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Best Online CD Rates for 2016

Who has the best CD rates? We uncover the top CD rates available online

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Top CD Rates

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.

Best Online CD Rates: What to Consider

A certificate of deposit is a promissory note that a financial institution, especially a bank or credit union, issues 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.

FDIC Insured

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.

The Top CD Rates

Finding the Best CD Interest Rates: 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 below are subject to change from the date of the review. Contact the company directly for an up-to-date figure.

Best 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.

The Best Online CD Rates

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.

1st
  • APY1.45%
  • Term24 Months
  • Required Balance$2,000

Synchrony Bank CD Rates Review

  • Pros
  • Interesting promotional offers
  • Excellent Customer Perks program
  • Offers rates above market averages
  • Cons
  • 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.

2nd
  • APY.3%
  • Term3 Months
  • Required Balance$1

Ally Bank CD Rates Review

  • Pros
  • No minimum opening balance
  • Interest compounded daily
  • Go Mobile feature
  • FDIC insured
  • 10-Day Best Rate Guarantee
  • Cons
  • 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.

3rd
  • APY1.2%
  • Term18 Months
  • Required Balance$2,500

Discover CD Rates Review

  • Pros
  • Variety of flexible terms
  • Offers rate above market averages
  • Cons
  • 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.

Advice for Finding the Top CD Rates

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.

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Best Online CD Rates Recap

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 rate, 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.

Best Online CD Rates FAQs

What is the coverage limit on a CD?

The Federal Deposit Insurance Corporation (FDIC) permits CDs to qualify for up to a $250,000 balance coverage limit. However, check the fine print to make sure that the institution you bank with is an FDIC insurer, otherwise you may not be guaranteed this safeguard. In order to find out how you can qualify for funds exceeding $250,000 you should consult the official FDIC website. Distinct insurance coverage categories are separate according to family status and ownership. The FDIC does not insure to any degree stocks, mutual funds, bonds, annuities, life insurance policies, and the contents of deposit boxes.

What is a certificate of deposit (CD)?

A certificate of deposit, commonly known as a CD, is a promissory note issued by a bank or credit union to an account holder. In return for investing your money in a CD, the issuing bank agrees to pay a specified interest rate through its maturity date. The maturity date, noted on a CD, is the point in time which the term ends, meaning that you can withdraw your principal amount as well as any interest earned. From that point forward, the bank is no longer required to pay you interest. In many cases, the bank will give you the option to "renew" the CD with the same terms from the prior period. Before renewing, make sure to double check that the CD rate is suitable as they are apt to change between periods.

What happens if I have to take the funds out before maturity?

If you're forced to withdraw your funds for whatever reason prior to the maturity date, be aware that you will most likely face fees and penalties. The degree of these penalties will vary from bank to bank so check the specific terms and conditions of your issuer. Bank of America, for example, is allowed to claim all the interest earned on the amount or seven days of interest (whichever greater) if the CD has terms less than 90 days.

In some situations, you may be more inclined to borrow money against a credit card than retrieving the funds from your CD. It all depends on the points noted in your agreement and the CD rate.

What is the difference between APR and interest rate?

Annual percentage rates (API) is the interest you accumulate for a whole year while an interest rate is just the cost that you pay to borrow any amount of money until your loan is paid off to entirety.

What is a personal loan?

This is an amount of money that you borrow from a bank or any other kind of online lender. Various lenders offer loans for many different purposes. Some will restrict you to specific uses while others allow you more open-ended uses.

How can I use my personal loan?

You can use the personal loan for debt consolidation, home improvement, student costs or even to make purchases. A majority of the lenders will allow loans for home, family, and personal purposes but not for business or educational expenses. Thus, consult your lender to learn about their terms and conditions.

How much can I borrow?

The maximum amount you can borrow depends on your lender since maximum amounts vary from one lender to the other. Banks will offer you the highest amount though they are quite selective in their approval processes. The purpose of your loan, the length of your term and your credit history will determine the maximum amount that you can borrow.

Will my credit score be impacted if I view my rates?

Whenever lenders pull a full credit check, it can affect your credit score on a temporary basis. Lenders will pull a soft check that will not affect your credit score until you choose a specific loan package that requires them to pull a full report.

What will be my rates?

The rates can range from 4% for long-term loans to 150% for short term loans (may be higher or lower). These rates are majorly affected by your credit score, with a good score being eligible for lower interest rates and APR.

Which should I choose; simple interest or compound interest?

Simple interest means that you will pay interest based on the principal borrowed amount while compound interest is charged on the total amount you owe which includes fees and interest that has already been accumulated. Thus, whenever possible choose simple interest because you pay more with a compound interest rate.

How fast will my loan be funded?

The speed at which your loan will be funded varies from one lender to the other with the online lenders being faster than the banks. The quickest will fund the loan on the same day of your application.

Nonetheless, the majority take one to five business days to process your loan.

Do I need a co-signer?

In some instances, if you have a co-signer with an exemplary credit history, lenders will offer you better rates on your loans. Furthermore, if you have a poor credit record, a co-signer will come in handy. Nonetheless, lenders do not allow co-signers in many occasions.

What if I am late, or I miss a payment?

Policies regarding late payments vary from one lender to the other. Some of the lenders will give you a grace period; others will charge no fees for late payments. Nonetheless, a majority will charge some fee for late payment, and it is advisable to check on every lender's individual policy for details.

Do I need to maintain an account minimum?

