Best CD Rates for 2020 (Certificate of Deposit)

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A CD is an agreement: You commit to leave your money in the bank for a set period of time. In exchange for your commitment, your bank agrees to pay you a higher interest rate (compared to a regular savings account’s interest rate).

Normally, making a longer commitment pays a higher rate of return. So CDs provide a great place to store cash – if you’re good at committing to a fixed interest rate for a fixed length of time.

Yes, you could access your money before the term expires, but you’d have to pay back part of the interest.

To find the best CD rates for 2020 you’ve come to the right place. I’ll share some of the highest-earning CD accounts – as well as provide detailed information about other attractive features CD accounts offer.

Today’s Best CD Rates By Term

3 Month CD Rates

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6 Month CD Rates

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12 Month CD Rates

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3 Year CD Rates

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5 Year CD Rates

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Note: Rates last updated December 03, 2020. They may vary by region.

Best CD Rates from Top Banks for December 2020

Here are the 10 best CD rates from top banks:

CIT Bank

Offering competitive interest rates and flexible terms with no monthly fees, CIT Bank’s CDs provide a great way to grow your savings, whether it’s short-term or long-term.

Interestingly, with CIT Bank, you could get higher annual percentage yields (APY) on some of the shorter-term products (for example, CIT’s 12-month term APY is higher than its 36-month APY) – so consider CIT Bank when you’re nervous about long commitments but still want a healthy rate.

CIT Bank offers 3 types of CD products: term CDs, No-Penalty 11-Month CDs, and Jumbo CDs.

CIT Bank’s Term CDs offer some attractive rates for terms from 6-months to 5 years – while CIT’s No-Penalty CDs offer some of the best rates on the market with a minimum opening deposit of $1,000 – giving you access to flexibility, as well as lucrative interest.

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: depends on the CD’s term and type
  • FDIC Insured: Yes

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  • As an online bank, CIT pays good rates on money market accounts and even its checking account. Read our full CIT Bank Review.

BBVA Bank

If you’d rather invest with one of the largest banks in the U.S. than an online-only financial institution, BBVA could be a good option for you.

BBVA Bank’s CDs offer one of the highest annual percentage yields available with no monthly service charge. Plus, you can feel reassured your money is in safe hands because you’re investing with one of the top U.S. commercial banks.

Buying a certificate of deposit from a traditional bank instead of an online bank means you could visit physical branches and apply for a CD in person – if that’s what you prefer. However, the APY may vary based on whether you buy your CD online, in person, or by phone.

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: $25 plus 1% of the amount withdrawn (for CD terms of 365 days or less); $25 plus 3% of the amount withdrawn (for CD terms of greater than 365 days)
  • FDIC Insured: Yes

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Discover Bank

Discover Bank offers some of the highest CD rates as well as several term options (from a shorter 3-month term to a longer 10-year term). This provides extra flexibility – not all competitors offer such a wide range of terms.

With Discover Bank, the longest CD terms pay the highest rates. For example, a 3-month CD will pay 0.35 percent; a 1-year term pays 1.35 percent.

You can access your money early if you need to – but you will be charged a penalty. However, with no monthly fees and easy account management on the Discover app, this is a solid CD option, if Discover Bank’s $2,500 minimum deposit isn’t too steep for you.

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: depends on the term (from 3-months simple interest for a CD term of less than a year to 24-months simple interest for a CD term of 7 to 10 years)
  • FDIC Insured: Yes

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Ally Bank

Ally Bank is another great place to find generous rates on CDs. The online bank offers High-Yield CDs, Raise-Your-Rate CDs, as well as No Penalty CDs, giving you plenty of options.

Ally Bank’s High-Yield CDs are available in terms from 3 months to 5 years, and you will pay a penalty if you want to access your money early. The No Penalty CDs are a better option if you think you might need to get hold of your money before the maturity date – however, the rates for No Penalty CDs are lower.

Raise Your Rate CDs allow you to take advantage of a higher CD rate offered by Ally Bank (if it comes along during your term). You start with one rate, then have the option of bumping it up during the term of the CD to the current 2-year CD rate, or twice if you choose the 4-year term. The maturity date doesn’t change – but you can make your money go a little further.

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: depends on the CD’s term and CD type
  • FDIC Insured: Yes

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Barclays

London-based Barclays also offers fantastic online CDs to U.S. customers which come with attractive rates across a variety of terms. For example, you could lock in 1 percent APY whether you’re buying a 1-year CD or a 5-year CD or something in between — which is pretty awesome.

