đź’¬ Our Nerds say:
"When comparing CD rates, aim for the highest APY for the CD term length you need. The best rates right now tend to be on shorter terms such as one-year CDs or less, but a longer-term CD with a lower rate can outearn a shorter-term CD.
"Or, if you’d want the flexibility to redeem a CD early at no cost, a few banks offer no-penalty CDs.”
— Spencer Tierney,NerdWallet senior writer covering consumer banking
2024 news about the best CD rates
The best one-year CD rates above 5% APY are drying up, and the many promotional CD rates for shorter than one-year terms don’t make up for it. The highest one-year rate among our list of the best banks for CDs is 5.20% APY at Popular Direct.
Competitive CD rates started to dip gradually in early 2024, according to NerdWallet analysis. Banks and credit unions previously raised CD rates in the past two years to follow the direction of the Federal Reserve’s benchmark rate, which saw almost a dozen increases. However, economic projections suggest that the Fed’s upcoming September meeting may result in the first Fed rate cut since March 2020, according to the CME FedWatch Tool on July 29. Rates on new CDs will likely fall further than they have so far this year.
The right time for CDs ultimately depends on your savings goals, but if you’re in the market for them, consider locking in high CD rates while they last. Learn more about where rates are headed in our CD rate forecast.
CD definition: What is a CD?
A certificate of deposit is a bank account that requires you to lock funds away for a fixed period of months or years in exchange for a fixed interest rate that can be higher than other bank accounts. These accounts are often referred to as CDs.
Historically, CDs took the form of paper certificates, but nowadays, CDs are like other financial accounts that you can manage online. See more about what CDs are.
» Curious about other savings options? Check out NerdWallet’s best high-yield online savings accounts
How to choose a CD
Consider each part of a CD to help break down your decision:
CD term: Most terms at a bank or credit union range from three months to five years. Learn how to choose your CD term.
CD type: High-yield CDs work like standard CDs but have the best rates and are often at online banks. Some CDs have an unusual feature, such as a no-penalty CD that doesn’t charge for early withdrawals or a bump-up CD that allows for a rate increase during a term. See types of CDs.
CD rate: Once you’ve narrowed down the term and type of CD, you can compare banks and credit unions to find a competitive rate. You may decide to go with a bank you already have accounts at or choose a new institution, depending on whether convenience matters to you, but aiming for a high rate is ideal. See current CD rates.
CD deposit: The amount you put into a CD depends on your savings goals, but a CD’s opening minimum requirement isn’t a good guide. And, if you’re worried about a bank failing, keep less than the FDIC insurance limit of $250,000 in your accounts to keep your money protected. Learn how to choose your CD deposit.
CD penalty: The early withdrawal penalty only kicks in if you redeem a CD before the term ends. The penalty is usually several months to even a years’ worth of interest, depending on the CD term length. Ideally, you only need to factor in the penalty if there’s a chance you’ll need funds early. See more about CD early withdrawal penalties.
Watch our explainer to further help you decide on CDs:
Choosing multiple CDs
If the pressure of choosing one CD is too much, you might consider a strategy to balance cash access with high yields. Opening multiple CDs with different terms in a CD ladder lets you redeem CDs over time while taking advantage of competitive short- and long-term CD rates.
When to consider CDs
Think about CDs as part of the cash and cash equivalents category of your overall portfolio, which is your overall collection of investments across different types of assets. For many people, CDs can work best in a few situations:
Locking up savings for a big purchase within the next five years, including a down payment on a car or house.
Stashing away a sudden windfall to avoid spending it now.
Earning some returns without market risk, especially closer to or during retirement.
Learn more about when CDs can be worth it.
How much does a $10,000 CD make in a year?
A $10,000 CD with a 5% APY would make $500 in a year. But if you’re eyeing a 6-month CD with that rate and deposit, you’d earn a little less than half that.
The three main factors that impact CD earnings are the rate, the CD term and the CD deposit. Unlike regular savings accounts, you don’t generally have the ability to add money to a CD after the initial deposit. Here’s a look at some scenarios for how much $10,000 in a CD can earn in a year, compared to six months. (Or use our CD calculator.)
Starting balance | APY | Interest earned in 1 year | Interest earned in 6 months (rounded) |
|---|---|---|---|
$10,000. | 3.00%. | $300. | $149. |
$10,000. | 4.00%. | $400. | $198. |
$10,000. | 5.00%. | $500. | $247. |
$10,000. | 5.30%. | $530. | $262. |
🤓Nerdy Tip
A lower rate can outearn a higher rate. A 1-year CD with a 4.50% APY will get you more interest than with a 6-month, 5.00% APY CD. If you had $10,000 to deposit, you'd earn $246.95 with the 6-month CD and $450 with the lower-rate 1-year CD. When comparing CD rates, use a CD calculator to see how much you can earn with different term lengths.