Account minimums will depend on the bank that you choose. Some banks require no minimum to open account, others will have a low minimum of $25 - $30, and some can have minimums in the thousands. All banks will have their benefits and drawbacks. You will have decide which details are most important to you when you are making your decision.

What is the coverage limit on a CD?

The Federal Deposit Insurance Corporation (FDIC) permits CDs to qualify for up to a $250,000 balance coverage limit. However, check the fine print to make sure that the institution you bank with is an FDIC insurer, otherwise you may not be guaranteed this safeguard. In order to find out how you can qualify for funds exceeding $250,000 you should consult the official FDIC website. Distinct insurance coverage categories are separate according to family status and ownership. The FDIC does not insure to any degree stocks, mutual funds, bonds, annuities, life insurance policies, and the contents of deposit boxes.

What is a certificate of deposit (CD)?

A certificate of deposit, commonly known as a CD, is a promissory note issued by a bank or credit union to an account holder. In return for investing your money in a CD, the issuing bank agrees to pay a specified interest rate through its maturity date. The maturity date, noted on a CD, is the point in time which the term ends, meaning that you can withdraw your principal amount as well as any interest earned. From that point forward, the bank is no longer required to pay you interest. In many cases, the bank will give you the option to "renew" the CD with the same terms from the prior period. Before renewing, make sure to double check that the CD rate is suitable as they are apt to change between periods.

What happens if I have to take the funds out before maturity?

If you're forced to withdraw your funds for whatever reason prior to the maturity date, be aware that you will most likely face fees and penalties. The degree of these penalties will vary from bank to bank so check the specific terms and conditions of your issuer. Bank of America, for example, is allowed to claim all the interest earned on the amount or seven days of interest (whichever greater) if the CD has terms less than 90 days.
In some situations, you may be more inclined to borrow money against a credit card than retrieving the funds from your CD. It all depends on the points noted in your agreement and the CD rate.

Are Certificates of Deposits Tax Exempt?

Yes and No. Certificates of Deposit are not tax exempt if they are purchased as a traditional investment. You will be required to pay tax on interest income earned in the year it is paid by your bank. You will be taxed at your normal tax rate. If your Certificate of Deposit is part of a retirement plan, then taxes will be done differently. If your CD is a part of a Roth IRA it will grow tax free and you can pull money out tax free, however, if you pull it out before it matures, you will be subject to bank fees. If your CD is part of a traditional IRA, it will grow tax free until you reach retirement age. When you withdraw the money, you will be taxed.

Who offers Certificates of Deposits?

Certificates of Deposits can be purchased through banks and investment brokers. You can also purchase through a number of online banking institutions as well. Check around to see what the interest rate and terms are at a couple of places to find the best investment option for you.

What are the advantages to investing in a CD?

Certificates of Deposits have a number of advantages. The first is that they are considered a safe investment since they are backed up to $250,000 by the FDIC. The second is that they have a number of terms and interest rates available. This gives you a wide range of options to choose from. Next, they generally earn higher than a savings account. If you aren't planning to spend that money, why not put it in a CD and earn higher interest for a couple years? Lastly, CDs offer fixed rates so you can predict your income from interest without worrying what the market is doing.

What are the disadvantages to a investing with a CD?

There are a couple disadvantages to consider when it comes to investing with CDs. The first is there liquidity. The money stays in the account until it reaches maturity. If you decide to take it out before the maturity date, you will be hit with a penalty. If you want to be able to have access to the money, this many not be the right investment for you. Another factor to consider is that it is possible that your investment will earn less than inflation year over year. If your goal is to get a good return on your money you made need to look at something a little riskier.

What happens when my investment matures?

When your CD reaches maturity, you have two options. You can either take out the money or let it renew into a new CD. If you decide you want to reinvest the money you should consider what your goals are and what kind of interest rates you can get.

Is there a minimum for what I have to invest?

Minimums amounts needed to invest will depend on the institution where you buy your CD. It can range anywhere from $100 to $1000. Typically the more you invest, the higher interest rate you will be able to obtain.

What kind of interest rates do CDs offer?

CDs can have a fixed rate or variable rate. With a fixed rate you will have a predictable return on your investment. Typically people chose CDs because of their safety and a fixed interest rate lets you know what you can depend on to earn on your investment. A variable interest rate allows you the opportunity to possibly earn more on your CD than an fixed interest rate depending on the market. While you have the opportunity to earn more, you also have the opportunity to earn less, according to what the market is doing.

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Advertiser Disclosure

In order for MoneySavingPro to remain a consumer free service, many of the companies covered in our industry reviews compensate MoneySavingPro for new sign ups.

However, the results of our comparison tools, the rankings of the providers and the information presented is not affected by compensation. Indeed, many of these companies approach us for an advertising partnership after we have already written a published their reviews.

While we try to research and review as many providers as possible in the 100+ industries we cover, we have not reviewed every company available.

Our rating system is independent of compensation and reflects our true understanding of the industry and the company based on a variety of factors. The companies that receive the highest rating will always be the providers that we believe offer the best value to the consumer.

Advertiser Disclosure

In order for MoneySavingPro to remain a consumer free service, many of the companies covered in our industry reviews compensate MoneySavingPro for new sign ups.

However, the results of our comparison tools, the rankings of the providers and the information presented is not affected by compensation. Indeed, many of these companies approach us for an advertising partnership after we have already written a published their reviews.

While we try to research and review as many providers as possible in the 100+ industries we cover, we have not reviewed every company available.

Our rating system is independent of compensation and reflects our true understanding of the industry and the company based on a variety of factors. The companies that receive the highest rating will always be the providers that we believe offer the best value to the consumer.