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CDs are relatively easy to wrap your head around. They’re essentially savings accounts that earn a fixed interest rate for a fixed amount of time, but you generally can’t withdraw funds from the account before the term is over without sacrificing some or all of the interest you’ve earned.
Banks and credit unions offering the best CDs pay higher APYs or dividend rates relative to the national average rates. According to the FDIC, average APYs on CDs with terms spanning from one month to five years ranged from 0.20% to 1.72% as of July 17, 2023. The best CD rates are far higher.
We’ve compared 142 CD and certificate accounts at 84 nationally available banks and credit unions to find some of the best accounts available.
While annual percentage yield (APY) wasn’t the only criteria considered while ranking the best certificate of deposit accounts, it was one of the most important factors. Here is a summary of the top CD rates, starting with the highest CD rate you can get.
Read on to learn why we picked each account—including their pros and cons—and to access individual bank reviews. You can also view the best CD rates for specific term lengths.
Annual percentage yields (APYs) and account details are accurate as of Aug. 3, 2023.
3.91% to 5.36%
$5,000
12 Months to 5 Years
3.91% to 5.36%
$5,000
12 Months to 5 Years
Connexus Credit Union pays some of the highest yields available on its share certificates (which would be called CDs at a bank). Five share certificate terms are available: 12 months, 24 months, 36 months, 48 months and 60 months, with APYs ranging from 3.91% to 5.36%. There’s also a 15-month Special certificate that offers 5.25% APY. The minimum deposit is $5,000.
Connexus also ranks well for digital experience. Its mobile app is rated highly on both the App Store and Google Play.
Unlike some credit unions, Connexus doesn’t require you to open a checking account in order to open a share certificate. It does, however, require credit union membership. If you don’t qualify under the regular group and geographic categories of membership, you can become eligible to be a member of the credit union by making a one-time $5 donation to the Connexus Association.
Read our full Connexus Credit Union Review.
The yields earned on credit union accounts are referred to as dividends rather than interest. Dividends are compounded and credited to your account quarterly. The early withdrawal penalty for the Connexus three-year share certificate is equal to 180 days’ dividends on the amount withdrawn.
There’s a 10-day grace period after maturity when you can withdraw your funds without penalty. If you take no action, your share certificate automatically renews at maturity for the same term and at the current dividend rate for a three-year certificate.
You do not have to open a Connexus checking account to have a Connexus certificate, but each Connexus member is required to have a Connexus savings account (minimum $5 deposit).
4.40% to 4.65%
$1,000
6 Months to 7 Years
4.40% to 4.65%
$1,000
6 Months to 7 Years
First National Bank of America (FNBA) has seven CD terms—ranging from six months to 84 months—with competitive APYs from 4.40% to 4.65% and a relatively low minimum deposit requirement of $1,000. CDs from FNBA may be particularly good for savers looking for longer-term CDs. It’s one of the few banks in our database offering CD terms of 72 and 84 months, paying 4.60% and 4.60% on those terms, respectively.
FNBA has a highly rated mobile app on both the App Store and Google Play for those seeking to manage their CD accounts on the go.
Read our full First National Bank Of America Review.
Interest is compounded and credited to your account quarterly. The early withdrawal penalty varies by term. The bank provides a notice approximately 30 days before the CD matures, at which time you can decide to withdraw your funds, automatically renew your CD or roll over your funds to a different CD. Rates and CD options may differ slightly for Michigan residents.
4.30% to 5.30%
$500
6 Months to 5 Years
4.30% to 5.30%
$500
6 Months to 5 Years
Quontic Bank offers competitive rates on its CDs and provides innovative online and mobile tools to manage those CDs—precisely what you would expect from an online bank. Quontic’s user-friendly mobile app is available on both iOS and Android.
In total, Quontic offers five different CD terms to choose from: six months, 12 months, 24 months, 36 months and 60 months, with APYs ranging from 4.30% to 5.30%. You can fund your account by transferring money from an existing Quontic account, from another bank via ACH transfer or by using Plaid technology. The minimum deposit is a low $500.
