| Bank | Min. Deposit | 12-Month APY | 36-Month APY | 60-Month APY | |
|---|---|---|---|---|---|
 | $0 Member FDIC | 4.00% APY | 3.75% APY | 3.90% APY | 👉 Learn More at BMO Alto |
 | $1 Member FDIC | 3.00% APY | 👉 Learn More at Western Alliance | ||
 | $0 Member FDIC | 3.75% APY | 3.00% APY | 3.25% APY | 👉 Learn More at Barclays |
 | $0 Member FDIC | 4.25% APY | 3.60% APY | 3.60% APY | 👉 Learn More at Ally Bank |
 | $2,500 Member FDIC | 4.10% APY | 3.50% APY | 3.40% APY | 👉 Learn More at Discover Bank |
 | $1,000 Member FDIC | 3.50% APY (11-Month) | 👉 Learn More at CIT Bank | ||
 | $1 Member FDIC | 4.00% APY | 👉 Learn More at American First Credit Union | ||
 | $1 Member FDIC | 5.10% APY (9-month) | 👉 Learn More at Blue Federal Credit Union |
BMO Alto Online CDs
BMO Alto is BMO's online version of the bank and it tends to have very competitive accounts overall, and CDs are no exception. It offers six terms, from six months to five years. There are no fees and no minimum balance requirements.
- 6-month – 5.15% APY
- 12-month – 4.00% APY
- 24-month – 3.75% APY
- 36-month – 3.75% APY
- 48-month – 3.80% APY
- 60-month – 3.90% APY
The early withdrawal penalty for CDs that have a term of less than a year is 90 days of interest. For those with terms of 12 months or longer, the penalty is 180 days of interest.
It also offers an online savings account that is currently paying 5.10% APY.
Western Alliance Bank
You can open a CD with Western Alliance Bank via Rasin. Rasin is an online platform that teams up with banks to offer some of the best rates out there.
- 3-month – 4.05% APY
- 6-month – 3.75% APY
- 9-month – 3.00% APY
- 12-month – 3.00% APY.
There are no fees and you can get started with just $1.
Get Started with Western Alliance
Barclays
Barclays offers a wide range of CD options, from six months to 60 months. All have competitive interest rates.
- 6-month – 4.50% APY
- 12-month – 3.75% APY
- 18-month – 3.25% APY
- 24-month – 3.00% APY
- 36-month – 3.00% APY
- 48-month – 3.00% APY
- 60-month – 3.25% APY
There is no minimum to open the account and no fees. Early withdrawal penalties will apply if you break the CD before the term ends. For CDs with terms of two years or less, the penalty is 90 days of simple interest. For CDs with terms longer than two years, the penalty is 180 days of simple interest.
Barclays also offers a savings account that is paying 4.35% APY.
Ally
Ally is an online bank that has a variety of CDs, from three months to five years, and they all have competitive interest rates. There is no minimum balance to open the CD and there are no monthly fees.
- 3-month – 3.00% APY
- 6-month – 4.60% APY
- 9-month – 4.50% APY
- 12-month – 4.25% APY
- 18-month – 4.10% APY
- 3-years – 3.60% APY
- 5-years – 3.60% APY
Early withdrawal penalties will apply if you withdraw your funds before the CD's term is up. For CDs with terms of two years or less, the penalty is 60 days of interest. For those between two and three years, the penalty is 90 days of interest. For terms of longer than three years and up to four years, the penalty is 120 days of interest. Lastly, for terms longer than four years, the penalty is 150 days of interest.
Ally also has a savings account that earns 4.00% APY.
Discover
Discover Bank has CDs ranging in terms from 3 months to 10 years. There is a $2,500 minimum deposit to open a CD.
- 3-month – 2.00% APY
- 6-month – 3.90% APY
- 9-month – 4.00% APY
- 12-month – 4.10% APY
- 18-month – 3.80% APY
- 24-month – 3.60% APY
- 36-month – 3.50% APY
- 48-month – 3.40% APY
- 60-month – 3.40% APY
Early withdrawal penalties will apply. Discover also has a savings account earning 4.00% APY.
CIT Bank
If you don't like the idea of paying a penalty if you need your money before the term is up, CIT Bank has a no-penalty CD with a competitive rate. However, it only comes in one term – 11 months. There is a minimum deposit of $1,000
- 11-Month – 3.50% APY
CIT Bank also offers the PlatinumSsavings that pays 4.70% APY on balances of $5,000 or more. Otherwise, it offers the Savings Connect account that pays 4.35% APY on all balances. Both accounts have a $100 minimum deposit.
American First Credit Union
American First Credit Union is offering a 12-month CD via Raisin. There is a $1 minimum balance requirement.
12-month – 4.00% APY
There is a $10 early withdrawal penalty and you won't have access to the growth until the CD matures.
Get Started with American First
Blue Federal Credit Union
Blue Federal Credit Union is offering a 9-month, no-penalty CD via Rasin. There is a $1 minimum balance requirement.
- 9-month – 5.10% APY
This is a great rate, especially considering that there is no penalty for early withdrawal.
Get Started with Blue Federal Credit Union
How do CDs Work?
CDs are kind of like savings accounts, except they pay a fixed rate for a set amount of time, and during that time, your money is locked up in the CD. You can't deposit or withdraw any money during the term of the CD.
If you do withdraw the funds before the end of the CD, you'll typically have to withdraw the entire amount and pay a penalty. Often, this penalty is a certain number of months' worth of interest, and the longer the CD, the more months of interest you'll owe.
