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The 10 best CD rates for July 2023

With interest rates on the rise, you might be wondering how to find the best CD rates. Choosing the right certificate of deposit  (CD) comes down to a few different factors, including finding the highest interest rate for a term length that fits your needs.

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.)

The highest current CD rates for our top picks*

  1. Bread Savings: 5.35% APY for 1-year CD (visit Bread Savings)
  2. Quontic Bank: 5.30% APY for 1-year CD (visit Quontic Bank)
  3. BMO Harris: 5.10% APY for 12 and 13-month CDs (visit BMO Harris)
  4. CFG Bank: 5.05% APY for 1-year CD
  5. Synchrony Bank: 5.05% APY for 9-month CD
  6. Ally Bank: 5.00% APY for 18-month CD
  7. Barclays Online: 5.00% APY for 12-month CD
  8. Bethpage Federal Credit Union: 5.00% APY for 1-year CD
  9. PenFed Credit Union: 4.90% APY for 15-month CD
  10. Marcus by Goldman Sachs: 4.85% APY for 12-month CD

*Last updated July 25, 2023

Best CD rates from our top picks by term length*

Term lengthBankAPYNational average APY
3 month CDAlly Bank2.50%1.11%
6 month CDQuontic Bank5.05%1.30%
9 month CDSynchrony Bank5.05%
12 month CDBread Savings5.35%1.72%
18 month CDAlly Bank / Synchrony Bank5.00%
24 month CDBread Savings5.00%1.47%
36 month CDBread Savings4.75%1.37%
48 month CDBMO Harris / Bread Savings4.50%1.30%
60 month CDBarclays Online / BMO Harris4.50%1.37%

*Last updated July 25, 2023. National rates are provided by the FDIC.

The 10 best CD rates overall

Here’s our rundown of the top 10 CDs, including the key figures you should know before you open an account. All rates listed below are up to date as of June 2, 2023, and are subject to change.

1. CFG Bank: For the saver who is on the hunt for the highest APYs across the board 

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 the mobile application. 

Key numbers

Term lengthAPY
1-year CD5.28%
3-year CD4.60%
5-year CD4.50%

Minimum opening deposit: $500

Penalty: There is an early withdrawal penalty equal to 90 to 180 days’ interest depending on your CD term. 

Why we picked it

Apart from a high APY, CFG’s CDs scored the top spot on our list for having some of the highest APYs across all three CD terms and for its 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 the bank’s online and mobile banking platforms.

Other CD rates*

While our methodology only considered 1-, 3-, and 5-year CDs, here are the other CD terms available if you’re looking for more options:

Term lengthAPY
18-month CD4.80%

2. Quontic Bank: For the saver who wants to avoid fees 

About: Quontic Bank is a digital bank that first started as a community bank in New York City in 2009. It is an FDIC-insured bank offering online and mobile banking platforms and it offers a number of checking accounts, savings accounts, and mortgage products. 

Key numbers 

Term lengthAPY
1-year CD5.15%
3-year CD4.40%
5-year CD4.30%

Minimum opening deposit: $500

Penalty: For CDs redeemed within the first year, the penalty is equal to the interest for the full length of your CD term. CDs between 12 and 24 months will incur a penalty equal to one year of interest. For CDs 24 months and over, the penalty is equal to two years’ worth of interest.

Why we picked it

Quontic Bank’s CDs made our list for a few reasons. High APYs paired with a lack of monthly fees and a minimum deposit of $500 makes these CDs a viable option for savers who want to earn interest on their funds without surprise fees. The downside: Customer service representatives are only available on weekdays via live chat, email, and telephone between 9:00 a.m. and 6:00 p.m. ET. For savers who may need support in the evenings or on the weekend, this could be a drawback. 

Other CD rates*

Here are the other CD terms this bank offers if you’re looking for more options:

Term lengthAPY
6-month CD5.05%
2-year CD4.50%

3. Ally Bank: For the saver 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 

Term lengthAPY
1-year CD4.50%
3-year CD4.25%
5-year CD4.10%

Minimum opening deposit: $0

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. 