Quontic claims you can open an account online in three minutes or less.
Read our full Quontic Bank Review.
Interest is compounded daily and credited monthly. You cannot make a partial withdrawal of principal and you must request the bank’s consent to withdraw principal before the maturity date. The Quontic Bank three-year CD’s early withdrawal penalty equals two years’ interest, which potentially could nearly erase your interest earnings. If the penalty is assessed before the interest is earned, your principal could also be reduced.
When the CD matures, there’s a grace period of 10 days to withdraw the funds or select a different Quontic CD. If you take no action, the CD automatically renews for the same term at the current three-year CD interest rate.
3.00% to 4.90%
$1,000
6 Months to 7 Years
3.00% to 4.90%
$1,000
6 Months to 7 Years
PenFed Credit Union pays competitive yields, ranging from 3.00% to 4.90%, on nine different Money Market Certificate terms, from six months to seven years. And, at $1,000, the minimum deposit requirement is fairly modest.
The credit union gets excellent customer satisfaction scores. It also has a highly rated mobile app, available on iOS and Android. And don’t let the “money market” in this certificate’s name confuse you; this is a share certificate, not a money market account.
With PenFed, you choose your maturity option when you open your certificate and can change it anytime prior to maturity. This gives you some flexibility, and extra time, to decide what you’d like to do with the funds in your account when it matures. You can transfer the funds into another PenFed account, roll it into a new certificate, get a mailed check or transfer it via ACH.
You can join PenFed Credit Union by making a $5 deposit into a savings account.
Read our full PenFed Credit Union Review.
The yields earned on credit union accounts are referred to as dividends rather than interest. Dividends on certificates with terms greater than six months are compounded daily and credited monthly.
All early withdrawal requests must be made in writing and are subject to early withdrawal penalties. If the one-year certificate is redeemed within the first year, all dividends will be forfeited. If redeemed after the first year but prior to the maturity date, the penalty will equal 30% of what would have been earned if the certificate had been held to maturity. The penalty will not exceed the total dividends earned.
4.00% to 5.25%
$1,000
6 Months to 5 Years
4.00% to 5.25%
$1,000
6 Months to 5 Years
CommunityWide Federal Credit Union provides a competitive 4.00% to 5.25% yield on all its certificate accounts. Savers can choose from seven different terms: six months, 12 months, 18 months, 24 months, 36 months, 48 months and 60 months. The minimum deposit is a relatively modest $1,000.
Unlike many other credit unions and banks, CommunityWide won’t automatically renew your certificate account upon maturity. Instead, you can choose to renew it for another term or to deposit the principal and interest into another account at CommunityWide or another institution.
CommunityWide requires membership in the credit union to open a certificate account. Membership is open to U.S. citizens who open a savings account with a $10 minimum deposit, $5 of which goes to an organization of your choice—the Marine Corps, Habitat for Humanity or Goodwill.
Read our full CommunityWide Federal Credit Union Review.
The yields earned on credit union accounts are referred to as dividends rather than interest. Dividends are compounded and credited to your certificate account monthly. Early withdrawal penalty: Any amount withdrawn prior to the maturity date will be assessed a penalty equal to the amount of the withdrawal times the remaining term (days) of the certificate at the rate of two times the current APY (divided by 365) paid on the certificate.
Here’s an example of how that might work. Say you withdraw $1,000 from your CD 30 days before the maturity date. You multiply 1,000 by 30 to get 30,000. And say the APY is 1.10%. You double that to 2.20, then divide by 365, for a result of roughly 0.006. Multiply that by the 30,000 figure, and you have your penalty: approximately $180.
