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Home Alyssa Powell Here are the best CD rates of 2020

Here are the best CD rates of 2020

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.Best rates for a 1-year termBest rates for a 2-year termBest rates for a 3-year termBest rates for a 4-year termBest rates for a 5-year termBest rates for a no-penalty CDBest rates for no opening depositIf you want to grow your money but keep it safe from the turbulence of the stock market, a certificate of deposit (CD) may be a good option.Generally, a CD should be fee-free and as easy to open as any checking or savings account. Since you’re locking in an interest rate, it’s smart to look for the highest one. But it’s also important to consider minimum deposit requirements and penalties for early withdrawals in case you need the money in a pinch.Below you’ll find our picks for the best CD rates right now. There’s no CD that will work for everyone, but we combed through offerings at around a dozen national banks as well as popular comparison sites, like Bankrate and NerdWallet, to find the strongest options available right now.
Our expert panel for this guideWe consulted banking and financial planning experts to inform these picks and provide their advice on finding the best CDs for your needs. You can read their insights at the bottom of this post.

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We’re focusing on what will make a CD most useful, including high APY, low costs, term lengths, and more.

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Sallie Mae CD (Member FDIC)Why it stands out: Sallie Mae pays competitive rates, especially for terms of 1 year or less. Its early withdrawal penalties are less harsh than what many competitors charge.Term options: CD terms range from 6 months to 5 years.Penalties: Sallie Mae charges standard penalties for early withdrawals of your principal balance, as follows:90 days simple interest penalty for terms of 12 months or less180 days simple interest penalty for terms over 12 monthsKeep an eye out for: Minimum deposit. You’ll need at least $2,500 to open a CD with Sallie Mae.

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Quontic Bank CD (Member FDIC)Why it stands out: Quontic pays good rates, and its mandatory $500 deposit is lower than what many competitors require.Term options: CD terms range from 1 year to 5 years.Penalties: Quontic offers standard penalties for early withdrawals of your principal balance, as follows:1 year interest penalty for a CD term under 2 years2 year interest penalty for a CD term of 2 years or moreKeep an eye out for: High early withdrawal penalties. You can find significantly lower penalties with some of our other top picks.

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Marcus by Goldman Sachs High-Yield CD (Member FDIC) Why it stands out: Marcus by Goldman Sachs offers a variety of CDs, including High-Yield CDs and No-Penalty CDs. The bank pays some of the highest rates in the industry, and its mandatory $500 minimum deposit is lower than most competitors’ required deposits.Term options: High-Yield CD terms range from 6 months to 6 years, and No-Penalty CDs come with 7-month, 11-month, and 13-month options.Penalties: Marcus offers standard penalties for early withdrawals of your principal balance, as follows:90 days interest penalty for a CD term of under 12 months270 days interest penalty for a CD term of 12 months to 5 years365 days interest penalty for a CD term of more than 5 yearsKeep an eye out for: Minimum opening deposit. You need at least $500 to open a CD with Marcus.

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First National Bank of America CD (Member FDIC)Why it stands out: First National Bank of America pays competitive rates on its CDs, and it offers terms up to seven years.Term options: CD terms range from 1 year to 7 years.Penalties: First National Bank of America offers standard penalties for early withdrawals of your principal balance, as follows:180 days interest penalty for a CD term of 12 to 23 months360 days interest penalty for a CD term of 24 to 47 months540 days interest penalty for a CD term of 48 to 84 monthsKeep an eye out for: High early withdrawal penalties. You can find lower penalties and even no-penalty CDs with other banks.

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First Internet Bank of Indiana CD (Member FDIC)Why it stands out: First Internet Bank of Indiana pays competitive rates on CDs, and contrary to what the name implies, CDs are available to residents of all US states.Term options: Terms range from 3 months to 5 years.Penalties: First Internet Bank of Indiana charges standard penalties for early withdrawals of your principal balance, as follows:90 days interest penalty for a 3-month term180 days interest for a term of 6 to 18 months365 days interest for terms of 24 to 60 monthsWhat to look out for: Compounded interest. First Internet Bank of Indiana compounds interest monthly, not daily, which will affect your earnings.