Other CD rates*

Here are the other CD terms this bank offers if you’re looking for more options:

Term lengthAPY
3-month CD2.50%
6-month CD3.50%
9-month CD4.35%
18-month CD4.85%

4. Barclays Bank: For the saver who doesn’t need a brick-and-mortar location

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.

Key numbers

Term lengthAPY
1-year CD4.80%
3-year CD4.30%
5-year CD4.20%

Minimum opening deposit: $0

Penalty: There is an early withdrawal penalty associated with these accounts equal to 90 to 180 days simple interest, depending on the terms of your account. Barclays also offers a mobile app for 24/7 banking.

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 a verified external bank account. U.S. customers can reach a Barclays representative by calling their toll-free number between 8:00 a.m.–8:00 p.m. ET seven days a week. They can also access their online account 24/7. 

Other CD rates*

Here are the other CD terms this bank offers if you’re looking for more options:

Term lengthAPY
18-month CD4.90%
24-month CD4.40%
48-month CD4.25%

5. Bread Savings: For the saver who isn’t new to the savings game

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 

Term lengthAPY
1-year CD5.20%
3-year CD4.50%
5-year CD4.25%

Minimum opening deposit: $1,500

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

While the opening deposit for Bread’s CDs is above $1,000, customers can benefit from competitive APYs (well above 4% and even 5% for its 1-year term), plus—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.  

Other CD rates*

Here are the other CD terms this bank offers if you’re looking for more options:

Term lengthAPY
2-year CD5.00%
4-year CD4.50%

6. BMO Harris: For savers who are serious about locking up their funds 

About: BMO Harris is the 8th largest bank in North America by assets and currently serves more than 12 million customers. Its products and services include checking accounts, savings accounts, money market accounts, CDs, retirement accounts, credit cards, and more.

Key numbers

Term lengthAPY
1-year CD5.10%
3-year CD4.30%
5-year CD4.30%

Minimum opening deposit: $1,000

Penalty: There is an early withdrawal penalty between 180 to 545 days of interest, depending on your account terms.

Why we picked it

BMO Harris’ CDs made our list for its competitive CD rates and compounding frequency. One con: the early withdrawal penalty associated with some of these CDs is significantly higher than some of our other picks, so savers should be careful about withdrawing funds early. Interest on your balance compounds daily. BMO Harris representatives are available to assist you via telephone from 7:00 a.m. to 10:00 p.m. CT on weekdays and 8 a.m. to 8 p.m. on Saturdays and Sundays. The bank also offers a contact form for email support on its website. 

Other CD rates*

Here are the other CD terms this bank offers if you’re looking for more options:

Term lengthAPY
3-month CD0.05%
6-month CD0.20%
9-month CD3.50%
13-month CD5.10%
18-month CD4.50%
24-month CD4.50%
25-month CD4.50%
30-month CD4.30%
35-month CD4.50%
45-month CD4.50%
48-month CD4.30%
59-month CD4.50%

7. Synchrony Bank: For the saver who is just getting started, but wants to take advantage of higher APYs  

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 

Term lengthAPY
1-year CD4.75%
3-year CD4.30%
5-year CD4.00%

Minimum opening deposit: $0

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. 

Other CD rates*

Here are the other CD terms this bank offers if you’re looking for more options:

Term lengthAPY
3-month CD2.25%
6-month CD4.75%
9-month CD5.05%
11-month, no-penalty CD4.25%
13-month CD4.50% 
14-month CD4.50%
15-month CD4.50%
16-month CD4.80%
18-month CD5.00%
19-month CD4.50%
24-month CD4.30%
24-month bump up CD4.00%
48-month CD4.00%

8. PenFed Credit Union: For the saver who prefers a credit union over a major bank

About: Pentagon Federal Credit Union (PenFed) is a Virginia-based credit union that offers online banking options in addition to a few brick-and-mortar locations across the U.S. Customers can benefit from their wide range of financial products including checking and savings accounts, credit cards, auto loans, home loans, and more. 