2.25% to 5.00%
$50
3 Months to 5 Years
2.25% to 5.00%
$50
3 Months to 5 Years
Bethpage Federal Credit Union’s Certificate Accounts check several boxes. These certificates pay competitive dividends, ranging from 2.25% to 5.00% APY, and have a very low $50 minimum deposit and balance requirement. Bethpage offers nine standard certificates, ranging from three months to 60 months.
Notably, Bethpage is one of the few institutions on our list that offers a very competitive dividend on a three-month certificate, making it a good spot for those interested in saving for near-term goals.
You can manage your certificate account online or via Bethpage’s mobile app. And you can become a member at Bethpage by making a $5 deposit into a Bethpage savings account.
Read our full Bethpage Federal Credit Union Review.
The yields earned on credit union accounts are referred to as dividends rather than interest. For all certificates opened online, dividends are compounded daily and credited monthly. If you were to withdraw your entire principal before the end of the three-month term, the early withdrawal penalty would basically erase your earnings: The penalty equals 90 days’ dividends on the principal amount withdrawn.
When your certificate matures, there is a seven-day grace period during which you can renew or make changes to the account. The certificate will automatically renew, at the same term and current APY, unless you contact Bethpage by phone, online or in person.
4.35% to 5.35%
$1,500
12 Months to 5 Years
4.35% to 5.35%
$1,500
12 Months to 5 Years
Overall, Bread Savings (formerly Comenity Bank) offers competitive rates on its CDs. You can open one by making a $1,500 minimum deposit. Five term lengths are available: 12 months, 24 months, 36 months, 48 months and 60 months. The APY is 4.35% to 5.35% on all term lengths.
CDs from Bread Savings allow account holders to deposit up to $1 million per account and $10 million per customer, a balance maximum that’s significantly higher than offered by other banks on our list. Like the other banks on this list, CDs at Bread Savings are insured up to $250,000 per depositor, for each ownership category, by the FDIC in the event of a bank failure. But the option to deposit more is available.
Customers can monitor their CD accounts using the Comenity Direct mobile app.
Read our full Bread Savings Review.
Interest is compounded daily and credited monthly. The early withdrawal penalty equals either 180 or 365 days’ simple interest, depending on the term. There’s a 10-day grace period to withdraw funds or close the account after maturity. If you don’t take action, your CD will automatically renew.
3.95% to 5.25%
$1,000
3 Months to 5 Years
3.95% to 5.25%
$1,000
3 Months to 5 Years
TIAA Bank offers 10 CD terms, ranging from three months to five years. The minimum deposit requirement to open an account is relatively modest—$1,000. And the bank’s CD rates, ranging from 3.95% to 5.25% APY, are competitive across term lengths.
TIAA also offers a 20-day advanced maturity alert, giving you plenty of time to figure out what to do with your funds. There’s also a 10-day grace period following the maturity date.
Customers can check in on their CD account via TIAA’s website or the bank’s highly rated mobile app.
Read our full TIAA Bank Review.
Interest on the TIAA Bank three-month CD compounds daily and is credited monthly. If you withdraw your principal before the maturity date, the early withdrawal penalty equals 22 days of simple interest. TIAA Bank offers a Web Safety Guarantee that provides 100% protection for any funds lost due to unauthorized online use or a TIAA Bank mistake.
0.50% to 5.00%
$250
91 Days to 5 Years
0.50% to 5.00%
$250
91 Days to 5 Years
At Consumers Credit Union, you’ll find 10 certificate terms, from 91 days to five years, all offering competitive dividend rates, ranging from 0.50% to 5.00% APY. There’s a low minimum deposit requirement to open a certificate—$250—and dividends compound daily and credit to your account monthly.
Consumers is mostly an online credit union, although it does offer some branch locations throughout Illinois. If you’re not near a branch, you can take care of all of your banking needs via Consumers’ website and mobile app. It also has a 24/7 live chat feature and customer service is available by phone six days a week.
You can join Consumers Credit Union by making a one-time donation of $5 to the Consumers Cooperative Association.
Read our full Consumers Credit Union Review.
