Jacob holds a bachelors degree in finance and has spent his professional career crunching numbers and mastering spreadsheets in the corporate world. He moonlights as a fantasy football commissioner, back-yard bbq amateur, and freelance writer/money blogger.
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One of the most popular savings instruments of all time is a Certificate of Deposit, or CD for short. In the past, yields on CDs could be as high as 12%!
Those days are gone (for now, at least), but that does not mean that a CD is no longer a viable alternative to a savings account. In fact, there are still some banks out there offering the best CD rates that we have seen in years.
Take a look at the history of CD rates in the chart below, dating back to 1984 through 2016, and see how things have changed.
Since this chart ends in 2016, it does not show the recent increase that we have been seeing in CD rates.
(chart via bankrate.com)
Despite their dramatic decrease over the last few decades, CD’s remain a great option for individuals with cash reserves who want to earn a secure and predictable interest on their savings.
My Top 3 Favorite Bank CD's
CIT Bank No-Penalty 11 Month CD
APY
2.05%
ACCOUNT MINIMUM
$1,000
PROMOTION
No penalties
- Pros & Cons
With the CIT Bank No-Penalty CD you get a great rate, the security of an 11-month CD, and no-penalty access to your funds if you need them. Member FDIC.
Ally Bank High Yield CD
APY
2.15%
ACCOUNT MINIMUM
$0
PROMOTION
Loyalty rewards
- Pros & Cons
Maximize your CD earnings with a High Yield CD. No hidden fees. No maintenance fees. No minimum balance required.
BBVA Bank CD
APY
1.80%
ACCOUNT MINIMUM
$500
PROMOTION
Higher APY offers
- Pros & Cons
With a CD from BBVA, you'll not only enjoy a terrific rate of return on your investment, you'll also enjoy it risk-free. That's because CDs are FDIC-insured up to applicable limits.
How Does a Certificate of Deposit (CD) Work?
A certificate of deposit is a product issued by banks and credit unions that offer a fixed interest rate to investors in exchange for depositing a lump-sum of money for a specific period of time.
There are two fundamental traits for every CD that banks and credit unions offer: the term - or length of time that the money is held by the bank - and the yield - or the interest rate the bank will pay you for lending them the cash.
For example, a bank may offer a 6-month CD with a 2% interest rate. You, as the saver/investor, could purchase this CD and you would receive a 2% return on your investment after the 6-month term is up.
Hypothetically, let’s say you invested $1,000 on that 6-month CD. After the 6-month term, you would receive your full principal back ($1,000) plus the 2% interest you are owed ($20), for a total of $1,020.
Simple enough, right?
The simplicity behind the transaction and the federally backed promise of the bank or credit union is what makes a CD so attractive to cash investors.
But, there are some drawbacks; all CDs carry certain liquidity concerns and potential fees for early withdrawals.
The nature of a CD is that you are giving the bank X amount of dollars for a specific amount of time.
You may not be able to get your money back during that time (liquidity concern) without paying a fee for early withdrawal.
Not all banks charge fees for early withdrawals - some just cancel the interest earned - so it’s important to review the rules and requirements of the CD you are purchasing.
The length of a CD will also vary, with longer-term CDs typically carrying higher interest rates than the short-term options.
CD term lengths range from 3 months to 5 years or more.
With that said, let’s take a look a the best CD rates available today from some of the most trusted banks in the industry.
10 Banks with the Best CD Rates
Note: All rates are current as of October 7, 2019, and are subject to change without notice. Please review and verify all rates, fees, and other associated details on the company's website prior to any purchase.
CIT Bank No-Penalty 11 Month CD
Overview: CIT Bank is a subsidiary of CIT Group, a financial holding company founded in 1908.
They offer both term and no-penalty CDs, along with jumbo and ramp-up CDs that seek to maximize returns but also carry higher penalties for early withdrawal.
Rates:
- 6-month: 0.72%
- 12-month: 2.00%
- 18-month: 2.10%
- 5-year: 1.70%
Fees & Minimums: CIT Bank requires a minimum of $1,000 to open a CD. The early withdrawal fees vary by CD length.
Early withdrawals on a CD up to one year in length will incur a penalty of three months of simple interest on the amount withdrawn, a term between one year and three years carries a penalty of six months’ worth of simple interest and a CD with a term longer than three years would carry a penalty equal to 12 months’ of interest.