Key numbers 

Term lengthAPY
1-year CD4.60%
3-year CD4.10%
5-year CD3.90%

Minimum opening deposit: $1,000

Penalty: For CDs redeemed within the first year, all dividends will be forfeited. For certificates redeemed after the first year but before maturity, the penalty is equal to 30% of what would’ve been earned if the certificate had been held to maturity, not to exceed total dividends earned. 

Why we picked it

PenFed’s CDs scored a spot on our list for their stellar APYs and higher-than-average customer service score. While their early withdrawal penalty is more severe than others, this account can provide customers with all of the perks of a credit union while still offering a lucrative APY on par with major banks, plus—interest on these accounts compounds daily. For assistance, customers can reach PenFed by email, chat, or phone 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.

Other CD rates*

Here are the other CD terms this credit union offers if you’re looking for more options:

Term lengthAPY
6-month CD3.00%
15-month CD4.90%
18-month CD4.65%
2-year CD4.60%
4-year CD4.00%
7-year CD3.90%

9. Bethpage Federal Credit Union: For the saver who wants a lower minimum deposit

About: Bethpage Federal Credit Union is a New York–based credit union that offers a number of financial products including checking accounts, money market accounts, credit cards, and more.

Key numbers

Term lengthAPY
1-year CD5.00%
3-year CD3.75%
5-year CD4.00%

Minimum opening deposit: $50

Penalty: If you withdraw funds from your CD before it reaches maturity, the penalty ranges from 90 days’ to 180 days’ worth of simple interest, depending on the terms of your account. 

Why we picked it

Bethpage’s CDs took a spot on our list thanks to the competitive APYs across all terms and low minimum deposit. At $50, these CDs have a lower deposit than some of the other CDs on our list. Interest on these CDs compounds daily and Bethpage offers CD terms from three months to five years. 

Other CD rates*

Here are the other CD terms this bank offers if you’re looking for more options:

Term lengthAPY
3-month CD2.25%
6-month CD4.75%
18-month CD4.25%
24-month CD4.25%
30-month CD3.70%
39-month Bump-up3.75%
48-month CD3.85%

10. Marcus by Goldman Sachs: For the saver who likes a pick-me-up in form of earned interest 

About: Marcus is an online bank with no physical locations that offers a wide range of savings, investment, credit, and lending products. Its CD terms range from six months to six years. 

Key numbers

Term lengthAPY
1-year CD4.75%
3-year CD4.30%
5-year CD3.80%

Minimum opening deposit: $500

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’ high-yield 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. 

Other CD rates*

Here are the other CD terms this bank offers if you’re looking for more options:

Term lengthAPY
6-month CD4.65%
9-month CD4.70%
10-month CD5.05%
18-month CD4.75%
2-year CD4.35%
4-year CD4.00%
6-year CD 3.70% 

Best 6-month CD rates

Prime Alliance Bank5.25%
Vio Bank5.20%
MYSB Direct5.35%
First Internet Bank of Indiana5.33%
Bask Bank5.25%
Department of Commerce Federal Credit Union5.13%
First Tech Federal Credit Union4.91%
Rising Bank5.15%
Quontic Bank5.05%

The rates above were last updated July 25, 2023. Click here to see the full details and methodology of our Best 6-month CD rates ranking.

Best 1-year CD rates

CFG Bank5.05%
Quontic Bank5.30%
Bethpage Federal Credit Union5.00%
Limelight Bank5.25%
BMO Harris5.10%
Barclays Bank5.00%
Bread Savings5.35%
Synchrony Bank4.80%
VIO Bank5.00%

The rates above were last updated July 25, 2023. Click here to see the full details and methodology of our Best 1-year CD rates ranking.

