWatch Guides team bring you the country’s top cd rates on a daily basis based on data supplied by Curinos, LLC, a leading provider of retail banking research that collects deposit pricing data from more than 3,600 financial institutions. We’ve also thoroughly researched the CD products offered by more than 100 of the most popular banks, credit unions and fintech companies to condense our recommendations for you.
To gain first-hand product experience, we opened accounts with each of our top 10 picks to provide you with user and customer service insights only available to clients. Whether you’re looking for the top rate available in the U.S., or a great deal with a leading provider – we’ve got you covered. Our picks below for the best CD rates are available to customers throughout the U.S. and have APYs up to 5.35%. Learn more about our rating methodology.
*APYs (Annual Percentage Yields) valid as of April 17, 2024. Rates may vary by location.
Synchrony Bank
4.6
APY Range0.25% to 5.15%TermsThree months to five yearsMinimum DepositNone
Our Experience Opening a Synchrony Bank CD
We opened a nine-month CD with Synchrony Bank in February of 2024 to give you a first-hand look at the application process. Our experience with Synchrony Bank was positive overall, starting with the fact that the provider was transparent about its APYs and related balance tiers during sign-up. Other highlights include:
- Seamless account integrations, such as the ability to set up recurring deposits
- Option to transfer CD interest payments to an external account or a Synchrony money market or high-yield-savings account
- Accessible application process with checkbox for those without phone numbers due to hearing or speech disabilities
However, Synchrony fell short in a couple of areas when we opened our CD. The main thing we noted was difficulty with customer service in these areas:
- Difficulty finding the customer service phone number followed by completing seven voice prompts to reach a live agent
- For chat, must request a live agent
- Unable to connect with Synchrony’s budgeting tool
Why We Picked Synchrony Bank
We found Synchrony Bank to be a transparent and user-friendly online bank with several savings products such as a high-yield savings account (HYSA), a money market account and a wide range of CD terms – many with APYs between 4% and 5%.
We liked the seamlessness of Synchrony’s online platform, which allows you to transfer interest payments from your CD account to another internal or external account. We also liked that Synchrony CDs have no minimum balance requirements.
Pros & Cons
Pros Transparent about CD rates and required balance tiers Offers some of the highest CD rates available No minimum deposit requirements on CDs Has a no-penalty CD and a bump-up CD Cons Difficulty reaching a customer service agent No physical branch locations No checking account option
Synchrony Bank CD Term Rates
Rates for Synchrony terms are listed below:
- 3-month CD: 0.25% APY
- 6-month CD: 5.15% APY
- 9-month CD: 4.90% APY
- 11-month (no penalty) CD: 0.25% APY
- 1-year CD: 4.80% APY
- 13-month CD: 4.50% APY
- 14-month CD: 5.00% APY
- 15-month CD: 4.50% APY
- 16-month CD: 4.00%
- 18-month CD: 4.50% APY
- 19-month CD: 4.00% APY
- 2-year CD: 4.20% APY (traditional CD) or 3.60% APY (bump-up CD)
- 3-year CD: 4.15% APY
- 4-year CD: 4.00% APY
- 5-year CD: 4.00% APY
See more rates in our Synchrony CD Rates article.
Ally
4.6
APY Range3.00% to 4.50%TermsThree months to five yearsMinimum DepositNone
Our Experience Opening an Ally Bank CD
Our research team opened a six-month CD in December 2023 and a three-month CD in February 2024 to test Ally’s CD application process. Ally Bank has several helpful features that stand out, including:
- A series of FAQ articles available within the application
- Convenient customer support options, including chat and phone, with estimated wait times posted
- A 0.05% loyalty bonus that’s automatically added to your interest rate when you renew a CD term
We also encountered the following drawbacks when opening an Ally CD:
- Required a picture of our Social Security card during the application process, which none of the other banks we tested did
- Up to five to seven days for Ally to review our application
Source: Ally.com via Marketwatch Guides user testing
Why We Picked Ally Bank
We chose Ally for its history of high APYs and solid customer service. The online bank offers many ways to save, including several high-yield CDs, bump-up CDs and a no-penalty CD that allows you to withdraw your money as soon as seven days after you fund the account. We were also impressed with Ally’s Ten Day Best Rate Guarantee that automatically increases the APY on your non-IRA CD if rates rise within ten days of opening your account. We found Ally’s customer service and user experience top-notch, even while its security measures slowed down our application process.
Pros & Cons
Pros Loyalty APY (additional 0.05%) when you renew an Ally CD Raise Your Rate bump-up CD allows you to increase your rate if rates rise during your term No Penalty CD offers a competitive 4.00% APY and the ability to withdraw your money during the 11-month term with no penalties Cons No APYs over 5.00% No physical branch locations
Ally Bank CD Term Rates
Rates for Ally terms are highlighted below:
- 3-month CD: 3.00% APY
- 6-month CD: 4.40% APY
- 9-month CD: 4.45% APY
- 11-month CD: 4.00% APY (No Penalty CD)
- 1-year CD: 4.50% APY
- 18-month CD: 4.45% APY
- 2-year CD: 3.75% APY (Raise Your Rate CD)
- 3-year CD: 4.00% APY
- 4-year CD: 3.75% APY (Raise Your Rate CD)
- 5-year CD: 3.90% APY
See more rates in our Ally CD Rates article.
