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When it comes to building up your savings, choosing where you put your funds is half the battle.
One option is a certificate of deposit (CD), which is one of many types of savings vehicles out there that’s worth exploring. CDs are offered by banks and credit unions and typically pay a higher interest rate than traditional savings accounts.
But there is a catch: Once you deposit your funds into a CD, you’re committing to keeping your hands off that money for a set amount of time. Withdrawing your money from your account before that time is up could come with some hefty penalties—more on that later.
Choosing the right CD comes down to a few different factors. To help make your decision a little easier, the Fortune RecommendsTM editorial team ranked more than 40 CDs and came up with a list of our top-10 picks. We weighed minimum deposits to open an account, annual percentage yields (APYs) for one, three, and five-year terms, compounding frequency, and customer service options. (Read our full methodology here.)
Our picks for the top 10 CD rates
Here’s our rundown of the top-10 CDs, including the key figures you should know before you open an account. Minimum deposit requirements, APYs, and other numbers in our list are up-to-date as of October 10, 2022 but are subject to change.
1. Bread Savings: For those who really cares about high APYs above all else
About: Bread savings, formerly Comenity Direct Bank, is an online-only bank that offers CDs ranging from one to five years, as well as a high-yield savings account.
Key numbers
Minimum opening deposit: $1,500
1-year CD APY: 3.60%
3-year CD APY: 4.00%
5-year CD APY: 4.25%
Penalty: Early withdrawal penalties do apply for Bread’s CD accounts. For terms shorter than one year, the penalty is 90 days simple interest. For one to three-year terms, the penalty is 180 days simple interest. For terms greater than four years, the penalty is 365 days simple interest.
Why we picked it: Bread Savings offers its customers competitive APYs on all three of its 1-, 3-, and 5-year CDs, and accrued interest is compounded daily. Account holders are not charged for certain CD services like ACH transfers, monthly maintenance, and incoming wire transfers, but will be charged $25 for outgoing wire transfers, $15 for official check requests, and $5 paper statement fees.
Customers can bank with Bread online or via its mobile app. For assistance, they can connect with a Bread Savings customer service representative via telephone on weekdays between 7 a.m. and 9 p.m. CT, and weekends and most holidays from 9 a.m. to 5 p.m. CT.
2. CFG Bank: For those who likes a monthly “pick-me-up” in the form of an interest check
About: Founded in 2009, CFG bank is a Maryland-based bank that offers one to five-year CDs, as well as money market accounts, traditional checking accounts, and commercial banking products. They have a handful of brick-and-mortar locations across Maryland, although customers can also bank with CFG online or via its mobile application.
Key numbers
Minimum opening deposit: $500
1-year CD APY: 3.75%
3-year CD APY: 3.75%
5-year CD APY: 3.75%
Penalty: According to CFG’s website, CD accounts are subject to an early withdrawal penalty, however the bank does not provide specific penalty information online.
Why we picked it: Apart from a high APY, CFG has a lower minimum opening deposit compared to other CD products available on the market. Another perk: interest can be withdrawn when needed. Customers can request that their interest be mailed to them as a check each month or they can opt to transfer earned interest to another account. Customer service representatives can be reached by telephone, Monday through Friday, 8:30 a.m. to 5 p.m. ET and customers can also contact CFG 24/7 via email or its online and mobile banking platforms.
3. Synchrony Bank: For those who are just starting to build their savings
About: Synchrony bank is an online bank that offers a wide range of savings and credit products. Customers can bank online or via mobile app. Its CD terms range from three months to five years.
Key numbers
Minimum opening deposit: $0
1-year CD APY: 3.46%
3-year CD APY: 3.81%
5-year CD APY: 3.81%
Penalty: There is an early withdrawal penalty applied to the amount of principal withdrawn between 90 and 365 days’ simple interest depending on your account terms.
