We regularly survey approximately 4,800 banks and credit unions in all 50 states to provide you with one of the most comprehensive comparisons of interest rates. All of the CD accounts below are insured by the FDIC at banks or the NCUA at credit unions. When selecting the best CD account for you, look for the highest yield while also considering introductory rates, minimum balances and accessibility.
Summary of Best CD Rates
|Bank/Institution||Rating||1-year APY||3-year APY||5-year APY||Minimum Deposit||Learn More|
TIAA Bank Basic CD
Consumers Credit Union CD
PenFed Credit Union CD
Alliant Credit Union CD
Discover Bank CD
Comenity Direct CD
TAB Bank CD
Synchrony Bank CD
Sallie Mae Bank CD
Ally Bank High Yield CD
Connexus Credit Union CD
Marcus by Goldman Sachs High-Yield CD
Live Oak Bank CD
The Federal Reserve and CD rates
The Federal Reserve’s interest rates decisions can impact the rates that banks offer on CDs. When the Fed raises or lowers the federal funds rate, banks typically respond by moving savings and money market account yields in the same direction. CDs tend to track Treasurys closely. In 2019, a year when the Fed lowered rates three times, CDs generally decreased before or after a Fed rate cut.
Two emergency Fed rate cuts in March, and decreasing Treasurys, are reasons many high-yield CDs decreased in 2020.
If you’re concerned about rates potentially decreasing or want to lock in a fixed yield, a CD may be right for you. Savings accounts and money market accounts generally have variable rates, meaning your yield can decrease. Introductory rates on those accounts are an exception to this rule. Intro rates may give you a fixed rate during the introductory period, though there may be certain requirements to keep this rate.
National average interest rates for CDs
Learning about the average interest rates is a great way to get an idea of the CD rate environment. But you should aim to get a CD with a yield much higher than the average. The top CD yields are typically available at online banks.
Here are the current average rates for the week of Feb. 17, 2021, according to Bankrate’s weekly survey of institutions:
CD NATIONAL AVERAGE APY
How Much Do CDs Pay?
While the national average is a good indicator of the direction of rates—and how much they’ve changed over a period of time—they are not what you should consider when shopping for CDs. Instead, look for the top nationally available rates, which stand far above industry averages.
Take one-year CDs, for instance. The current national average is just 0.19% annual percentage yield (APY). Today’s top-paying institution, however, will pay you 0.90% APY on that same one-year commitment—that’s more than five times as much. Similarly, for three-year CDs, you can currently earn 1.30% APY instead of the industry average of 0.25% APY.1
If you have cash, you can park for a period of time, but want to earn more than the best savings and money market accounts will net you, our research on the best nationally available rates in every major CD term can lead you to maximum returns.
Keep in mind that CD yields are still considered taxable as interest income on both the state and federal levels, which will impact the total return you can realize.
How Does a CD Work?
Opening a CD is very similar to opening any standard bank deposit account. The difference is what you’re agreeing to when you sign on the dotted line (even if that signature is now digital). After you’ve shopped around and identified which CD(s) you’ll open, completing the process will lock you into four things:
- The interest rate: Locked rates are positive in that they provide a clear and predictable return on your deposit over a specific time period. The bank cannot later change the rate and therefore reduce your earnings. On the flip side, a fixed return may hurt you if rates later rise substantially and you’ve lost your opportunity to take advantage of higher-paying CDs.
- The term:This is the length of time you agree to leave your funds deposited to avoid any penalty (e.g., 6-month CD, 1-year CD, 18-month CD, etc.) The term ends on the “maturity date,” when your CD has fully matured and you can withdraw your funds penalty-free.
- The principal:With the exception of some specialty CDs that allow add-on deposits, this is the amount you agree to deposit into the CD, at the time of opening.
- The institution:The bank or credit union where you open your CD will determine aspects of the agreement, such as early withdrawal penalties (EWPs) and whether your CD will be automatically reinvested if you don’t provide other instructions at the time of maturity.
Once your CD is established and funded, the bank or credit union will administer it like most other deposit accounts, with either monthly or quarterly statement periods, paper or electronic statements, and usually monthly or quarterly interest payments deposited to your CD balance, where the interest will compound.