Quontic Bank
4.5
APY Range4.30% to 5.30%TermsSix months to five yearsMinimum Deposit$500
Our Experience Opening a Quontic Bank CD
Three MarketWatch Guides team members attempted to open CDs with Quontic Bank, and two were rejected via email. When we reached out to a Quontic customer service representative, the rep said that rejections are common because the bank uses a third-party system for verification. She added that two common causes are the use of virtual private networks (VPNs) and recent address changes. The two Guides team members had moved within the last 14 months, which could have been a factor in the approval process.
We were able to open a six-month CD and fund it with $500. It was easy to set up an account with the bank, which we created in just nine clicks. We particularly liked:
- You start earning interest the day you initiate your transfer, not the day your transfer is received
- To reach a customer service agent, you input your number into the website and within seconds you’re connected to a U.S.-based agent – no phone prompts or account numbers are required
- Seamless integration with budgeting apps
The biggest issue our team faced with Quontic was the rejected CD applications. We reached out to Quontic’s corporate team to comment on our experience and received the following response:
“Given Quontic is a digital-only bank, we take a strong approach to identifying someone’s digital identity and there is always a possibility that someone triggers false positives for a decline. We use a third-party platform in which we leverage best practices for an approval/denial workflow. There can be many reasons in which an applicant could be declined. Due to fraud prevention reasons, we do not disclose the exact reason for the denial. However, we continue to meet and exceed industry benchmarks for approval rates so we feel comfortable that our workflow is configured as appropriately as possible.”
Why We Picked Quontic Bank
While Quontic is a newer online bank, we like its high APYs for certificates of deposit, one of which tops 5.00%. And it was a breeze to set up our Quontic account, once one of our researchers was able to get past the bank’s third-party verification system and have an application approved.
When it comes to CDs, we like Quontic’s simple but thorough offerings. Quontic offers five traditional fixed-rate options with terms ranging from six months to five years. All terms have high APYs that beat national averages and a minimum deposit requirement of $500.
Quontic is also the only bank on our list that’s a certified Community Development Financial Institution, meaning its mission is to support economically disadvantaged communities through access to financial products such as mortgages.
Pros & Cons
Pros Earn interest the day you initiate a money transfer into the account Easy, fast and secure account setup Fast U.S.-based customer service with no prompts Cons No physical branch locations No specialty CDs Third-party verification may reject your application if you’ve recently moved
Quontic Bank CD Term Rates
Rates for Quontic terms are listed below:
- 6-month CD: 5.05% APY
- 1-year CD: 4.50% APY
- 2-year CD: 4.50% APY
- 3-year CD: 4.40% APY
- 5-year CD: 4.30% APY
Marcus by Goldman Sachs
4.5
APY Range3.90% to 5.00%TermsSix months to six yearsMinimum Deposit$500
Our Experience Opening a Marcus by Goldman Sachs CD
We opened a 14-month CD with $500 in February of 2024 to gather insights into the application process and digital platform experience. We liked Marcus by Goldman Sachs for its flexibility and streamlined features, some include:
- Gives you 30 days after account opening to add additional funds (excludes no-penalty CDs)
- Lets you add a joint account holder up to three business days after you open your account
- Option to open multiple CD and savings accounts at the same time
- Tips and FAQ on screen to provide information during the application process
- Guarantees the highest rate it offers for your CD within 10 days of account opening if you make the minimum deposit
Here are the areas we highlighted for improvement:
- Limited visibility of promotional CD options on parts of the website
- Manual process for verifying an external account with small test deposits took two days
Why We Picked Marcus by Goldman Sachs
We found Marcus, an online bank backed by finance giant Goldman Sachs, to be flexible and user-friendly, although we did have to hunt to find the best rate on its one-year CD. The bank offers three types of CDs — no penalty, traditional fixed rate and rate bump — all with competitive rates and terms ranging from six months to six years.
Marcus has a referral offer for its current online HYSA customers: if you refer a new customer who opens a savings or CD account, you’ll receive a 1% boost on your CD or savings account rate for three months. Depending on which CD you own, this could temporarily push your rate to one of the highest available at any bank.