Your interest compounds daily, and there are no monthly fees nor minimum balances. The steady across-the-board CD rates let you create a stable CD ladder so you maximize your earnings. CD laddering means dividing your deposit into multiple CDs with different maturity dates.

This strategy reduces the risk of needing to access your money before the maturity date – but it’s a double-edged sword because your interest rate could decrease with the broader market.

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: depends on the CD’s term
  • FDIC Insured: Yes

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Sallie Mae Bank

Sallie Mae bank offers some excellent student loan options – and you can find great options for high-interest certificates of deposit.

Sallie Mae CD rates are generous – and the bank offers several short-term and long-term CD options (from 6 months to 5 years). The bank’s rates are particularly competitive for shorter-term CDs – like 6-month or 9-month terms – because most banks will offer lower rates for such terms. Typically, a bank will offer higher rates the longer the CD term.

That said, you will need a minimum deposit of $2,500 (and to maintain this balance) to earn competitive returns. There are no monthly fees – but you will pay a $5 returned deposit fee.

And – just like with most other CD accounts – you will pay a penalty if you withdraw your money before maturity.

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: depends on the CD’s term
  • FDIC Insured: Yes

Marcus by Goldman Sachs

Marcus by Goldman Sachs also offers some high-yield certificates of deposit for terms that range from 6 months to 6 years – especially if you’re looking to get an attractive rate for shorter-length investments. A 12-month Marcus by Goldman Sachs CD can earn you as much as 1.4 percent APY.

You’d need $500 to open a CD account with Marcus by Goldman Sachs.

You can also check how much you could earn over time using the CD calculator on the bank’s website – and that’s guaranteed to get you excited about your potential returns.

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: depends on the CD’s term
  • FDIC Insured: Yes

Synchrony

Synchrony Bank’s CDs are available for terms from 3 to 60 months – and they offer consistently excellent rates. Synchrony doesn’t offer many bells and whistles (no jumbo, bump up or any other funny-sounding options!) – just straight-up term certificates of deposit.

Synchrony is an online-only financial institution. This means you won’t find physical branches in your area – and this may be a deal-breaker for some people.

As with any other providers on this list, your money is FDIC-insured with Synchrony, up to $250,000. You can also easily bank-on-the go with the top-rated Synchrony app, which allows you to control your accounts from your smartphone (be it iOS or Android).

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: depends on the CD’s term
  • FDIC Insured: Yes

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Fidelity

Fidelity may not be a financial institution you know a lot about – however, this top-rated low-cost online broker can help you find some of the very best CD rates.

Brokered CDs resemble bank CDs. They both pay set interest rates (which are usually higher than a traditional savings account’s rates). They both have maturity dates and FDIC protections.

The main difference between brokered CDs and bank CDs is how they are bought and sold. Brokered CDs are bought and sold by brokerage firms. Your CDs can be held at different banks but all managed through Fidelity. This could extend your FDIC protection beyond $250,000 without managing several bank accounts.

Fidelity sells brokered CDs through two venues – new issue offerings, and the secondary market. It’s an excellent place for CD laddering (i.e., setting up your CDs so that they mature at staggered intervals).

You can earn up to 1.1 percent APY with Fidelity’s 5-year CD. Fidelity charges no maintenance fees and has a highly-rated mobile app, which you can use to manage your CD on-the-go.

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: depends on the CD’s term
  • FDIC Insured: Yes

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American Express

You know American Express from its ubiquitous credit card badges at retailers; you may not associate this brand with saving money. But cardholders can open high-yield savings accounts or buy CDs up to five years in term lengths.

American Express’s rates won’t blow you away. They top out at 1.1 percent APY for a 60-month CD term. But you will get some unusual flexibility and transparency.

For example, with American Express you could automatically transfer your interest income into a savings account or onto your credit card balance. This won’t help your long-term savings goals, at least not directly. But the interest income could chip away at your credit card balance.

  • Best CD Rate: {{ rate }} APY ({{ term }} term and {{ min }} minimum deposit)
  • Early Withdrawal Penalty: Depends on term
  • FDIC Deposit Insurance: Yes

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What is a Certificate of Deposit and How Does it Work?

CDs are special savings accounts where you store your money for a set period of time in return for an attractive interest rate. Most of the time, your money is sort of locked away – and you don’t get to use it until the CD’s maturity date.

That’s because you agree to let your bank use your deposit for a specific period of time. In exchange, the bank offers you a higher annual percentage yield (APY).