Why we picked it: Synchrony’s CD accounts don’t require a minimum deposit, meaning that savers who are just starting out can put whatever amount they feel comfortable with in an account and start letting the magic of compound interest work for them. Interest is compounded daily and you can withdraw interest paid during your CD’s current term anytime without penalty. You can reach Synchrony Bank via phone, chat, or email or download its mobile app for 24/7 banking.
4. PenFed Credit Union: For those who prefers a credit union over a bank
About: Pentagon Federal Credit Union, better known as PenFed offers checking, savings, and credit products, in addition to various lending services. PenFed is based in McClean, Virginia, but has a number of brick-and-mortar locations across the nation.
Anyone is eligible for a PenFed membership after submitting an online application for a Regular Share account application (a standard share savings account) or a Premium Online Savings account application (an online-only account that may earn more dividends than a Regular Share account) and depositing a minimum of $5. Its certificate products range from six months to seven years.
Key numbers
Minimum opening deposit: $1,000
1-year CD APY: 3.15%
3-year CD APY: 3.60%
5-year CD APY: 3.60%
Penalty: If you make a withdrawal within the first year of opening your account, you’ll forfeit all dividends. After the first year, the early withdrawal penalty will be equal to 30% of what you would’ve earned if the certificate had been held to maturity (not exceeding total dividends earned).
Why we picked it: The barrier to entry is lower for this credit union than most. Anyone who opens a CD with this credit union is eligible to reap the benefits of PenFed’s high APYs. Dividends earned through the credit union’s CD products are compounded daily and can be transferred to a separate PenFed account or sent to you via check.
Customer service agents are available to assist you via telephone Monday to Friday, 7:00 a.m. to 11:00 p.m. EST, 8:00 a.m. to 11:00 p.m. on Saturday and 9:00 a.m. to 5:30 p.m. EST on Sunday. You can also access your PenFed account 24/7 via mobile app.
5. Barclays Bank: For those who doesn’t mind trading in-person support for higher rates
About: Barclays is a London-based bank that offers online services to customers in the U.S. While it doesn’t have any physical locations in the U.S., it does offer a handful of CD terms, ranging from 12 months to 60 months. So this pick is best for those who don’t mind and online-only experience. If you don’t mind sticking to digital-only communication, Barclays offers a 24/7 banking support through its mobile app.
Key numbers
Minimum opening deposit: $0
1-year CD APY: 3.25%
3-year CD APY: 3.50%
5-year CD APY: 3.65%
Penalty: There is an early withdrawal penalty associated with these accounts that’s equal to 90 to 180 days’ worth of simple interest, depending on the terms of your account.
Why we picked it: Barclays’ CDs boast competitive APYs with no hidden monthly fees, or minimum balances to open an account. You can choose to keep earned interest in your CD account or have it transferred to a separate Barclays account or verified, external bank account.
6. Marcus by Goldman Sachs: For those who don’t need face-to-face banking support
About: Marcus is an online bank with no physical locations that offers a wide range of savings, investment, credit, and lending products. The CD terms it offers range from six months to six years.
Key numbers
Minimum opening deposit: $500
1-year CD APY: 3.25%
3-year CD APY: 3.45%
5-year CD APY: 3.50%
Penalty: If you withdraw funds from your CD before it reaches maturity, the penalty ranges from 90 days to 270 days worth of simple interest, depending on the terms of your account.
Why we picked it: Marcus’ CDs offer a competitive rate with a wide range of terms to help savers hit every kind of investment goal. Interest on these accounts is compounded daily and account holders have the option to keep that interest in their CD or withdraw earned interest, penalty-free. Marcus offers a mobile banking app, and you can reach a customer service representative via telephone or online chat 24/7.
7. Ally Bank: For those who likes to have access to a customer service rep at all times
About: Ally Bank is an online-only bank offering checking, savings, mortgage, auto products, and more. Its CD terms range from three months to five years.
Key numbers
Minimum opening deposit: $0
1-year CD APY: 3.10%
3-year CD APY: 3.20%
5-year CD APY: 3.25%
Penalty: There is an early withdrawal penalty between 60 to 150 days of interest, depending on your account terms.