Pros & Cons
Pros A competitive APY on three no-penalty CDs terms (7, 11, or 13 months) Allows depositors to withdraw the accrued interest on CDs each month without penalty Allows unlimited deposits within the first 30 days of a high-yield or rate-bump CD’s term Lets you select what to do when your CD matures up to one year before that date Cons No physical branch locations Lack of a checking account means it might not be a good choice for someone looking to keep their money in one bank Can take two or three days for an external account to be verified manually
Marcus by Goldman Sachs CD Term Rates
Rates for Marcus terms are listed below:
- 6-month CD: 4.80% APY
- 7-month CD: 4.70% APY (No Penalty CD)
- 9-month CD: 4.90% APY
- 11-month CD: 4.70% APY (No Penalty CD)
- 1-year CD: 4.90% APY
- 13-month CD: 4.70% APY (No Penalty CD)
- 14-month CD: 5.00% APY
- 18-month CD: 4.60% APY
- 20-month CD: 4.40% APY (Rate Bump CD)
- 2-year CD: 4.20% APY
- 3-year CD: 4.15% APY
- 4-year CD: 4.05% APY
- 5-year CD: 4.00% APY
- 6-year CD: 3.90% APY
Read our full Marcus CD Rates article for more details.
USAA Bank
4.5
APY Range0.05% to 5.05%TermsThree months to seven yearsMinimum Deposit$1,000
Our Experience Opening a USAA Bank CD
We opened a 182-day USAA CD with $1,000 to show you the process from a customer’s point-of-view. Our experience was fairly seamless, and we found the company to be user-friendly. Highlights include:
- Easy to transfer funds from existing USAA accounts
- Detailed guidance on CD types during the application process
- Pre-application checklist displaying the required documentation and information
- Lower minimum deposits for variable-rate CDs
It’s also important to note this limitation with USAA Bank:
- Exclusively available to military members, veterans and their spouses and children
Why We Picked USAA
USAA is well-known for its affordable insurance and wide variety of banking products, which are accessible only to members of the military and their families. We loved how USAA educated us on different types of CDs while we were setting up our account. USAA has over a dozen CD terms, though the most notable are the 182-day term at 5.05% APY and its nine-month term at 4.90% APY. If you qualify for membership with USAA, it’s easy to add a CD to an existing checking or savings account.
While USAA offers four adjustable-rate CDs and two variable-rate CDs, the current APY of 0.01% is so low we don’t recommend them. All three types of CDs have early withdrawal penalties.
Pros & Cons
Pros Some of the top rates available for select terms A wider range of CD term lengths than many banks Doesn’t require a larger deposit amount to get the best rates Cons Low APYs on terms under nine months Minimum opening deposits of $1,000 for fixed- and adjustable-rate CDs Membership is restricted to current and former military members and USAA members’ spouses and kids
USAA Bank CD Term Rates
Rates for USAA terms are listed below for fixed-rate CDs:
- 91-day CD: 0.05% APY
- 182-day CD: 5.05% APY
- 7-month CD: 0.05% APY
- 270-day CD: 4.90% APY
- 1-year CD: 4.80% APY
- 15-month CD: 4.70% APY
- 18-month CD: 4.60% APY
- 2-year CD: 4.40% APY
- 30-month CD: 2.75% APY
- 3-year CD: 2.75% APY
- 4-year CD: 2.50% APY
- 5-year CD: 2.50% APY
- 7-year CD: 2.02% APY
See more rates in our USAA CD Rates article.
Discover Bank
4.4
APY Range2.00% to 4.70%TermsThree months to 10 yearsMinimum Deposit$2,500
Our Experience Opening a Discover Bank CD
In February 2024, we opened a six-month Discover CD with $2,500 to give you a first-hand look into the process. We like Discover for its transparency on its account options, and we took note of the following:
- APY and CD account details clearly displayed on the brand’s website
- Included a CAPTCHA verification step in the application for security
And here are the areas where we think Discover could improve its customer experience:
- Lengthy 19-step application process, including inquiries about paperless statements and using money internationally
- Deposit not available for five days
- No chat option for customer support
Why We Picked Discover
Discover is a popular credit card provider offering cash back rewards and a free monthly FICO score report to cardmembers, but it also has many online banking products, including CDs. Discover’s CD terms range from three months to 10 years – the longest term among our picks. While Discover’s CD rates aren’t as high as some other banks (its top APY is 4.70%for a one-year term), it may be a convenient option for existing Discover customers.
While we didn’t love the lengthy application process, the bank did offer many security features like multiple verification codes and Captcha. We also liked the transparency of Discover’s account dashboard, which clearly displays our CD’s interest rate and maturity – a feature we didn’t find with most other banks.
Pros & Cons
Pros Rare 7- and 10-year long-term CDs offered at 3.75% APY APY, interest rate and maturity date clearly displayed on dashboard Offers live customer service via phone 24/7 Cons $2,500 minimum deposit on CDs, which is higher than many competitors’ requirements Steep early withdrawal penalties, especially on longer-term CDs
Discover Bank CD Term Rates
Rates for Discover terms are listed below:
- 3-month CD: 2.00%APY
- 6-month CD: 4.25% APY
- 9-month CD: 4.25% APY
- 1-year CD: 4.70%APY
- 18-month CD: 4.40% APY
- 2-year CD: 4.00% APY
- 30-month CD: 3.75% APY
- 3-year CD: 3.75% APY
- 4-year CD: 3.75% APY
- 5-year CD: 3.75% APY
- 7-year CD: 3.75% APY
- 10-year CD: 3.75% APY
Read our Discover CD rates article for more details.
