In recent years, even the best online CD rates have remained below 1% and have now become notoriously low. Though current CD rates are known for the way they have plummeted over the years,
I've looked at some of the best CD rates online by highest APY interest rate, bank reviews, customer ratings, as well as a number of other factors. Here are some of the top choices:
Keep in mind that the higher dollar amount you invest the better interest rate you'll earn and often times you can open the account directly online. It's a hassle-free, simple way to maximize your returns while not taking on a large degree of risk.
In This Guide
The Best Online CD Rates: Our Top Picks
I have combed through some of the best banks and examined their CD products to bring you our top 5 providers that should certainly be able to pique your interest and meet your needs. I've comprised detailed reviews on each provider but you can view a summary of their offerings below.
- APY: 1.25-1.50%
- Term: 12-36 months
- Req. Balance: $2,000
Synchrony Bank CD Rates Review
- Interesting promotional offers
- Excellent Customer Perks program
- Offers rates above market averages
- Minimum deposits are a bit high
Synchrony Bank is a leading and award winning online bank that offers a variety of CD products with competitive terms from 3 months up to 5 years. Their APY offers range from 0.25% for the lowest term to 2.20% for the longest term. The bank does have a minimum deposit requirement of $2,000 in order to open a CD and it seems as if they have no maximum amount. This can be seen as a pro or a con. If you decide you want to invest less than the minimum, you won't be able to use this bank for your CD. However, if you are interested in taking advantage of their high interest rates and earning a substantial amount of money at your maturity date, you may find that their minimum deposit requirement will help you deposit enough so that you can reap the benefits of the high yield and returns.
- APY: .3-1.55%
- Term: 3-36 months
- Req. Balance: $0-5,000
Ally Bank CD Rates Review
- No minimum opening balance
- Interest compounded daily
- Go Mobile feature
- FDIC insured
- 10-Day Best Rate Guarantee
- Deposits/withdrawals take longer to process
- Technical issues when accessing via mobile app
- Customers report accounts getting closed without consent
Ally Bank is one of the most popular online banks and the 31st largest bank by U.S. bank deposit size. Ally's interest rates for their CD products are not the absolute best in the industry, but they are competitive and there are many other features that make Ally a top contender. Unlike other banking institutions, Ally does not require a minimum deposit amount in order to invest in a CD. This makes the bank a great option for people who are new to investing or don't have thousands of dollars to deposit at first.For added convenience, Ally has mobile banking so you can manage your account on the go and they can also auto renew your CD when it matures if you wish to keep it for a longer term. With certificates of deposit, it's best to have a long term or increase your term after the maturity date so you can have the best yield. Ally provides the proper tools to help you set up a CD ladder and do just that.
- APY: .35-1.2%
- Term: 3-18 months
- Req. Balance: $2,500
Discover CD Rates Review
- Variety of flexible terms
- Offers rate above market averages
- Short terms offer very low returns
Discover is a well-known national online bank that offers CDs with terms from 3 years to 10 years. There is a minimum deposit amount of $2,500 required in order to open a CD with this bank. Discover also offers traditional and Roth IRA CDs for customers who wish to invest in their retirement. Like most banks, Discover charges a penalty for withdrawing your funds early before your Cd's maturity date. Discover's early withdrawal fees has been known to be on the high side. Customers who withdraw the money from their CD before the maturity date can be charged anywhere from 3 months to 24 months of simple interest determining on the term. Regardless of which bank you choose, you should always avoid trying to withdraw money from your CD too early to avoid these costly fees. On the other hand, Discover has a convenient mobile app for customers to use so they can manage their account and make updates on the go.
Key Considerations of Online CD Rates
A certificate of deposit is a promissory note that a financial institution, especially a bank or credit union, issued to an account holder. On that note, the institution promises to pay a specific interest rate through a specific date, called maturity date. As a savings product, a CD account qualifies for a $250,000 balance coverage limit, which is provided by the Federal Deposit Insurance Corporation (FDIC). For this reason, it's important to bank with an institution that is FDIC-insured. Otherwise, you have no way to safeguard your funds in the event of an economic collapse.
The Federal Deposit Insurance Corporation is an agency within the U.S government which "protects the fund's depositors place in banks and savings associations." FDIC insurance covers a wide span of deposit accounts including savings accounts, checking accounts, money market accounts, and certificates of deposit. The standard amount the FDIC insures is $250,000 per depositor, per bank for each individual category.
If you will only earn $25 upon your CD's maturity date, that might not be worth it enough to you...
All of the banks I reviewed in terms of their certificate of deposit rates are FDIC insured so when you choose one of these top providers, you can rest assured by knowing that your money is secure.
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High Yield Accounts
"Yield" is used interchangeably with "interest rate." Typically expressed in annual terms, a yield is the income return on an investment. It's also referred to as the interest or dividends received from a security.