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TIAA Yield Pledge CD (Member FDIC)Why it stands out: TIAA’s main strength is that it pays a competitive rate on its CDs.Term options: CD terms range from 3 months to 5 years.Penalties: TIAA is unique in that each term length has a different early withdrawal penalty, as follows:3 months: 22 days simple interest6 months: 45 days’ simple interest9 months: 68 days’ simple interest1 year: 91 days’ simple interest1.5 years: 136 days’ simple interest2 years: 182 days’ simple interest2.5 years: 228 days’ simple interest3 years: 273 days’ simple interest4 years: 365 days’ simple interest5 years: 456 days’ simple interestKeep an eye out for: Opening deposit and early withdrawal penalties. You’ll need at least $5,000 to open a CD with TIAA, and early withdrawal penalties can get high for longer terms.

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Ally High Yield Certificate of Deposit (Member FDIC) Why it stands out: Ally has more options for CDs than any other online bank, including an 11-month, no-penalty CD with various interest rates for different balance tiers and a variable-rate CD.Term options: Ally offers a total of 11 different CD term lengths ranging from 3 months to 5 years.Penalties: Ally offers standard penalties for early withdrawals of your principal balance, as follows:60 days interest penalty for a CD term of 24 months or less90 days interest penalty for a CD term of 25 months to 36 months120 days interest penalty for a CD term of 37 months to 48 months150 days interest penalty for a CD term of 49 months or moreKeep an eye out for: Types of CDs. Ally offers three types of CDs: High Yield CDs, Raise Your Rate CDs, and No Penalty CDs.Unlike regular High Yield CDs, Raise Your Rate accounts offer 2-year and 4-year terms. APRs on these accounts start lower than High Yield CDs rates, but you can increase your APR once over 2 years or twice over 4 years.No Penalty CDs do not penalize you for early withdrawal, but the only term available is 11 months.Be sure to choose the type of CD that makes sense for you.

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Simple No-Penalty CD (Member FDIC)Why it stands out: Simple’s minimum deposit of $250 is relatively low, and its rate is competitive.Term options: 12 monthsPenalties: NoneWhat to look out for: Checking account. You must open a Simple Online Checking account to qualify for a CD.

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Capital One 360 CDs® (Member FDIC) Why it stands out: Capital One offers competitive rates, and unlike most banks, you don’t need any money for an initial deposit.Term options: Capital One offers CD term lengths ranging from 6 months to 5 years.Penalties: The penalties for early withdrawals are as follows: 3 months interest penalty for a CD term of 1 year or less6 months interest penalty for a CD term greater than 1 yearWhat to look out for: Rates. Capital One is a good choice for people who don’t want to place an initial deposit, but you can find slightly higher rates elsewhere.