BMO Alto
4.3
APY Range4.50% to 5.15%TermsSix months to five yearsMinimum DepositNone
Our Experience Opening a BMO Alto CD
For a personal look into the BMO account process, we opened a $2,500 CD with a six-month term. Here’s what we liked about becoming a BMO Alto account holder:
- Gives you the higher APY if the offered rate increases between when you open your account and fund your CD
- Convenient option to save the application and finish it later
- Two options for linking an external account to fund your CD
- Lets you cancel online instead of requiring you to call
Since the bank doesn’t offer a mobile app, we tested its online banking platform. There were several technical glitches we had to work through:
- Asked for location during the application process
- Aggressive account timeout mechanisms, leading to unintended logouts
- Error when linking bank accounts forced us to link manually
Source: alto.bmo.com via MarketWatch Guides user testing
Why We Picked BMO Alto
We liked BMO Alto, an online-only subsidiary of BMO Financial Group, for its competitive CD rates on longer-term CDs with no minimum deposit. And while it doesn’t offer a mobile app, it was easy to set up our account on its website, also accessible via mobile. Customer service is available via phone 24/7.
BMO Alto is limited to savings accounts and CDs, though, so if you want a one-stop financial institution, this isn’t it.
Pros & Cons
Pros Has one of the highest rates offered for a five-year CD No minimum opening deposit Fund your account within 10 days and if rates rise, you’ll get the higher rate Cons No mobile banking app Only allows CD funding through a BMO Alto bank account or an automated clearing house transfer from an external bank account Only offers savings accounts and CDs
BMO Alto CD Term Rates
Rates for BMO Alto terms are listed below:
- 6-month CD: 5.15% APY
- 1-year CD: 5.05% APY
- 2-year CD: 4.65% APY
- 3-year CD: 4.50% APY
- 4-year CD: 4.50% APY
- 5-year CD: 4.50% APY
See more rates in our BMO Alto CD rates article.
Barclays
4.3
APY Range3.50% to 5.00%TermsSix months to five yearsMinimum DepositNone
Our Experience Opening a Barclays CD
We opened a one-year CD and funded it with $500 for a hands-on look at Barclays’ application process. It was efficient:
- Had the fewest number of steps in its application process among the top 10 CDs we reviewed
- Option to set up two-factor authentication for additional security
However, we had some challenges with Barclays:
- One of only two accounts we tested that didn’t provide instant approval, instead making us wait for email confirmation and manual account review
- Prompted us to reset our password during the initial login, which was confusing
- Linked external account didn’t show up as an option for transferring money
- Phone system required us to enter a Social Security number to speak with an agent, unlike other banks
Our review team reached out to Barclays for comment on our experience with opening a CD and received the following response:
“We strive to provide a simple and easy experience for our customers. The majority of our customers are pleased with their online experience and savings rates that are roughly five times the national average.”
Why We Picked Barclays
It was quick and easy to set up an account with Barclays, requiring just eight clicks to complete the process. Rates for all Barclays online CDs are competitive, and there are no minimum opening deposit requirements. Barclays also gives you a little longer than other banks to fund your CD — up to 14 days.
Pros & Cons
Pros 5% APYs on shorter-term CDs No minimum balance requirements for CDs or the savings account No penalty for withdrawing interest earned on a CD before its maturity date Cons Only offers savings and CD accounts Has just seven CD term lengths Live customer support only available from 8 a.m. to 8 p.m. EST
Barclays CD Term Rates
Rates for Barclays terms are listed below:
- 6-month CD: 5.00%APY
- 1-year CD: 5.00% APY
- 18-month CD: 4.50% APY
- 2-year CD: 4.00% APY
- 3-year CD: 3.50% APY
- 4-year CD: 3.50%
- 5-year CD: 3.75% APY
Alliant Credit Union
4.2
APY Range4.00% to 5.20%TermsThree months to five yearsMinimum Deposit$1,000
Our Experience Opening an Alliant Credit Union CD
We opened a three-month CD with $1,000 to share our personal experience with Alliant. Alliant had several features we liked, including one that made it stand out from the nine other banks we opened CD accounts with:
- Instant funding from an external account, which took days with other CD providers we used
- Security measures such as naming the devices you log in with and automatically logging out after 10 minutes of inactivity
- Exceptional customer service that directly links you with an agent — no prompts
While you do need to join the credit union to be a customer, you can first apply for a CD, and if the application is approved, Alliant will automatically set up the membership for you.To maintain your membership, you must keep a $5 balance in your Alliant savings account. Alliant funds this initial deposit for you.
We thought Alliant could improve in some areas:
- Difficult to find the chat option for customer support
- CDs renew automatically and may renew at a lower rate
Why We Picked Alliant
Credit unions typically offer more favorable rates than traditional brick-and-mortar banks, and Alliant is no exception. Its top certificate rates are above 5% and if you invest in a jumbo certificate for $75,000 or more, you’ll earn an extra 0.05% APY for some term lengths. Otherwise, the minimum deposit to open a regular Alliant certificate is $1,000.
