Certificate of deposit rates, or CD interest rates, are the annual yields on fixed-term deposits at banks and credit unions. They tend to offer higher returns than savings accounts and money market accounts. However, they come with a set amount of commitment and may carry early withdrawal penalties. Bank and credit union CD rates depend on a variety of factors, including the Fed’s policy on short-term interest rates. They also depend on the institution’s financial condition, which may influence its ability to attract and retain deposits. For example, a bank that is heavily in debt might be less interested in offering high CD rates than a credit union with lower borrowing costs and more cash on hand.
The term of the CD also impacts the rate. Typically, the longer the term, the higher the rate. In addition, some banks and credit unions offer relationship rates higher for current customers or those with multiple accounts. Some institutions, such as CIT Bank and Sallie Mae, also offer no-penalty CDs. These allow you to withdraw your funds without penalty once the term ends, but they typically pay a lower interest rate. This can be helpful if you believe that rising interest rates are imminent but don’t want to commit to a long-term CD.
| CERTIFICATE | ANNUAL PERCENTAGE YIELD | MINIMUM DEPOSIT REQUIREMENT | TERMS |
|---|---|---|---|
| Connexus Credit Union | 3.91% to 5.61% | $5,000 | 12 Months to 5 Years |
| First National Bank of America | 4.40% to 4.65% | $1,000 | 6 Months to 7 Years |
| Quontic Bank | 4.30% to 5.30% | $500 | 6 Months to 5 Years |
| PenFed Credit Union | 3.00% to 4.90% | $1,000 | 6 Months to 7 Years |
| CommunityWide Federal Credit Union | 4.00% to 5.50% | $1,000 | 6 Months to 5 Years |
| Bethpage Federal Credit Union | 2.25% to 5.00% | $50 | 3 Months to 5 Years |
| Bread Savings | 4.35% to 5.35% | $1,500 | 12 Months to 5 Years |
| TIAA Bank | 3.95% to 5.25% | $1,000 | 3 Months to 5 Years |
| Consumers Credit Union | 0.50% to 5.00% | $250 | 91 Days to 5 Years |
| Marcus by Goldman Sachs | 3.70% to 5.00% | $500 | 6 Months to 6 Years |
CDs for Investment
CDs can be a good option for investors in the current low-interest-rate environment. They’re FDIC-insured and offer a fixed rate of return higher than savings accounts earn. They’re also a safe investment because you can only withdraw funds when the term ends, and you’ll be penalized for doing so before then. The best CD rates depend on your time horizon and the amount you deposit. The longer the term, the higher the interest rate. Some banks also increase the rate for jumbo CDs (those with a $100,000 minimum deposit). Bankrate surveys hundreds of institutions to calculate national average APYs on various CD terms. These figures are based on the most competitive offerings at online banks and large brick-and-mortar banks. While you’ll likely earn less than if you put your money in stocks, the risk-free return is worth it if you can wait until your term is up and don’t mind a little loss of principal. However, if rates rise when your certificate matures, you’ll want to think twice before withdrawing your funds. In that case, you may want to consider a ladder strategy, which involves opening multiple CDs with different terms, so you have money coming due more frequently. That way, you can reinvest at rising rates before you need the cash.
CD Rates Calculator
The CD calculator lets users input their initial contribution, term length (expressed in months or years), and interest rate to see how much their investment will grow over time. It can also be used to compare rates with savings accounts and money market accounts. The user can select the frequency with which the account will compound; the more frequently it compounds, the faster their savings will grow. The user can also enter their marginal tax rate to calculate the amount of tax they will pay on their interest income. This is especially important if their account is taxable.