The yields earned on credit union accounts are referred to as dividends rather than interest. Dividends compound daily and credit to your account monthly. For the 91-day term certificate, the early withdrawal penalty is 60 days’ dividends. This penalty applies whether or not the interest has been earned, so the penalty could reduce your principal balance.
There’s a grace period of 10 days after your certificate matures to withdraw funds from your account. Otherwise, the certificate renews automatically for the same term at the current APY.
3.70% to 5.05%
$500
6 Months to 6 Years
3.70% to 5.05%
$500
6 Months to 6 Years
Marcus by Goldman Sachs offers nine different terms, from six months to six years, with competitive rates ranging from 3.70% to 5.05% APY and a low minimum deposit requirement of $500.
Marcus allows for the penalty-free withdrawal of interest earned on your CD each month. You can either transfer the interest to a Marcus Online Savings Account or an external bank account. Just keep in mind that withdrawing interest lowers the overall amount you can earn on your investment.
Marcus also offers a 10-day CD rate guarantee. If the rate on the CD term you select goes up within the first 10 days after funding your account, you’ll automatically get the higher rate. You must deposit at least $500 within the first 10 days to get that guarantee.
Like many other online banks, it has a mobile app that provides 24/7 access to your accounts.
Read our full Marcus By Goldman Sachs Review.
Interest is compounded daily and credited monthly. There’s a 10-day grace period after the maturity date to withdraw funds, renew the CD or close the CD and open a new one. The CD automatically renews if you take no action.
If you’re shopping for a particular CD term, check out the best CD rates by term below. Although APY is the primary factor here, these banks and credit unions also rank well in other categories, such as minimum requirements, interest compounding frequency, customer experience and digital banking options.
To create this list, Forbes Advisor analyzed 142 CD and share certificate accounts across 84 financial institutions, including a mix of traditional brick-and-mortar banks, online banks and credit unions. For the star rating, we ranked each account on 11 data points within the categories of APY, minimums, compound interest schedule, customer experience, digital experience, available terms and overall availability. We also analyzed and ranked each account by individual term.
The following is the weighting assigned to each category:
CD accounts with higher APYs rose to the top of the list. Minimum deposit requirements of $10,000 or higher affected scores negatively. Accounts with daily compounding interest schedules were scored higher than those with monthly or quarterly schedules. To appear on this list, the account must be nationally available.
To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Reviews Banks.
CD rates today range from 5.15% and up, depending on the term. CD rates are not static, and banks may adjust them up or down to keep pace with changes to benchmark rates. The banks offering the best CD rates can change from day to day.
Banks can vary greatly in the CD rates they offer, with online banks tending to offer higher rates than national brick-and-mortar banks. Here are some of the current CD rates at top banks:
CD rates are on an upward trend, thanks to the Federal Reserve’s decision to institute multiple rate hikes in an attempt to curb inflation. When the Federal Reserve raises the federal funds rate—the rate at which banks lend to one another overnight—rates on deposit accounts tend to follow suit.
Whether current CD rates will hover at those levels or go even higher may hinge largely on whether the Fed decides to introduce additional rate hikes. In general, the CD rates forecast is calling for even higher rates, though where they’ll top out remains to be seen.
Use the list of CDs above to start your search for the best rates. Compare rates from several banks and credit unions to find the best options. Pay attention to any deposit requirements and possible withdrawal penalties before opening a CD. Since your funds are inaccessible for the length of the term, do your due diligence to determine how much money you can afford to park in a CD account, so you don’t end up paying a withdrawal penalty later.
The Federal Reserve periodically adjusts its benchmark federal funds rate, which underpins most interest rates including the rates paid on CDs. When the Federal Open Market Committee (FOMC) establishes its target rate, interest rates throughout the economy shift accordingly.
When the Fed attempts to combat inflation, the FOMC will usually increase rates to tighten the money supply. When unemployment is high or fears of a recession persist, the Fed will typically lower its target rate to spur growth.