Best 3-year CD rates

CFG Bank4.30%
Ally Bank4.25%
Quontic Bank4.40%
Bread Savings4.75%
Barclays Bank4.30%
Synchrony Bank4.40%
Marcus by Goldman Sachs4.30%
PenFed Credit Union4.30%
BMO Harris4.50%
Quorum Federal Credit Union4.85%

The rates above were last updated July 25, 2023. Click here to see the full details and methodology of our Best 3-year CD rates ranking.

Best 5-year CD rates

CFG Bank4.20%
Ally Bank4.10%
Barclays Bank4.50%
Quontic Bank4.30%
BMO Harris4.50%
Synchrony Bank4.00%
Bethpage Federal Credit Union4.00%
Bread Savings4.35%
PenFed Credit Union4.00%
Department of Commerce Federal Credit Union4.67%

The rates above were last updated July 25, 2023. Click here to see the full details and methodology of our Best 5-year CD rates ranking.

What you should know about CDs

What is a certificate of deposit?

A CD is a type of deposit 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. 

Banks and credit unions use customer deposits to fund loans, make investments, and generate revenue in different ways. So to encourage customers to keep their money on deposit longer, CDs usually carry higher APYs than other, more liquid savings vehicles. The average national rate for a traditional savings account is currently 0.42%, while the average rate for a one-year CD is about 1.63%, 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. Although, some savers opt for a hybrid strategy that involves laddering CD accounts with various terms to take advantage of higher, long-term rates and near-term liquidity (more on that later). As with any investment, CDs have their pros and cons. But they’re solid tools for those occasions where you need to protects your principal but still want to earn a bit more interest than a savings account.

How are CD rates determined?

CD rates are set by your individual bank or financial institution. Although, there are several factors that can influence these rates. This includes the length of your CD term and type of CD, the amount of your initial deposit (some CDs offer tiered interest rates), benchmark interest rates set by the Federal Reserve, and temporary promotional offers offered by your financial institution. 

What is the APY on a CD?

APY stands for “Annual Percentage Yield.” It’s a way to calculate the total amount of interest that you can earn on an investment such as a CD in one year, taking into account the effect of compounding interest.

The APY of a CD will depend on the interest rate offered by the bank or financial institution, the frequency of compounding (daily, monthly, annually, etc.), and the length of the term of the CD.

What are the most common types of CDs?

There are various types of CDs you can choose from depending on how much money you’d like to deposit into your CD, whether you’d prefer to have access to your money before maturity, and more. A few of the most common types of CDs include: 

  • High-yield CDs: CDs that offer a higher APY than most CDs available on the market. 
  • Jumbo CDs: A CD that requires a higher minimum deposit, usually $100,000 or more—although this depends on your financial institution. 
  • No-penalty CDs: Also known as liquid CDs, these CDs allow you to make withdrawals before your CD reaches maturity without paying a penalty. 
  • Brokered CDs: A CD you can purchase from your broker or brokerage firm, rather than your bank. 
  • Step-up CDs: With this account, your CD’s APY will increase incrementally over the course of your term according to a predetermined schedule set by your bank or credit union. 
  • Bump-up CDs: Sometimes called a “jump up” CD, allows depositors to take advantage of a one-time increase in their APY to match the going rate for their CD term at their financial institution. 
  • Add-on CDs: Unlike traditional CDs, this type of CD allows you to make contributions to your account after you’ve made your initial deposit.

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, as well as general CD pros and cons, 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 10 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: NCUA and FDIC 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.

Tips on saving with CDs: Building a CD ladder

For savers who are on the fence about locking away their funds in a CD for an extended amount of time, you’re not alone. While some CDs offer terms that are just a few months long, other CDs take years to mature. Still, longer-term CDs can be a surefire way to boost your savings. One way to have the best of both short-term savings accounts and long-term CDs: CD laddering

A CD ladder is a savings strategy where you invest in several CDs with varying maturities. This way, you’ll benefit from higher rates on longer-term CDs, while still keeping some of your funds accessible in the near term.