Alliant also offers an array of certificates, including three types of IRA certificates: Traditional, Roth and Simplified Employee Pension (SEP).
We also found Alliant’s customer service to be top-notch. After we called their customer service number, an agent answered our call directly. While Alliant is a credit union and membership is required, they make it easy to join by automatically setting up an account for you after your certificate application is approved.
Pros & Cons
Pros Competitive rates on CDs: 5.20% for a 1-year term Large selection of financial products, including loan and retirement options 24/7 customer service by phone Cons $1,000 minimum deposit for non-jumbo CDs Membership requirements to join the credit union Interest on CDs compounded monthly rather than daily
Alliant Credit Union CD Term Rates
Rates for Alliant non-retirement certificate terms are listed below:
- 3-month CD: 4.25% APY
- 6-month CD: 5.00% APY
- 1-year CD: 5.15% APY (standard CD) or 5.20% APY (jumbo CD)
- 18-month CD: 4.90% APY (standard CD) or 4.95% APY (jumbo CD)
- 2-year CD: 4.30% APY (standard CD) or 4.40% APY (jumbo CD)
- 3-year CD: 4.20% APY (standard CD) or 4.30% APY (jumbo CD)
- 4-year CD: 4.05% APY (standard CD) or 4.10% APY (jumbo CD)
- 5-year CD: 4.00% APY (standard CD) or 4.05% APY (jumbo CD)
The minimum deposit for standards CDs is $1,000 and $75,000 for jumbo CDs.
Citizens Access
4.2
APY Range3.35% to 5.00%TermsOne to five yearsMinimum Deposit$5,000
Our Experience Opening a Citizens Access CD
We opened a Citizens Access one-year CD with a $5,000 deposit in February 2024 to test the overall user experience, here’s what we liked:.
- User-friendly interface, making it easy to see the number of steps in the application process and a timeline
- Helpful FAQs to guide you along the account creation process
- Combines several questions on each screen and provides clear confirmations for each step
Certain aspects of our experience with Citizens Access, however, were not as positive:
- Waited on hold for eight minutes to speak with a representative
- Deposit took five days to reach the account
Source: Citizens.com via MarketWatch Guides user testing
Why We Picked Citizens Access
We like that Citizens Access, an online-only division of Citizens Bank, offers a HYSA, mortgages, student-loan refinancing and CDs. Their application process is straightforward and has ample FAQs if you run into an issue. Citizens Access is able to offer high rates with no monthly fees on its savings products since it doesn’t have physical branches to maintain. The one-year CD is a standout at 5.00% APY.
The minimum deposit to open a Citizens Access CD is $5,000, so it’s best for savers who have more to invest.
Pros & Cons
Pros Offers a competitive 5.00% APY for one-year CDs Allows you to create a CD ladder within one simple online application Ample customer service hours with live phone support seven days a week Cons The $5,000 minimum opening deposit for CDs is higher than the amount required by most online banks Only allows deposit accounts to be funded via online bank transfer or mailed checks
Citizens Access CD Term Rates
Rates for Citizens Access terms are listed below:
- 1-year CD: 5.00% APY
- 2-year CD: 4.00% APY
- 3-year CD: 3.35% APY
- 4-year CD: 3.40% APY
- 5-year CD: 3.45% APY
Top CD APYs by Term
Depending on your financial goals, the term length of a CD is an important factor to consider as APYs vary based on the duration of the term. In our latest MarketWatch Guides team CD survey, over 78% of people chose their term based on interest rate, while 28% based their decision on when they’d need their money. Common CD terms range from three months to five years. The following CDs assume a $10,000 deposit and are accurate as of April 17, 2024. Rate data is sourced by Curinos. These products may have stricter requirements than our picks above – see the institution’s website for more details.
| Institution | APY |
|---|---|
| Shoreham Bank | 5.50% |
| Cashmere Valley Bank | 5.30% |
| Banesco USA | 5.30% |
| Institution | APY |
|---|---|
| International Bank of Chicago | 5.75% |
| Grand Bank for Savings | 5.50% |
| EagleBank | 5.60% |
| Institution | APY |
|---|---|
| Merchants Bank of Indiana | 5.92% |
| Peoples Bank of Seneca | 5.58% |
| Community Savings | 5.50% |
| Institution | APY |
|---|---|
| Merchants Bank of Indiana | 5.92% |
| Dollar Savings Direct | 5.00% |
| Pacific City Bank | 4.85% |
| Institution | APY |
|---|---|
| First National Bank of America | 4.55% |
| First Internet Bank | 4.55% |
| BMO Alto | 4.50% |
Is Now the Right Time to Buy a CD?
In our survey of Americans who have used a CD within the past five years, over half of the respondents told us they opened a CD in either 2023 or 2024. High interest rates were the main reason why people opened a CD, and 40% of respondents reported earning a rate between 4% and 6%.
We spoke to Preston Caldwell, chief U.S. economist at Morningstar Research Services, on the future outlook for CDs. He expects the federal funds rate to drop from its current range of 5.25% to 5.5% to 3.75% to 4% by the end of the year. He expects short-term CDs to see a similar dip of around 1.5%.