Though they are known for the way they have plummeted over the years, they are expected to rise to 1.02% for a 1 year CD by the end of 2016.
Yield is important to most investors because it represents how much your investment will grow depending on the interest rate. When investing the best rates for CDs, determine the yield you'd like to receive at your CD's maturity date is an important first step.
Locking up your money for a few years or even a few months can be a big decision so you want to make sure you weigh the pros and cons to justify whether or not it will be a good idea. If you will only earn $25 upon your CD's maturity date, that might not be worth it enough to you, so you may want to invest more or lengthen your term to increase the yield.
Note: The yields mentioned are subject to change from the date of the review. Contact the company directly for an up-to-date figure.
Online CD Rates vs Regular Savings Rates
No matter how you look at it, saving money has its challenges. But this doesn't mean you can't take your account to the next level and hit your target balance. The key, however, is choosing the right type of savings account.
It might come as a surprise, but there several savings options available to us. Yet, some people focus all their energy on growing their basic or regular savings account, and they ignore other alternatives. There's nothing wrong with a basic account, and it can certainly keep your cash safe. But if you need to maximize your savings efforts, a certificate of deposit might be a better fit.
A CD is a type of savings account. By opening a CD, you agree to leave your money in the bank for a specific length of time. CD terms can be as short as 30 days or as long as five years. It's a safe investment because you're guaranteed the return of your money plus any interest you earn. But like some people, you might feel a regular savings account is just as safe as a CD - and you're absolutely correct. But there are significant differences between these two accounts.
Higher Interest Rate with a CD
A CD is a type of investment, and since you agree to leave your money untouched in the bank for a specified time period, these accounts offer better rates than regular savings. The average basic savings account earns less than .10% APY (with many accounts only earning 0.01%). However, some certificate of deposits earning as much as 1.00% or 2.00% APY. CD rates depend on various factors, such as the length of the CD and the deposited amount. Typically, the longer a CD term, the higher the interest rate.
CDs Limit Access to Your Cash
If you have a basic savings plan, you can visit an ATM anytime and withdraw cash with no penalty, but cash in a CD isn't as accessible. Your money is tied up for the length of the CD, and if you withdraw cash from a CD before the end of your term, there's an early withdrawal penalty.
Some people don't like the idea of tying up their cash, but the fact that you have limited access to funds in your CD isn't necessarily a bad thing. Since the early withdrawal penalty discourages needless withdrawals, a certificate of deposit might be the solution to growing your money.
Interest Rates are Locked with a CD
With a basic savings account, the bank can adjust your rate at any time, and if you don't pay attention to your statements, your rate may drop without you realizing it. However, when you open a fixed-rate CD, your rate is locked for the duration of the term. So, if you have a five-year CD with a fixed-rate of 1.86% APY, you're guaranteed this rate of return.
Tips & Advice
Want to learn more about Certificates of Deposit along with how to maximize your earnings if you choose this form of investment? Our helpful advice column features several articles detailing more information about CDs that will help you make an informed decision when it's time to make a final decision.
By skimming through the brief but detailed articles in our Advice Column, you'll find out:
- How to Compare CD Rates: We provide some of the best comparison tools when you are shopping around for the best CD products. Our comparison tool allows you to adjust your deposit and term to find the best company to meet your needs. It's important to compare and contrast before you make a final decision so you can decide with confidence and lock in your term knowing that you made the right choice.
- How to Maximize Your Returns with a CD: Maximizing your return is a big factor that most people want to know how to do when they invest in a CD. Everyone who invests in a CD wants to take advantage of a high-yield opportunity and earn more money on their investment. Our experts share insight on how to get more bang for your buck and make the most of your return by implementing a few specific strategies.
- The Advantages and Disadvantages of CDs: A CD can be a great tool to help you invest your money, but it's not perfect for everyone. It's best to weigh the pros and cons out before making any hasty decisions. Luckily, our team has already determined popular pros and cons of opening a CD and all this insight is shared through our Advice section on bank CD products.
CD Rates Calculator
CDs can be a great way to invest and grow your money, but you should compare everything first and make sure you are knowledgeable about the entire process. When searching for the best certificate of deposit rate, pay attention to things like interest rat the , frequency of compounding interest, maturity, terms and conditions, and early-withdrawal penalties.
Banks that provide such competitive rates typically have less overhead and are web-based. You probably won't be able to find competitive interest rates and flexible terms on CDs at a regular brick and mortar bank.
Before opening a certificate of deposit, you want to make sure you are choosing the best bank for your situation and consider the APY along with how much you wish to deposit. If you aren't going to make a decent amount of money by investing in a CD, you probably shouldn't be opening a CD just yet. Make sure you have an ideal amount of money to deposit and can stick to your term so that you are not tempted or pressured to withdraw your money early and pay a fee.
If you want to put your money in an account that is a little more accessible, check out the best savings accounts.
However, if you are looking for a better return on your investment, the best money market accounts can be a solid opportunity.