CDs are ideal when you want to maximize your guaranteed interest rate on the money you don’t need to spend. If you may need to use the money, don’t buy a CD. Open a high-yield online savings account or money market account instead.

Or look for a short-term CD. Most of the best CD providers on my list above have 3-month and 6-month terms with rates that exceed regular savings rates.

And even if you bought a long-term CD and needed the money sooner than you’d expected because of an emergency, you can still spend the money. You’d just have to pay an early-withdrawal penalty which normally negates part of your interest earnings, turning your CD back into a regular savings account.

CDs vs. Traditional Savings Accounts

Other than the higher APY you’ll earn on most CDs, how do CDs accounts differ from traditional savings accounts?

Simply put, CDs don’t have the flexibility a savings account offers. You won’t have the freedom to withdraw and deposit whenever you want. You trade this freedom for a higher interest rate.

Also, you often need a higher minimum deposit to open CD accounts. Not always, though. Some banks like Barclays let you open a CD with any amount. And some banks require a minimum deposit to open a savings account.

How to Choose the Best CD for Your Financial Needs

Opening a CD account is one of the most lucrative low-risk investment vehicles you’ll find. Locking your money away for a set period means your bank will reward you with a higher interest rate – which is ideal if you’re happy not to see your money for a set period while you let it grow.

Now that you know about so many CD providers, you may be wondering how to choose the provider best suited for your financial needs. Along with the rates, consider the CD’s term and its penalty structure in case you do need an early withdrawal.

Unexpected things happen – so my advice would be to have another, perhaps a more flexible high-yield savings account that gives you penalty-free access to your funds in case of an emergency.

If you don’t have one – then choosing the CD with the lowest penalty (or no penalty, as offered by Ally Bank) for early withdrawals might be a smart move.

CD Laddering

I’ve mentioned laddering a couple of times so far, but this topic deserves more attention. CD ladders are a simple way to earn higher rates while retaining some flexibility. Let’s look at an example.

We’ll say you have $5,000 and you don’t expect to need the money for a couple of years. You could buy a 36-month CD and earn a decent interest on your $5,000 as long as you didn’t need the money for three years.

Or you could build a CD ladder. With this strategy, you’d buy five separate CDs, each worth $1,000. At Barclays, all five of your CDs could earn 1.2 percent a year. But the CD’s maturity dates would all be different:

  • 1-year CD: $1,000
  • 2-year CD: $1,000
  • 3-year CD: $1,000
  • 4-year CD: $1,000
  • 5-year CD: $1,000

At the end of the first year, your one-year CD would mature, having earned $12 in interest. You could withdraw your $1,012 or roll the money into a new 5-year CD to keep the ladder moving.

Each year you’d have a chance to withdraw approximately a fifth of your savings with no penalties. Also, each year you could take advantage of higher interest rates. If 5-year CDs pay 0.25 percent more this time next year because the Federal Reserve raised its prime rate, you could earn more. Of course, if rates go down you’d earn less.

CDs and IRAs: A Nice Combination

IRAs (Individual Retirement Accounts) let you save money for retirement while also saving money on your income taxes. Retirement savers can shield up to $6,000 in earnings from federal taxes ($7,000 if you’re 50 or older). Or, if you open a Roth IRA you could defer your tax savings until you reach retirement and withdraw the money.

Let’s say you’ve set the savings goal of maximizing your IRA contribution of $6,000 (in 2020). It’s OK to let the money sit idle, earning interest, in your IRA, but setting up CDs within your IRA can add more growth potential.

Since you don’t plan to touch the money anyway, you can maximize interest growth by picking a long term length for your CD. In fact, you could buy a $6,000 5- or 10-year CD every year. Set the CDs up to auto-renew and then let your retirement savings grow.

You could possibly earn more with mutual funds or ETFs, but with CDs, you’d have FDIC protections (NCUA deposit insurance protection at a credit union) up to $250,000.

If you have a traditional IRA, you shouldn’t need to pay taxes on the CD’s earned interest. With a Roth IRA, you’d pay income taxes for this year but could withdraw funds tax-free during retirement.

Online Banks vs. National Banks vs. Credit Unions

A lot of the banks on my list above operate only as online banks. This means you won’t find ATMs, branches, or even debit or credit cards when you open an account. Instead, you’ll go through the entire process — including making your initial deposits — online.

But because they have lower overhead, online banks can extend higher rates of return on your CDs which means you could generate more interest income.