Any adjustment in the federal funds rate is usually followed by a corresponding adjustment in the CD interest rates offered by banks. Banks may also adjust CD rates prior to an announcement by the Federal Reserve based on speculation about future interest rate changes.
On July 25, 2023, the Federal Open Market Committee announced the fourth rate hike in 2023, raising the federal funds rate a quarter point to a range between 5.25% and 5.50%. As of July 2023, the Fed has suggested that rates may increase at least one more times before the end of the year.
Certificates of deposit are time deposit accounts. They earn a fixed rate of interest on the money you invest for a fixed period of time. Unlike a savings account, CDs generally don’t allow you to withdraw the principal at any time during the term. If you withdraw money before the maturity date, you’ll often pay an early withdrawal penalty fee.
CDs lock up your money for a set period. In exchange, the bank or credit union pays an interest rate generally higher than rates found on a savings account. Banks and credit unions offer CDs and certificates in a variety of terms.
Typically, the longer the term, the higher the interest rate. However, recent pandemic-fueled uncertainty in the U.S. economy has caused some banks to price CDs differently, such as paying the same rate for all terms, or paying a higher APY for a shorter term.
CD rates are set like other banking rates. Banks and credit unions often use an index rate, typically the federal funds rate (also known as the “fed rate”), as a base to set rates for all interest-bearing accounts. When the fed funds rate rises, banks and credit unions will generally increase the interest rates on accounts like savings and CDs. When the fed funds rate falls, banks will then lower their rates on those same accounts.
The Federal Deposit Insurance Corporation (FDIC) tracks rates on deposit and Treasury instruments each month. When comparing CD rates, you can use the FDIC chart to see how well a particular bank or credit union’s CDs stand up against the national averages.
In addition to tracking current interest rates in the economy, banks and credit unions set rates based on a CD’s term. Generally, the longer you keep your money in a CD, the higher your interest rate. However, this is not always the case, and banks and credit unions may feature or promote individual terms at higher rates.
You have several types of CDs to choose from if you’re thinking about opening a CD account. Availability may vary between banks.
Related: Best Jumbo CD Rates
CDs may be worthwhile for those who want low risk and guaranteed returns. They can also benefit those interested in keeping their savings locked up from temptation.
Before you settle on a CD, make sure you shop around and compare CD rates to ensure you’re getting the highest rate of return possible.
Another important consideration with certificates and CDs is the likelihood of having to pay an early withdrawal penalty if you withdraw your funds before the stated maturity date.
There are several reasons why CDs are a smart way to build your savings.
There are also some drawbacks to certificates of deposit.
CD rates are set by banks and credit unions based on factors like the term length and the current interest-rate environment. The highest rates are typically reserved for longer CD terms.
Certificates of deposit carry fixed interest rates, making it easy for individuals to calculate the exact return to expect. You can calculate your guaranteed return on a CD using the following information:
You can also use a CD calculator to determine how much interest you’ll earn with a CD. For example, if you opened a 12-month CD earning 2.50% APY and deposited $1,000, you’d earn $25 over the course of one year. If you chose a 24-month CD with that same rate, you’d earn $50.62 by the end of two years. Plug in different term lengths or deposit amounts to see how it affects the overall savings earned.
CDs are safe. These products are insured by the FDIC at banks up to $250,000 per depositor, per bank, for each account ownership category, in the event of a bank failure. The NCUA insures CDs up to the same amount at federal credit unions and most state-chartered credit unions.
The amount of interest you’ll earn on a CD depends on the amount you invest, the term of the CD and the interest rate. The easiest way to estimate how much you could earn on a CD is to use a CD calculator, as the math can get a bit tricky. Here are some examples demonstrating the effects an increased investment and compound interest can have on your bottom line.