Other CDs: Promotional and No-penalty CDs
Traditionally, one-year, three-year and five-year CDs tend to be the most popular options to consider, but there are other CDs that occasionally provide higher yields or more flexibility.
Promotional CDs refer to CDs with nontraditional term lengths, or less often, CDs with expiration dates on the rates being offered. While these CD rates may be higher than CDs with traditional terms, they may automatically renew into lower-rate CDs by default.
No-penalty CDs are CDs that allow you to withdraw, at no cost, the full amount of a CD anytime after the first few days of opening. Generally, though, no-penalty CDs are uncommon and have lower rates compared to high-yield CDs for similar terms.
Current promotional CD rates
The following promotional CD rates stand out based on NerdWallet’s data analysis in late July 2024. Expiration dates for a promo are shown when available.
In general, promotional rates tend to be for irregular CD terms and featured on banking websites as a “promotional rate” or “CD special.” (For more details, see how promotional CD rates work.)
Name (click to see our review) | CD rate (or certificate rate) |
|---|---|
Bank of America: 7-month CD | 4.80% APY.* |
NASA Federal Credit Union: 9-month Certificate | 5.20% APY. |
Bask Bank: 9-month CD | 5.00% APY. |
Synchrony Bank: 9-month CD | 5.15% APY. |
Connexus Credit Union: 10-month Certificate | 5.15% APY. |
LendingClub: 10-month CD | 5.20% APY. |
NBKC Bank: 11-month CD | 5.00% APY. |
BMO: 13-month CD | 4.65% APY. |
Connexus Credit Union: 15-month Certificate | 5.00% APY. |
NASA Federal Credit Union: 15-month Certificate | 5.05% APY. |
NASA Federal Credit Union: 49-month Certificate | 4.25% APY. |
*Bank of America’s rate is based on a San Francisco ZIP code. Rates may vary by location. | |
Best no-penalty CD rates
A no-penalty CD is a type of CD that doesn’t have a penalty for withdrawing money before the term ends. It can be appealing if you want the traditionally higher yield of a CD, compared to regular savings accounts, but you also want the flexibility of needing the money sooner than you expect.
Right now, high-yield savings accounts have comparable rates to CDs (and the flexibility of withdrawal at will) but the main advantage of a no-penalty CDs over one of these accounts is the fixed rate, especially as rates drop.
These four banks offer high no-penalty CD rates:
Ally Bank® (Member FDIC): 4.00% APY, 11 months, no minimum to open.
CIT Bank: 3.50% APY, 11 months, $1,000 minimum to open.
Marcus by Goldman Sachs: 4.70% APY, 13 months, $500 minimum to open.
Climate First Bank: 5.00% APY, 12 months, $500 minimum to open.
» See more details on our list of the best no-penalty CD rates
Other CDs: IRA and jumbo CDs
Some types of CDs have more restrictions, such as funds earmarked only for retirement or high minimum deposits, and aren’t the standard CDs at banks or nationally available credit unions. However, they may work for certain savers:
IRA CDs are used to save a portion of retirement savings, largely for risk-averse savers and folks near or in retirement. You get the tax benefits of an individual retirement account plus the fixed rate of a CD. See the best IRA CD rates.
Jumbo CDs refer to CDs with a high minimum deposit requirement, traditionally $100,000. They’re not available everywhere and don’t often have the highest rates you can find. See the best jumbo CD rates.
Note: While not a special type of CD, CDs at credit unions – or share certificates – aren’t always available nationwide. Credit unions can have membership requirements limited to residents of a certain state or organization, such as the military. See the best credit union CD rates.
Alternatives to CDs
If you’re looking for similarly safe savings or investment vehicles to CDs but want more flexibility or other features, consider the following:
High-yield savings accounts have comparable returns to CDs and let you add or withdraw money typically whenever you want. Compare CDs and high-yield savings accounts.
Money market accounts, like regular savings accounts, let you add and withdraw money over time, but MMAs tend to have higher minimum deposit requirements to open the account or avoid a monthly fee. Compare CDs and money market accounts.
Bonds are loans to companies or the government that pay investors a fixed rate of interest in return. Compare CDs and bonds.
» Want more options? See the best investments in 2024