Traditional banks have their pros, too. There’s something to be said for walking into a branch office in your neighborhood and meeting the people you bank with. If this is important to you, you won’t mind earning a lower fixed interest rate on your deposit accounts.

Most online banks can’t carry the weight of your everyday banking needs. They don’t offer enough variety in banking products. So you’d need an online bank to work in conjunction with your neighborhood bank. (Capital One is an exception.)

Federal credit unions offer a third option. They tend to pay higher rates than national banks because credit unions don’t generate profits for shareholders. Instead, credit union members share the profits. You’d have to join a credit union to use its services.

How Do You Deposit Money Into an Online Bank CD Account?

People ask this question a lot. They want the higher account rates online banks talk about but they don’t want to mail checks or cash. I wouldn’t want to, either.

The best way to deposit money into an online bank will be through your national bank or credit union. You can connect your online-only bank to your neighborhood bank account. Then you can make electronic transfers from one bank to the other.

So if you saved up $1,000 in cash tips and wanted to open a CD at Ally Bank, you’d deposit the cash into your neighborhood bank and then transfer the same deposit amount to your Ally account. Give your banks a few business days to complete the transfer.

Most online banks will not accept cash. They may accept mailed checks. Almost all let you make mobile deposits.

Are All CDs Federally Insured?

Bank CDs have FDIC or NCUA protection up to $250,000. Brokered CDs may not offer this same protection, especially when their interest rates are connected to a securities market such as the S&P 500 or the Dow.

Also, some brokerage houses sell CDs which store funds in offshore banks — known as Yankee CDs — which do not have federal deposit insurance protection.

The Highest Interest Rates Ever for CDs

Believe it or not, CDs paid over 15 percent in the early 1980s. Just a couple months of interest back then would generate more than a 5-year CD term now. During the Great Recession in 2010 1-year CD rates dipped below 0.3 percent — historical lows.

To put it in perspective, back in the early ’80s, when CD rates were so high, a 30-year mortgage loan might have cost you 20 percent interest. It was a different financial world back then.

Specialized CDs for Special Occasions

For most beginners, a basic CD will do the job. You’ll get higher rates on longer-term lengths. You’ll find a sensible world with sensible rules.

CDs can grow a lot more elaborate, though. You could buy:

  • Jumbo CD: You could get higher rates on minimum deposits of $100,000 or sometimes $50,000.
  • No Penalty CD: You’d get a lower interest rate compared to traditional CDs but you wouldn’t face the early withdrawal penalty.
  • Bump-Up CD: You could ask for a rate increase if the bank offers higher rates on new CDs. Normally you get one bump up during your term. TIAA offers a good Bump-Up CD.
  • Step Up CD: Your rate could increase annually on a schedule set by the bank. These rates tend to start low and finish high, creating an average similar to a traditional CD’s rate.
  • IRA CD: As we’ve discussed, you could speed up your retirement saving and shield yourself from taxes.
  • Add-On CD: You could add to your CD’s initial deposit.
  • Brokered CD: You’d buy these through a brokerage house, as discussed earlier. Your rates could track the stock market, you could spread your deposits across several banks, and you might not have FDIC protections.

When Should I Buy Into CDs?

CDs meet the definition of an investment. Instead of spending money, you’re letting it work for you. Your money will earn money over time.

With FDIC and NCUA deposit insurance up to $250,000 per financial institution, your CD money’s as safe as you could ever expect. Since opening in 1933 the FDIC hasn’t lost a penny of insured money. That’s a pretty good track record.

Serious investors won’t get excited about a CD’s rate of return. But these banking products hit a sweet spot: higher returns with minimal risk. They’re also more predictable. You know your rate and you know how much your money will grow in the CD’s term.

So when should you buy in? CDs should fit into your larger financial life. Wait until you’ve saved up your emergency fund of at least three months’ expenses. That way you’re much less likely to tap your CD before its maturity date.

High earners who find themselves in higher tax brackets could lose money by relying too heavily on CD accounts. For example, if you were taxed at a high rate on your interest income — and inflation changed the value of the dollar during your CD’s term length — you could experience a loss.

In short, CDs won’t grow your money the way more ambitious investments can. But when you time your CD purchases correctly — buying long-term CDs before a dip in interest rates — you can shield your investment from the fluctuations going on in the broader market.

Additional Disclosures: Millennial Money has partnered with CardRatings and creditcards.com for our coverage of credit card products. Millennial Money, CardRatings and creditcards.com may receive a commission from card issuers. This site does not include all financial companies or financial offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

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