A $1,000 CD earning a 3.50% APY will net you $35 in interest over the course of one year. This is a simple calculation because you simply multiply the APY by the amount of your initial investment. But when looking at terms other than one-year CDs, it’s important to understand that the APY is an annualized rate and that interest compounds.
For instance, if you invest the same $1,000 in a six-month CD, you’ll earn $17.34 in interest—less than half the amount you’d earn on a one-year CD. That’s because the effects of compound interest grow with time, and you’ll miss out on six months of compounding.
If you put $1,000 into a five-year CD with a 3.50% APY, you’ll accrue $187.68 in interest, which is more than five times the amount you would earn from a 1-year CD, again due to compound interest.
A $10,000 CD with a five-year term and an APY of 3.50% will earn $1,876.86 in interest. That’s exactly 10 times what a $1,000 investment would earn.
Even a modest increase in an interest rate can make a notable difference in the total amount of interest you earn—especially for longer investments.
Banks and credit unions offer CDs in a wide range of terms and types. While APY may be the main factor in play when shopping for a CD, there are other factors to consider as well. Here’s what to keep in mind when choosing a CD:
Perhaps most importantly, consider your goals. CDs generally work best for short-term financial goals, like saving up for a down payment on a car. The CD you choose should closely match the financial goal you’re trying to meet. For example, if you plan on purchasing a vehicle in a year, consider investing in a one-year CD with a high yield. This allows you to access your money when you need it, and it’s also an excellent way to keep you from dipping into your savings prematurely.
Traditional CDs aren’t your only option. There are a number of different types of CDs available, all of which are beneficial in different ways. If you need more liquidity out of a CD, for example, you may benefit from a no-penalty CD.
Unlike other deposit accounts, banks don’t charge monthly maintenance fees for CDs. However, withdrawing your funds prematurely may result in one of the following fees.
You can usually open a certificate of deposit online or in person at banks or credit unions. Follow the steps below to buy a CD.
A good time to open a CD is when interest rates are on the rise. For example, in a high-inflation environment, the Federal Reserve tends to raise the federal funds rate. This impacts interest rates on banking products, including CDs.
Regardless of timing, a CD may be a good option when you’re saving for a specific goal, whether it’s a down payment on a house or a new car you’re planning to buy in the next few years.
Thanks to the combination of low risk and high returns, a CD may also be worth considering when you have a large sum of money you want to keep safe. This way, you can earn more than you would with a regular savings account and avoid the value fluctuation of the stock market.
Longer-term CDs tend to pay higher yields. They also require you to lock up your money for an extended period, unless you’re willing to incur an early withdrawal penalty. One way to get the best of both worlds is to engage in a CD ladder strategy. This occurs when savers spread their money across different CDs with varying terms. A portion of the money goes toward short-term CDs, while another portion of the funds is allocated to longer-term CDs.
As one of the CDs matures, the money, for example, may be reinvested in a new five-year CD. Eventually, you would have a five-year CD maturing each year. This will enable you to have some access to your money and, at the same time, keep it in a higher-yielding savings vehicle.
CDs may not provide a double-digit return right now, but you can get a higher rate if you are willing to shop around. Thanks to the increased competition in the marketplace, consumers have many options from traditional banks and their online brethren.
Banks and credit unions of all kinds want your business and will pay for it with attractive returns, making comparison shopping nonnegotiable when purchasing a CD or share certificate.
A CD ladder is a savings strategy that involves opening several certificates of deposit with varying maturity dates. Creating a CD ladder can help you take advantage of higher APYs on longer CD terms without locking up all of your funds for an extended period of time.
Here are the steps to build a CD ladder:
Say you have $5,000 to save and you want to open five CDs. You could add $1,000 to each CD so that they all have the same amount, but for different terms and at different rates. Your CD ladder would look like this:
On the other hand, you could choose to allocate them for different amounts, with the highest balance earning the highest APY. For example, something like this:
This example assumes your CDs are ordered by term from shortest to longest and by APY from lowest to highest. But, you could flip it around and put the most money into shorter-term CDs and the least amount into long-term CDs.