Why we picked it: Ally’s CD offerings give savers a wide range of term options and let them decide how much they’re ready to save, with a $0 minimum deposit to open an account. Customers aren’t subject to any monthly maintenance fees and interest on these accounts is compounded daily. Bonus: Ally Bank offers customers 24/7 phone, chat, and email support.
8. Bethpage Federal Credit Union: For those who want to start small
About: Bethpage is a New York-based federal credit union that offers personal and business banking products to customers across the U.S. Anyone who is a citizen or permanent resident of the U.S. can join the credit union by opening a $5 minimum savings account. Bethpage has more than 30 branches in New York and shared branch locations across the U.S. The CD terms they offer range from three months to five years.
Key numbers
Minimum opening deposit: $50
1-year CD APY: 3.00%
3-year CD APY: 3.30%
5-year CD APY: 3.55%
Penalty: There is an early withdrawal penalty associated with Bethpage’s CD accounts equal to 90 or 180 days’ dividends depending on your term length.
Why we picked it: Anyone is eligible to join this credit union and members can open a CD with as little as $50, which is on the lower end of our top picks. Dividends are compounded daily and account holders can download a mobile banking app to monitor their accounts 24/7. Bethpage’s member service center can be reached via telephone, Monday through Friday from 7:30 a.m. to 7 p.m. and Saturdays from 8 a.m. to 2 p.m. EST.
9. Department of Commerce Federal Credit Union: For those who avoid monthly fees
About: The Department of Commerce Federal Credit Union offers memberships to anyone who lives, works, worships or attends school in Washington, DC. Current or retired employees of certain government offices, their relatives, or anyone who lives with a DOCFCU member is also eligible to join.
You can also become eligible to join if you become a member of the American Consumer Council for a lifetime fee of $15. The DOCFCU has shared branches across the U.S. and offers a mobile app for 24/7 banking. Its CD terms range from six months to five years.
Key numbers
Minimum opening deposit: $500
1-year APY: 3.60%
3-year APY: 3.93%
5-year APY: 3.95%
Penalty: There is a withdrawal penalty associated with these CD accounts, the interest penalty for certificates of deposit with maturities between 12 and 84 months is 180 days worth of interest.
Why we picked it: CD accounts offer savers a high APY across term length and no monthly service fees. Dividends are compounded monthly and can be credited to the CD account or transferred to a separate savings or checking account. For questions or assistance, customers can send general questions via email or call the DOCFCU directly between 8:30 a.m. and 3:30 p.m. ET, Monday through Friday.
10. Sallie Mae Bank: For those who think you have to spend money to make money
About: Sallie Mae is an online bank that offers a wide range of savings, credit, and student loan products. Its CD terms range from six months to five years and consumers can do all of their banking online or via Sallie Mae’s mobile app.
Key numbers
Minimum opening deposit: $2,500
1-year CD APY: 3.25%
3-year CD APY: 3.50%
5-year CD APY: 3.55%
Penalty: There is an early withdrawal penalty for withdrawing your funds before they’ve reached their maturity date. This can range from 90 to 180 days’ simple interest.
Why we picked it: Sallie Mae requires the highest minimum deposit on our list, but it offers competitive APYs and zero monthly fees. Interest is also compounded daily—which can quickly add up at the high rates Sallie Mae offers—and can be left in your CD to automatically renew or it can be withdrawn penalty free. Customers can reach out to Sallie Mae via telephone Monday through Friday, 9 a.m. to 6 p.m. ET, or through its online chat function.
What is a certificate of deposit?
A CD is a type of savings account that offers a fixed interest rate on a lump-sum deposit for a set period of time. This type of deposit account can be especially helpful for savers who have a difficult time not dipping into their traditional savings accounts.