No-Penalty CD: CIT bank offers a no-penalty, 11-Month CD with 2.05% APY. You cannot make a withdrawal within 6 days of opening this CD. However, after 7 days you can withdrawal the total balance and interest earned at any time, for no fee.Ally Bank High Yield CD
Overview: Ally is a full-service online bank that has become well known to consumers for offering high-yield savings products.
This includes their online savings account and high-yield CDs. They also offer a checking account, money market accounts, credit cards, auto loans, home loans, and investment products.
Rates:
- 6-month: 1.00%
- 12-month: 2.25%
- 5-year: 2.40%
Fees & Minimums: There is no minimum to open a CD with Ally, with an exception for their 18-month and 3-year CDs, which offer increased rates with a minimum investment of 5,000 or $25,000.
These CDs can be accessed without a minimum, but to access the higher rates, the minimums must be met.
Like many others, Ally charges early withdrawal fees that are dependent upon the CD’s term:
Early withdrawal penalties will depend on your CD term | Header |
|---|---|
24 month or less | 60 days of interest |
25 month - 36 month | 90 days of interest |
37 month - 48 month | 120 days of interest |
49 month or longer | 150 days of interest |
11 month (No Penalty CD) | You can withdraw funds any time after the first 6 days from funding. |
Loyalty Reward: Ally offers a loyalty reward of 0.05% when you renew a CD with them. This rate is subject to change, but you can check what it will be up to 30 days before your CD matures.
BBVA Bank CD
Overview: BBVA a full-service bank that operates physical locations and ATMs all over the United States, but also offers online access to many of their banking services, including their high-yield CD.
They rank as one of the 25 largest commercial banks in the country.
Rates:
- 6-month: 1.80%
- 12-month: 2.30% (limited time rate offer)
- 3-year: 1.70%
Fees & Minimums: BBVA requires a $500 minimum to open a CD with them.
The penalty for early withdrawals is $25 plus one percent of the amount withdrawn for CDs with a length of 365 days or less, and $25 plus three percent of the amount withdrawn for CDs with a length greater than 365 days.
Marcus by Goldman Sachs
Overview: Marcus is the consumer banking arm of investment bank Goldman Sachs. Their offerings range from online savings accounts to personal loans.
Their online savings accounts and CDs are touted due to their competitive interest rates, as they routinely offer some of the highest rates in the industry.
Rates:
- 6-month: 0.60%
- 12-month: 2.25%
- 5-year: 2.45%
Fees & Minimums: Marcus requires a $500 initial deposit to open a CD. They guarantee the highest rate within the first 10 days of opening your bank account, meaning if rates go up within 10 days of opening your CD account, they will automatically increase your rate.
Fees for early withdrawals are dependent on the length of the CD:
CD Term | Early Withdrawal Penalty |
|---|---|
Less than 12 months | 90 days simple interest |
12 month - 5 years | 270 days simple interest |
More than 5 years | 365 days simple interest |
No-Penalty CD: In addition to their High-Yield CD, Marcus offers a no-penalty CD with no fees on early withdrawals after 7 days of the account being opened.
Synchrony Bank
Overview: Synchrony is another of the online banks that offers a high yield savings account, money market accounts, and CD accounts to consumers.
Customers of Synchrony bank are automatically enrolled in loyalty perks like complimentary identify theft resolution services, ATM fee reimbursements, and travel discounts on things like hotels and car rentals.
Rates:
- 6-month: 1.00%
- 12-month: 2.25%
- 5-year: 2.45%
Penalty Amounts | Header |
|---|---|
Terms of 12 months or less | 90 days simple interest |
Terms of more than 12 months, but less than 48 | 180 days simple interest |
Terms of 48 months or more | 365 days simple interest |
No-Penalty CD: In addition to their High-Yield CD, Marcus offers a no-penalty CD with no fees on early withdrawals after 7 days of the account being opened.
Discover Bank
Overview: Discover was one of the first credit card companies that turned into a full-service bank.
Since making the transition, they now offer checking accounts, online savings accounts, student loans, personal loans, home equity loans, and credit cards.
They are also one of the few banks to offer a 10-year CD. While this is quite long for many savers, the option is there for you.