Given the expectations for rates in 2024, experts like Caldwell advise securing higher CD rates now by purchasing longer-maturity CDs, such as those lasting at least five years.
“This will allow investors to lock in high returns for an extended period of time, which they’ll miss if they invest in short-term instruments and interest rates fall as we expect,” Caldwell said.
Federal Reserve Predictions
While the Federal Reserve has indicated that interest rate cuts are coming in 2024, no cuts have been made yet. Federal Reserve Chair Jerome Powell told a House Financial Services Committee in early March that the Federal Reserve would likely cut interest rates but is keeping a keen eye on inflation before making any decisions. So far this year, the Reserve has held rates between 5.25% and 5.50%.
The last time CD rates reached 5% was December 2007. From 2008 to early 2023, rates averaged at 0.94% and only briefly surpassed 2%.
Over the past year, the top CD rates offered by the online banks and credit unions we track have remained steady but have taken a slight dip in recent weeks. Now may be an opportune time to open an account and maximize your savings before rates likely fall later in 2024.
Understanding CDs
CDs are time-based deposit accounts from banks, credit unions or other financial institutions. With the exception of variable-rate and no-penalty products, CDs can help balance risk in a portfolio because most require you to keep your money deposited for a set period in exchange for fixed-rate earnings.
CDs can help balance risk in a portfolio because most require you to keep your money deposited for a set period in exchange for fixed-rate earnings. There are some exceptions, such as variable-rate CDs or no-penalty CDs, that have changing rates or don’t require you to leave funds deposited for the CD’s entire term.
“The pros of investing in a CD include FDIC protection and a guaranteed fixed rate for your cash. Cons include a lack of liquidity and penalties for early withdrawal of your funds.”
- Marguerita Cheng, founder of Blue Ocean Wealth
Early Withdrawal Penalties
Most CDs come with early withdrawal penalties if you take money out of the account before your CD matures, which is when its term ends. That makes CDs best for people who don’t need liquidity for those funds.
"There are certain situations when paying the penalty may make sense,” Cheng said. “For example, covering medical expenses or home repairs when you may end up carrying a balance on your credit card."
The threat of an early withdrawal penalty could also be useful for some people who are tempted to spend their money if they have easy access to it.
"From a psychological perspective, knowing you would have to pay a penalty to withdraw the money early may make you more disciplined to not touch your money if it’s sitting in a CD vs. other products that do not have a penalty, like your typical savings account," said Renee Stene, financial advisor and founder of Weddington Advisors.
According to our CD survey, over 83% of Americans with a CD avoid dipping into their principal (the amount of money they invested) before their CD term ends.
Deposit Insurance
If you open a CD with a bank insured by the Federal Deposit Insurance Corp. (FDIC), your deposit is automatically insured at no cost to you for up to $250,000 per depositor, per insured bank and ownership category. This means that if your bank fails, you’ll be covered up to the maximum insurable amount. Credit union CDs, sometimes called share certificates, receive similar protection through insurance from the National Credit Union Administration (NCUA).
Risks
While a CD is an inherently safe fixed-income investment, like any investment, it’s not without some risks.
One of the biggest risks is facing an early withdrawal penalty if you need to access your money before the CD matures. While you can lock in your interest rate for a set amount of time, you won’t be able to use your money for other purposes. If you withdraw funds early, you’ll forgo several months of interest payments as a penalty.
Another risk is missing out on higher interest rates if rates rise during the term of your CD. However, a fixed rate can also work in your favor if rates drop.
Finally, CDs offer lower returns than stocks, index funds and even some bonds. By putting your money in a CD, you’re guaranteeing your interest rate, but you may miss out on higher returns elsewhere.
Promotional CD Rates
Some banks offer promotional CD rates alongside their normal fixed CD rates. Promotional CD rates, also called Special CD rates, usually offer competitive APYs and can have unique term lengths such as seven months, nine months or 13 months. These special rates are typically offered for a limited time and are often used to entice new customers.
Here are some promotional CD rates available now:
- Marcus by Goldman Sachs: 5.00% APY on a 14-month Special CD through April 17, 2024
- Ally Bank: 4.55% APY on a 14-month Select CD through June 19, 2024
- Capital One: 5.10% APY on a 10-month Special CD at 5.05% APY
Once the original term matures, promotional CDs usually renew to the nearest normal fixed-rate APY and term.
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The highest CD rates can often be found with smaller banks and credit unions. This is typically because smaller banks are competing for clients against larger banks and credit unions are member-focused, not-for-profit institutions.
How Do I Get the Most Out of My CD?
To maximize your CD earnings, consider the type of CD you need and implement strategies to minimize your potential risk. You may want to use a CD ladder to diversify your maturity dates as interest rates change or a brokered CD to get a broader range of options and potentially higher yields.