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American Express Certificates of Deposit (CDs) (Member FDIC)Why it stands out: American Express offers decent rates for 4-year and 5-year terms, and the bank doesn’t have a minimum opening deposit requirement.Term options: American Express has CD terms ranging from 6 months to 5 years.Penalties: The early withdrawal penalties are as follows:90 days interest penalty for a term under 12 months270 days interest penalty for a term between 12 and 47 months365 days interest penalty for a term between 48 and 59 months540 days interest penalty for a term of 60 months or moreWhat to look out for: Early withdrawal penalties. American Express’ fees for withdrawing funds before the CD maturity date are higher than most.Other CDs we considered and why they didn’t make the cutDiscover CD (Member FDIC): You’ll earn a respectable rate with Discover, but it requires a $2,500 opening deposit.HSBC Direct (Member FDIC) : HSBC’s CD rates were relatively high, but they’ve recently dropped.PurePoint Financial (Member FDIC) : PurePoint’s rates are on par with the best CDs on our list, but its $10,000 minimum deposit could be a major drawback for more modest savers.Barclays (Member FDIC) : Barclays doesn’t require a minimum opening deposit, and the rates are respectable — but you won’t earn as high of a rate as you would with our top picks.Chase Bank (Member FDIC) : While Chase has some truly excellent rewards credit cards, the rates on its CDs do not compete with any of the banks on our list.USAA Bank CD (Member FDIC) : USAA Bank offers a wide range of CD options for military members and families, but rates are mediocre and you’ll need at least $1,000 to open an account.Connexus Share Certificate (Federally insured by the NCUA): Connexus pays a good rate, but it only compounds your interest once per quarter.Delta Community Credit Union CD (Federally insured by the NCUA): This credit union pays high rates on CDs, but it can be difficult to qualify for membership, especially if you don’t live in Georgia.Synchrony Bank CD (Member FDIC): You’ll need $2,000 to open a CD with Synchrony, and although the rates are decent, they aren’t quite as high as what you’ll find with our top picks.Citizens Access Liquid CD (Member FDIC): You’ll need $5,000 to open this no-penalty CD, and the rate isn’t as high as our top picks for no-penalty CDs.NBKC CD (Member FDIC): Unlike most banks, NBKC offers a variable-rate CD. But its rates aren’t quite as good as what you’ll get with our top choices.Why trust our recommendations?Personal Finance Insider’s mission is to help smart people make the best decisions with their money. We understand that “best” is often subjective, so in addition to highlighting the clear benefits of a financial product or account — a high APY, for example — we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don’t have to.How did we choose the best CDs?We reviewed CD offerings from around a dozen national banks. All banks included on our list are insured by the FDIC and do not impose monthly maintenance fees on CDs.In the event two banks offered the same APY on a CD product, we considered minimum deposit requirements and penalties for early withdrawals.For this list, we did not consider credit unions — though they tend to offer high interest rates on savings accounts and CDs, many limit membership to people who work in a specific industry or live in a designated area. What is a CD?A CD is basically a time-sensitive savings account that holds your money at a fixed interest rate for a specified period of time. You can open one at almost any bank or credit union.If you don’t need immediate access to your savings, a CD can guarantee a return on your money since you lock in a fixed annual percentage yield (APY) for the term of the CD. During that period, you typically won’t be able to add additional money or access your original balance without paying a penalty.You will, however, earn interest on the amount and have the option to collect those payments monthly or reinvest them into your CD. Most banks offer varying rates for different terms and deposit amounts — typically, the longer the term, the higher the rate.At the CD’s maturity date, you’ll typically have a 10 to 14-day grace period in which you can withdraw your money and close the account or renew the term.Are CDs safe?CDs are safer than investing your money in the stock market but may be less liquid than a savings account. CDs are a good place to store and grow money that you will need at a predetermined future date. While your money doesn’t have the potential to earn as much as it would in the stock market, there is no risk.Like savings accounts, CDs are insured by the FDIC for up to $250,000.Are CDs a good investment?Timing matters. CDs can be a good investment if interest rates are currently high and/or expected to fall. The biggest benefit of a CD is your ability to lock in a fixed interest rate. If interest rates fall during the term of your CD, the APY on your CD will not be affected. Conversely, if rates are expected to rise, then it may not be a good time to put money in a CD.Can you lose money in CDs?You cannot lose money in a CD if you leave it untouched for the full term length. It is like a locked savings account and the only way you can lose money is if you make an early withdrawal for which you are penalized.Are CD rates going up?Interest rates on CDs follow the federal funds rate, which is determined by the Federal Reserve. Since July 2019, the Fed has reduced interest rates three times, which means rates probably won’t drop for another several months, if at all. To learn more about what makes a good CD and how to choose the best fit, four experts weighed in:Here’s what they had to say about CDs. (Some text may be lightly edited for clarity.)What makes a CD good or not good?Mykail James, CFEI:”You always want to look at how much money you need to start up. And then if you can continuously add money in. Also, check not just what the interest rate is, but how often they pay out interest, whether it’s monthly or quarterly.”How should someone choose a CD term length?Roger: Ma, CFP”I would think about when you need the money and then compare that with what the prevailing CD rates are, and then what makes sense from a financial perspective, but also from your own personal timing perspective.”Mykail James, CFEI: “I believe in having a plan for whatever the funds are. If it’s supposed to be a house fund, and you want to wait for another two years to buy a house, that’s what you should be thinking of when you want to have this money. “How should someone decide whether to put their money in a high-yield savings account, money market account, or CD?Tania Brown, CFP:”So I guess we’ll start off with how much money you want to put in and the level of transactions you want to have. If you want to have any transactions, that automatically takes out CDs. Then you’re stuck between the high-yield savings and the money market account.”Laura Grace Tarpley, Personal Finance Insider: “I would use a high-yield savings account or money market account for short-term goals or an emergency fund. You’ll probably want to choose whichever has a higher rate, but money market accounts can be good for emergency savings because they often come with a debit card or paper checks, making it easy to access money quickly. Then use CDs for longer-term goals, like buying a home in a few years.”This post was most recently updated August 10, 2020.
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