However, you'll usually have a few days grace period after opening the CD to close it without penalty.
You'll have to decide ahead of time what you want to have happen to the CD when it matures (reaches the end of the term). Typically, the bank will send you a letter as the term is approaching asking what you would like to do with the money.
You can roll it over into a new CD of the same term, but at the new market rate. Or withdraw the funds and close the CD.
✨ Related: Best 12-Month CD Rates
Pros and Cons of CDs
Pros
- Pays a fixed rate
- Rate doesn't go down if interest rates drop
- FDIC insured
Cons
- Charges a penalty if you need your money before the end of the term
- Rate doesn't change if rates go up
How to Find a Good CD
First you'll want to decide for how long you are willing to lock your money away. Then search for the best APY for that particular term.
Also, look for promotional CDs. Often, banks will offer “non-traditional” terms, such as 11 months rather than one year, and give those CDs higher-than-average rates to attract new business.
You'll also want to pay attention to the minimum opening deposit and make sure you can meet that requirement.
Lastly, you'll want to understand the early withdrawal penalty. Hopefully you won't have to break the CD before maturity, but it's good to know what the effects would be ahead of time.
Early Withdrawal Penalty
There is one feature that often differs between banks, other than interest rates – the early withdrawal penalty.
You'd think that there wouldn't be many variations among banks on the early withdrawal penalty – but there is.
The early withdrawal penalty is assessed if you close your CD before its maturity date. You always have the option to withdraw your funds and close the entire CD, you simply surrender some or all of your accrued interest.
The penalty varies based on the length of the CD.
Ally Bank has the lowest early withdrawal penalties:
- 24 months or less: 60 days of interest
- 25 months – 36 months: 90 days of interest
- 37 months – 48 months: 120 days of interest
- 49 months or longer: 150 days of interest
Discover Bank has a more typical early withdrawal penalty schedule at online banks:
- 11 months or less: 3 months of interest
- 1 year to < 4 years: 6 months of interest
- 4 years to < 5 years: 9 months of interest
- 5 years to < 7 years: 18 months of interest
- 7 to 10 years: 24 months of interest
Here's a brick-and-mortar schedule from Bank of America:
- 90 days or less: greater of all interest earned or 7 days of interest
- 90 days up to 12 months: 90 days of interest
- 12 months – 60 months: 180 days of interest
- 60 months or longer: 365 days of interest
Here's a list of no-penalty CDs if you want one without any withdrawal penalty at all.
Different Types of CDs
The basic CD allows you to deposit funds that are then locked away for a set term, in exchange for a set interest rate. However, you might see some creative features as you shop for CDs.
- No Penalty CD: These CDs have no early withdrawal penalty, but it usually has an odd term and a slightly lower interest rate.
- Bump Up CD: If you dislike CD rates going up when you're locked in, a Bump Up CD might be just what you are looking for. These types of CDs allow you to move to a higher rate once during the term. Sometimes longer CDs will allow it twice. You may see these with other names, such as “raise your rate” or “step up”.
- Add-On CD: This type of CD allows you to make additional deposits during the term of the CD.
- Jumbo CD: These CDs typically have a large minimum deposit. It's not uncommon to see a minimum deposit of $100,000.
- Brokered CDs: These CDs are issued by a bank, but they are traded on the open market and you purchase from an investment firm. The important thing to note here is that you cannot break the CD like you can at a bank. If you need your money before the term is up, you must sell the CD on the market, and the value will be determined by the buyer. If interest rates have gone up, meaning your CD has a lower-than-market rate, you are unlikely to get all of your principal returned. Think of them more like bonds. They are investments, not savings accounts.
What is a CD Ladder?
A CD Ladder is when you open CDs in a variety of lengths so that you have access to your funds in regular intervals.
For example, let's say that you receive $100,000 for whatever reason. You decide you'd like to use $20,000 each year for the next five years. So you put $20,000 into a savings account for this year and then put the remaining $80,000 into four CDs as such:
- 1- year – $20,000
- 2-year – $20,000
- 3-year – $20,000
- 4-year – $20,000
This way, each year, a CD will become available, and you can access that year's income. And typically, longer CDs have higher interest rates, so by splitting it up, more of your money is earning a higher rate.
✨ Related: Best 5 Year CD Rates
Who Should Use CDs
CDs allow you to lock in higher interest rates when they are high. They can be a great solution if you have a large sum of money that you want to keep safe but don't need right away.
For example, if you've saved up for another large purchase but aren't going to make the purchase right away—perhaps a down payment on a house, a wedding, or a vacation—a CD will allow that money to earn a fixed interest rate while you wait for the right time to spend it.
Who Shouldn't Use CDs
You shouldn't use a CD if you may need your money before the term is up. It's not a place to store your emergency fund. Right now, high-yield savings accounts are paying rates that are similar to CDs, so you aren't losing out on very much interest by using a savings account instead.
The risk with a savings account is that they have variable rates, so the rate can change at any time. But putting your money into a CD that you end up breaking is likely to earn you zero interest, or worse, actually lose some principal when you go to withdraw.
CD Alternatives
High-Yield Savings Accounts: High-yield savings accounts are typically from online banks that pay a higher-than-average interest rate. The rate is variable instead of fixed but your money isn't locked in for any set period of time.
Here is our list of the best high-yield savings accounts.
Money Market Accounts: Money market accounts have interest rates like savings accounts, but they give you even more access to your funds. Money market accounts often come with debit cards and the ability to write checks.