Consider Your CD Type
The first way to maximize your CD’s potential is to consider the type you need. Here’s a quick breakdown of how they differ:
| Traditional CD | Bump-Up CD | No-Penalty CD |
|---|---|---|
| Fixed APY for the entire term | Allows you to get a higher rate if the available rate rises during you CD’s term | Doesn’t charge a penalty if you withdraw principal before your CD matures |
| Typically offers higher APYs than traditional savings accounts | Provides flexibility in case rates increase before your CD matures | Allows early withdrawal at no cost |
| Best for those seeking predictable, guaranteed returns | Best for investors who expect rates to increase | Best for those who may need access to their funds before the CD matures |
Implement a CD Ladder Strategy
Creating a CD ladder involves purchasing CDs with varying maturity dates instead of investing in just one CD.
“By staggering the maturity dates, you can take advantage of higher interest rates without giving up access to your cash for an extended period of time,” Cheng said.
Here’s how it typically works: Instead of putting all of your funds into a single CD, you divide your investment into smaller portions to buy separate CDs with different term lengths, such as six, 12 and 18 months. As each CD matures, you can reinvest the money into a new CD, effectively creating a “ladder” where a CD matures at regular intervals.
“A CD ladder can lower interest-rate risk,” Cheng said. “For example, if you put all your funds in one three-year CD, you may miss out on an increase in interest rates that could occur in the next few years while your cash is tied up.”
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Check out ourCD ladder templateto build your own CD ladder.
Look Into Brokered CDs
Brokered CDs are offered by brokerage firms such as Vanguard, Fidelity or Schwab rather than traditional banks or credit unions. You can often get higher CD interest rates through brokerage firms because they negotiate with multiple banks on behalf of their clients.
Brokered CDs also offer flexibility in terms of initial investment amounts and maturity dates, which could make them attractive options for people who want to diversify their portfolios. But because brokered CDs can be sold on the secondary market, unlike bank CDs, they may lose value.
Alternatives to CDs
While CDs are a reliable way to earn money on cash investments, there are several alternatives. CDs may offer higher interest rates than traditional savings accounts or money market accounts, and can be less risky than bonds, but their downside is less liquidity. In our recent CD survey, roughly 43% of Americans considered opening a high-yield savings account before opening a CD.
We’ll compare CDs to these other savings and investment options below.
| Features | CDs | High-Yield Savings Accounts | Money Market Accounts | Bonds |
|---|---|---|---|---|
| Type of investments | Time deposit | Savings account | Savings account | Debt security |
| APY | Typically fixed | Variable | Variable | Fixed or variable |
| Timeline | Fixed term | No fixed term | No fixed term | Fixed term |
| Risk | Low | Low | Low to moderate | Moderate to high |
| Ease of Access | Limited access until maturity | Immediate access | Immediate access | Varies |
| Initial Deposit | Varies | Typically low | Typically low | Varies |
| Insured by the FDIC or NCUA | Typically | Typically | Typically | No |
CDs vs. Savings Accounts
CDs and traditional savings accounts are types of deposit accounts offered by banks and credit unions. There are benefits and drawbacks to each type of account.
CDs limit your access to your money, which can be good or bad: you’re forced to save it until your term ends, but if you need the money, you’ll pay a penalty to withdraw it. CDs also usually have higher APYs than savings accounts, and you lock in your APY for the entire length of the term.
Savings accounts can drop their interest rates anytime. However, savings accounts give you flexibility with your money since there’s no penalty to withdraw it, and if interest rates rise, your savings rate may also increase.
1-Year CDs vs. Money Market Accounts
A money market account is a blend of checking and savings accounts. It often earns interest at a higher rate than a traditional savings account but may have restrictions that those accounts don’t. For example, some money market accounts limit the number of transactions you can make during a statement period.
While interest rates on a money market account rise and fall, they allow more flexibility, generally letting you access your money without penalties, unlike CDs. You can also regularly add money to a money market account, whereas most CDs won’t let you add money after making your initial deposit. If rates rise, your money market interest rate will probably also increase. One downside to a money market account is that because you can withdraw money without a penalty, you may be more likely to spend it.
CDs currently offer higher average APYs than money market accounts. With a regular one-year CD, you’ll lock in your rate until the term ends, so if rates fall, you’re protected. If rates rise, you’re stuck with the rate you have. You’ll also pay a penalty if you need to access your funds before the CD matures.
1-Year CDs vs. Bonds
A bond is a loan you make to a company or the government with a set interest rate, paid back to you over a set term. CDs and bonds currently have very similar yields.
CDs are generally considered a safer investment than bonds since companies can default on their bonds. However, U.S. Treasury bonds are low risk as they are issued by the U.S. government, which has a strong credit rating and history of paying its debts. CDs are less liquid than bonds — you’ll pay an interest penalty if you withdraw your money early.
Like CDs, bonds have set interest rates but are a more liquid investment because you can resell your bond before it matures. Bonds can sometimes lose their value in the resale market if interest rates drop. Also, bonds are usually sold in increments of $1,000, while most CD products have no set deposit amount, allowing you to choose how much money to invest. An added benefit of bonds is that they offer regular fixed income, as your bond interest is repaid, which usually comes every six months.