Rates:
- 6-month: 0.65%
- 12-month: 2.30%
- 5-year: 2.40%
- 10-year: 2.50%
CD Term | Penalty |
|---|---|
less than 1 year | 3 months simple interest |
1 year to 4 years | 6 months simple interest |
4 years to 5 years | 9 months simple interest |
5 years to 7 years | 18 months simple interest |
7 years to 10 years | 24 months simple interest |
IRA Certificate of Deposit: In addition to a regular CD, Discover offers an IRA CD - or a CD that is held in your traditional or Roth IRA account.
An IRA CD functions the same as a regular CD, the only difference is in which account the CD is located.
An IRA CD also acts like any other investment in a retirement account, and there are certain restrictions to withdrawal depended upon your current age.
Barclays Bank
Overview: Barclays is a British multinational bank, headquartered in London. In the US it is an online-only bank offering credit cards, personal loans, online savings accounts, and CDs.
Because their US business is online-only, they do not offer any checking accounts, operate any branch locations or ATMs, and do not have a mobile app for their US customers.
That said, they offer competitive rates on their online savings accounts and CDs.
Rates:
- 6-month: 0.65%
- 12-month: 2.25%
- 5-year: 2.20%
Citizens Access Bank
Overview: Citizens Access was launched in 2018 by Citizens Financial Group - an organization that has roots dating back to 1828 via High Street Bank.
Citizens Access is an online bank dedicated to providing high-interest savings accounts and CDs to consumers.
Rates:
- 6-month: 1.75%
- 12-month: 2.25%
- 5-year: 2.45%
Fees & Minimums: Citizens Access requires a $5,000 minimum to open either a savings or CD account.
Fees for early withdrawal are standard with the industry, with a penalty of 90 days of interest for CDs with a term of one year or shorter and 180 days of interest for CDs with a term longer than one year.
CDs with Citizens Access with automatically renew upon maturity unless you have provided instructions to the bank not to do so at least 10 days before the CD is set to renew.
American Express Bank
Overview: American Express is best known for its credit cards, yet they offer savings accounts and CD options to consumers.
Well respected in the credit card industry, American Express also consistently offers some of the highest CD rates in the industry.
Rates:
- 6-month: 0.40%
- 18-month: 1.90%
- 5-year: 2.15%
Fees & Minimums: American Express does not have a minimum requirement to open a CD, a nice perk for those who don’t have adequate cash savings they are willing to deposit into higher-minimum CDs.
Their fees for early withdrawal are relatively standard to the industry, and vary depending on the CDs term:
CD Term | Penalty |
|---|---|
less than 1 year | 90 days of interest |
12 months less than 2 years | 270 days of interest |
2 years less than 60 months | 360 days of interest |
60 months or more | 540 days of interest |
TIAA Bank
Overview: TIAA is an online bank offering a wide range of services, from checking and savings accounts to home loans and retirement planning.
They operate physical branches throughout Florida but provide online services and no-fee ATM access across the country. They offer three styles of CDs: a basic CD, a Bump Rate CD, and a Yield Pledge CD.
Rates (Yield Pledge CD):
- 6-month: 1.90%
- 12-month: 2.25%
- 5-year: 2.35%
Fees & Minimums: The minimum amount to open a Yield Pledge CD is $5,000.
The Bump Rate CD has a minimum of $1,500 and a Basic CD has a minimum of $1,000. Rates on the Bump Rate and Basic CDs are lower than the Yield Pledge CD.
Yield Pledge: TIAA’s Yield Pledge is a promise to review their interest rates on a weekly basis and ensure they are within 5% of the top competitor’s rates.
If the rate on your current CD is not greater than or equal to 5% of the competition, they will adjust your rate up to ensure you’re always getting one of the highest rates in the industry.
Choosing the Right Bank CD For Your Goals
When it comes to choosing whether a certificate of deposit is right for you, ask yourself the following questions
- Am I OK with my cash being locked up for the length of the CD’s term?
- What are the early withdrawal fees in case I need to access my cash quickly?
- Is this the best rate I can find for the CD’s terms?
- Should I be investing my excess cash elsewhere (a money market account for instance)?
- Does a CD fit into my overall savings and investment plan?
If you can answer those questions confidently and know a CD is right for you, the list above is a perfect place to start looking for your next fixed-rate, cash investment.
Jacob holds a bachelors degree in finance and has spent his professional career crunching numbers and mastering spreadsheets in the corporate world. He moonlights as a fantasy football commissioner, back-yard bbq amateur, and freelance writer/money blogger.
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