How you structure your CD ladder depends on your savings goals. Running different scenarios through a CD ladder calculator can give you an idea of how much your savings could grow based on different maturity lengths and interest rates.
CD ladders have their advantages and disadvantages. Here’s a closer look.
Pros
Cons
CDs can be a useful way to grow savings for the short- and long-term. When opening CD accounts, it’s helpful to know how to make the most of those deposits.
Here are some simple tips for maximizing CD returns.
Remember, you don’t have to keep your CDs at the same bank. Spreading deposits across accounts at different banks is another way to potentially maximize returns if you’re getting the best CD rates each institution has to offer.
CDs aren’t always the best option for savings, especially if you need more accessibility or want to maximize your investment long term. Here are some alternative accounts to consider and how they stack up compared to CDs.
An IRA is a tax-advantaged investment account. IRAs are often used as retirement vehicles or to complement other retirement accounts. While CDs offer returns over a specific period, IRAs are better for long-term investing. There are penalties on traditional IRAs if you withdraw funds before age 59½, although there are some exceptions. IRAs also carry annual contribution limits. The better choice depends on your savings goals.
Money market accounts are hybrid bank accounts that offer the benefits of savings and checking accounts. An MMA offers much more flexibility than a CD. It’s also a better option if you want to earn a high APY while keeping your money accessible.
Savings bonds work like loans, except you act as the lender. You’ll earn interest for lending money to the government or a corporation for a set period. Like CDs, bonds come with guaranteed interest returns. Both account types could cost you money if you cash in before the term ends. Also, bonds can lose value if they are sold on the secondary market, especially if interest rates have increased.
When interest rates are high, CDs typically offer better returns. When interest rates are lower, bonds may end up being the better option to earn interest.
Most CDs earn higher rates than traditional savings accounts, but high-yield savings accounts often come with similar or higher interest rates than CDs. Online banks are a great place to find competitive rates on savings accounts, often with no monthly fees and low minimum balance requirements. Savings accounts carry withdrawal limits, but still offer more flexibility than a standard CD account.
In a Forbes Advisor poll, 32.0% of Americans stated that they don’t know or aren’t sure what a certificate of deposit is. This means that nearly one-third of Americans are missing out on the benefits offered by CDs.
And among the 68.0% of respondents who do understand CDs, fewer than half (48.1%) had actually opened a CD in the past. This means that just 32.7% of Americans have used CDs as a savings vehicle.
This online survey of 1,000 Americans (18+) with at least one bank (checking and/or savings) account was commissioned by Forbes and conducted by market research company OnePoll, per the Market Research Society’s code of conduct. Data was collected from July 12 to July 20, 2023. The margin of error is +/- 3.1 points with 95% confidence. This survey was overseen by the OnePoll research team, which is a member of the MRS and has a corporate membership with the American Association for Public Opinion Research (AAPOR).
These financial institutions were included in our research for the best CD rates: ableBanking, Affinity Federal Credit Union, Ally Bank, American Express, Axos Bank, Apple Federal Credit Union, Bank of America, Bank5 Connect, BankDirect, BankPurely, BankUnitedDirect, Barclays, Bethpage Federal Credit Union, BrioDirect Banking, Capital One, Charles Schwab Bank, Chase, Chevron Federal Credit Union, CIT Bank, Citibank, Citizens Access, Colorado Federal Savings Bank, Comenity Direct, Comerica, CommunityWide Federal Credit Union, Connexus Credit Union, Consumers Credit Union, Credit Union of Denver, Discover, Dollar Savings Direct, EmigrantDirect, Financial Partners Credit Union, Financial Resources Federal Credit Union, First National Bank of America, Georgia’s Own Credit Union, Golden1 Credit Union, Greenwood Credit Union, HSBC Direct, Hughes Federal Credit Union, Ideal Credit Union, iGoBanking, Investors eAccess, Keybank, Kinecta Federal Credit Union, Limelight, Live Oak Bank, MAC Federal Credit Union, Marcus by Goldman Sachs, Michigan State University Federal Credit Union, My eBanc, MySavingsDirect, Navy Federal Credit Union, nbkc Bank, Northern Bank Direct, Northpointe Bank, Nuvision Federal Credit Union, Pacific National Bank, Pen Air Federal Credit Union, PenFed, PNC Bank, Popular Direct, Purepoint Financial, Quontic, Quorum Federal Credit Union, Radius Bank, Rising Bank, SalemFiveDirect, Sallie Mae Bank, Spectrum Federal Credit Union, State Bank of Texas, State Department Federal Credit Union, Superior Choice Credit Union, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, TotalDirect Bank, U.S. Bank, USAA, USAlliance Federal Credit Union, Vio Bank, Virtual Bank, Wells Fargo and Truist.