Because the bank or credit union is hanging onto your funds for a set amount of time, CDs usually carry higher APYs than other savings vehicles.The average national rate for a traditional savings account is currently 0.17%, while the average rate for a 1-year CD is about 0.60%, according to the most recent figures from the Federal Deposit Insurance Corporation (FDIC).
Once you’ve reached the end of your term, your CD has officially matured and you can withdraw the money you originally deposited, plus any earned interest, without penalty. Some CDs are penalty-free and allow you to withdraw your funds before your term ends, but others will charge you a penalty equal to a certain number of days worth of interest, this can vary depending on the interest rate your specific CD offers.
CD accounts are a great option for savers who want to play the long game. It forces you to keep your savings in one place and can help you earn interest at a faster rate if you’re willing to wait it out.
How to choose the best CD
Every CD is a little different, so you’ll want to pay close attention to the account features and fine print before deciding where you want to put your savings. A few factors you’ll want to consider when comparing your options:
- Term length: Your CD’s term length will tell you how long you have to wait before your CD matures and you can withdraw your money. Some CD accounts offer terms as short as one week, or as long as ten years. Choose a term length that meets your needs and aligns with your financial goals.
- APY: The annual percentage yield on your account will play a big role in how much your money will grow before your account matures. The higher the rate, the more you can expect to earn in interest. You’ll also want to ask about your account’s compounding frequency, that’s the rate at which your account is adding interest to the principal. Some CD accounts compound interest daily, others compound interest weekly, monthly, or quarterly.
- Minimum deposit: Most, but not all, accounts will require some sort of deposit to open your account. This can range from a few dollars to thousands of dollars. Most CDs require you to deposit your funds in one lump-sum and will not allow you to make any additional contributions. Make sure you meet the minimum and have your money ready to deposit upfront.
- Penalties: Not all CDs penalize you for making an early withdrawal, but if yours does, you could lose out on your earned interest and even some of your principal balance. You may not be able to anticipate if you’ll need to withdraw your funds, but knowing what the penalty is if that happens can help you determine if your account is a good fit or if you want to opt for an account with fewer restrictions.
- Deposit insurance: FDIC and NCUA insurance provides depositors with insurance coverage if their bank or credit union fails—up to $250,000 per depositor or share owner. Double check that your account is insured so that your money is protected if the worst case scenario happens.
Our methodology
The Fortune RecommendsTM team compared certificates of deposit (CDs) from more than 40 major banks, credit unions, and online-only banks that offered 1-,3-, and 5-year CD terms to curate our overall top-picks list. Our top picks are available to customers across the U.S. no matter where you’re located, subject to the terms of each CD.
For our best overall CD rates, we ranked the best overall CDs on the following categories and weighted each category as set forth in the percentages below:
- Annual percentage yield (APY) on a 1-year term (20%): This number represents the real rate of return on your balance; the higher the APY, the better. We weighted the APY for each CD term the same amount.
- APY on a 3-year term (20%)
- APY on a 5-year term (20%)
- Minimum deposit requirement (20%): In order to open a CD at any financial institution, the institution will require that you deposit a minimum dollar amount. We thought that a lower minimum was preferable and so rated banks with lower minimum deposit requirements higher.
- Compound frequency (15%): Interest on deposit accounts like CDs can compound daily or monthly. The more frequently interest compounds on your CD, the better.
- Customer service (5%): Top picks offer customers three ways to get in contact: chat support, by phone, or even email. Among the three options, we gave the phone support the most weight.
We think that the best CDs offer APYs twice the national average for one-year, three-year, and five-year terms. We didn’t include brokered CDs on our list, which are sold on the secondary market through brokerages instead of banks and can be riskier because of this.
The rates, fees, and minimum deposit requirements for CDs are available for limited time periods, and APYs are subject to fluctuation, which could impact how much interest you earn. All the banks and credit unions on this list are insured by the FDIC and NCUA respectively. Should you choose to terminate your CD before it matures, you may likely be subject to a penalty, which varies by bank and credit union.
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