How To Choose the Best CD For You
To find the CD that works for your finances, consider these eight factors:
- Define your goals: What’s the purpose of your investment? Are you saving for a short-term goal, such as a vacation, or a long-term goal, such as a down payment on a house?
- Evaluate your time frame: Decide how long you can commit your funds. CDs have term lengths varying from a month to several years. Keep in mind that shorter-term CDs usually have the best APYs right now since market rates are expected to drop in 2024. Also keep in mind that most CDs have early withdrawal penalties for taking money out before the term ends.
- Gauge your risk tolerance: What level of risk are you comfortable with? If stability and predictability are your priorities, a fixed-rate CD might be the best choice.
- Compare APYs and terms: Check with banks and credit unions for the term lengths you’re considering. Compare the options, noting the APYs for similar products. Remember that smaller banks and credit unions usually offer the highest rates.
- Consider minimum deposit requirements: Some banks offer CDs with no minimum deposit, while others require hundreds or thousands of dollars. Make sure any minimum deposit fits into your budget.
- Explore specialty CD options: Some banks offer options such as bump-up CDs, no-penalty CDs or add-on CDs, which can appeal to different people for different reasons. For instance, bump-up CDs allow you to request a higher interest rate if your bank begins offering a better rate for the CD you have. No-penalty CDs give you a lower interest rate for the flexibility of removing your funds with no penalty.
- Check for additional features: Look for perks such as rate guarantees, flexible maturity options or loyalty rewards.
- Look for credibility: Choose a credit union or bank that’s reputable, financially stable and NCUA- or FDIC-insured. Also, reading customer reviews can give you insight into customer service, the online experience and overall satisfaction with the bank.
FAQ: Best CD Rates
Online banks have some of the highest-paying CD rates right now, reaching 5.30% APY or more. There are some smaller credit unions offering higher rates, but these typically have membership requirements and geographic restrictions.
The top rates are now just under 6.00%. These are typically offered by a handful of credit unions that may have membership restrictions. However, because CD rates can rise and fall based on economic conditions, CDs paying 6.00% APY could be more common if interest rates increase.
The best CD rates for $100,000 are above 5.50% APY and tend to come from credit unions (though these usually have membership restrictions) or online banks. For larger sums such as $100,000, it may be more lucrative to open a CD from a bank that compounds interest daily rather than monthly, even if the APY is slightly lower.
High-risk investors may not find CDs attractive since their guaranteed payouts mean they often have lower rates of return than other types of investments. But variable-rate CDs may satisfy those looking for more risk since their interest rates can change when benchmark rates go up or down.
Bump-up CDs also allow for some risk since they often have lower APYs than some fixed-rate CDs but allow you to request a higher rate at least once during the CD’s term if the bank raises rates for new account holders. Additionally, you might consider a brokered CD that comes with a higher risk and higher APYs.
Methodology
Our team researched more than 100 of the country’s largest and most prominent financial institutions, collecting information on each provider’s account options, fees, rates, terms and customer experience. We then scored each firm based on the data points and metrics that matter most to potential customers. Read our full methodology.
For our list of the best CD rates, we selected the highest-scoring financial institutions in our review of CDs. These banks and credit unions provide CD products available to customers throughout the U.S. and earn high scores for offering low or no minimum opening deposit, a variety of CD product and term options and competitive yields on six-month CDs and one-, two- and three-year terms.
For the account opening process with these CDs, we opened each account with the necessary minimum deposit and measured the speed and thoroughness of the account opening process, ease of use of the account website, speed of our deposit to fund the account, rewards and features available to account holders and our experience with customer service chat and phone options.
*Data accurate at time of publication
**Rates accurate as of April 17, 2024
***Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Weddington Advisors and Great Valley Advisor Group are separate entities from LPL Financial.
Certificates of Deposit are FDIC insured and offer a fixed rate of return if held to maturity. There is no assurance that the techniques and strategies discussed are suitable for all investors or will yield positive outcomes. The purchase of certain securities may be required to effect some of the strategies. Investing involves risks including possible loss of principal.
****Our review team reached out to Synchrony Bank, Quontic Bank, Ally Bank, Marcus by Goldman Sachs, Discover Bank, BMO Alto and Alliant Credit Union for comment on our experiences with opening CDs but did not receive responses. Citizens Access responded but had not provided a comment at the time of publication.
Editor’s Note: Before making significant financial decisions, consider reviewing your options with someoneyou trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
Cheri ReadWriter
Cheri Read is a former accountant turned professional personal finance writer. As someone who struggled as a single mom for many years, she’s passionate about helping others tame their finances and enjoy their lives. Her work has been featured in a variety of publications over the last decade, including Money Saving Mom and She Owns It. Cheri lives in West Texas and spends most of her free time reading books dedicated to financial freedom or checking out the latest new side hustle.
Rashawn MitchnerManaging Editor
Rashawn Mitchner is a MarketWatch Guides team editor with over 10 years of experience covering personal finance and insurance topics.