Interest rates on CDs and other savings products are currently rising steadily as the Federal Reserve continues to raise interest rates.
CD interest rates move in response to other benchmark interest rates in the economy, most notably the federal funds rate. When prevailing interest rates increase, the rates on CDs will generally increase as well. Note that CD rates are set by individual banks, and not all banks offer competitive rates on CDs. Be sure to compare CD rates at several banks to find the best rates.
Online banks typically offer the best CD rates, although you can also find competitive rates at credit unions and other financial institutions. The best rates also depend on the length of the CD term. Long-term CDs usually earn higher rates than short-term CDs.
Promotional CD rates are limited-time rate increases on select CD terms. Many banks and credit unions offer promotional CDs with significantly higher rates than their standard CDs. These promotional CDs often come with shorter or unconventional term lengths, such as five, seven or 11 or months. The promotional rate is usually only good for the original CD term—if you renew your CD after that, you’ll earn the standard rate.
What’s considered a good CD rate varies significantly by term. For example, the national average interest rate for a 12-month CD as of June 20, 2023 is 1.63% APY, according to the FDIC, while the national average for a three-month CD is 1.07% APY. However, the online banks and credit unions listed above pay well above those rates.
A high-yield certificate of deposit (CD) is a CD account that earns an above-average interest rate. The national average rate on one-year CDs is 1.63% as of June 2023, but some of the best one-year CDs offer rates above 4.00%. Some banks may also offer higher promotional interest rates on specific CD terms.
Payouts on CDs depend on several factors including your initial deposit, the interest rate, CD term length and compounding frequency. The amount you should put into a CD depends on the minimum deposit required to open it and how comfortable you are leaving the funds alone until the CD matures. It may be a good idea to keep some of your savings separate in a high-yield savings account or money market account. In case of emergencies, you can tap into those accounts without having to break into your CD early and potentially pay a penalty.
You can currently find extremely competitive rates on several CDs. Specific rates vary between banks and generally depend on the CD term. Compare the best CD rates above for an idea of what’s currently available.
Banks typically charge an early withdrawal penalty for pulling funds out of a CD account before it reaches maturity. The penalty varies depending on the bank, term length, and type of CD account. Typically, the penalty equals a percentage of the interest earned on the CD account.
CDs pay a fixed interest rate on an investment for a fixed term. Once your CD matures, you can choose to reinvest the principal and interest into a new CD. If your bank offers a rollover or renewal feature, your CDs may roll over automatically if you do nothing. Whether you choose to purchase a new CD or roll over your CD investment, current interest rates will apply.
Any amount of CD interest over $10 is taxable and must be reported to the IRS. The IRS treats CD earnings as income even if you reinvest that money in another CD. At the end of each tax year, the financial institution that issued the CD will send you a 1099-INT statement showing how much interest you earned. Report this amount on your taxes. Even if you don’t receive a form, you are required by the IRS to report interest earned on CDs and other deposit accounts on your federal tax return. Interest is taxable in the year it is received.