Say you want to build a 5-year CD ladder with five rungs. If you have $5,000 to invest, then you might divide the funds equally into five CDs with different maturity dates:

  • $1,000 into a one-year CD at 3.00% APY
  • $1,000 into a two-year CD at 4.00% APY
  • $1,000 into a three-year CD at 4.25% percent APY
  • $1,000 into a four-year CD at 4.45% APY
  • $1,000 into a five-year CD at 5.00% APY

After one year, your first CD will have matured and you will have access to 20% of your original investment, plus interest. Then you can choose to spend, save, or re-invest those funds into another CD. You can continue this pattern each time one of your CDs matures.

Taxes: what you need to know

If you opt for a CD as your primary savings vehicle, you should be aware that interest earned on the funds you deposit are considered taxable interest by the IRS. Your financial institution will typically send you a 1099-INT statement for any interest earned over $10, and the amount you’ll owe will depend on how much interest you’ve earned and your tax bracket.

If you withdraw funds from your CD early, you can also expect to see those penalties on your 1099-INT form. 

CDs compared to other savings accounts

CDs differ from other savings accounts in a few key ways. This type of account not only functions differently, but it may be better suited for a certain type of consumer who is saving for a goal with a specific timeline. 

  • Access to your savings: CDs don’t offer the same level of access to your savings that a traditional savings account or money market account would. Once you agree to your CD term, your money will sit, untouched, and accrue interest for the duration of your term until your CD hits maturity. Making a withdrawal early would result in an early withdrawal penalty. 
  • CDs usually offer higher APYs at a fixed rate: One of the major selling points for a CD account is that, typically, CDs offer a fixed APY at a higher rate than other types of savings vehicles. That means that you’ll be able to take advantage of a higher rate for an extended period of time, and you’ll have the peace of mind knowing that once you’ve locked in your rate, your APY won’t fluctuate during your term in response to external factors like federal funds rate increases.

CDs vs. high-yield savings accounts

High-yield savings accounts work in the same way as traditional savings accounts. It’s a deposit account at a credit union or bank that you can use for saving and earning interest on your money—usually at a higher rate. This type of savings account differs from CDs in that they offer greater access to your funds, rather than requiring you to lock away your funds for a set amount of time. As such, there’s no penalty for making withdrawals.

CDs vs. money market accounts

Money market accounts function as a hybrid between savings accounts and checking accounts. Similar to CDs, these accounts typically offer much higher APYs than checking accounts, but may still offer some of the same features including check writing, debit card access, and the ability to make withdrawals and deposits via ATM. Like a CD, this type of account may also be of interest to savers who have the ability to make a larger opening deposit.

Frequently asked questions

In which situation would a certificate of deposit (CD) be the best banking choice?

A CD may be the best banking choice for you if you are saving for a long-term goal with a specific timeline in mind. To avoid early withdrawal penalties or potentially forfeiting any interest earned on the funds in your CD, you want to be sure that you won’t need access to your money before your CD’s maturity date.

Why is a certificate of deposit considered a safe investment?

Certificates of deposit are considered safe investments so long as they are helped by FDIC- or NCUA-insured financial institutions which insure your deposits up to $250,000 per depositor, per bank, for each account ownership category or up to $250,000 per share owner, per insured credit union, for each account ownership category. 

What is the minimum balance for a certificate of deposit?

The minimum balance for a CD will depend on your financial institution. There is no set minimum across the board. However, most institutions will require a minimum deposit between $500 and $1,000. Some may require higher or lower opening deposits.

How can I calculate earnings from a CD?

To calculate your earnings from a CD, you’ll need to  use the following formula: A = P(1+R/N)(NT). Where ‘A’ represents the value of your CD, including interest. ‘P’ is equal to your principal balance or initial deposit. ‘R’ represents your yearly interest rate, in this case it would be your APY. ‘N’ represents the compound frequency of your CD in a given year, and ‘T’ represents the number of years until your CD’s maturity date.

 What are the advantages of certificates of deposit?

CDs offer many advantages for savers, including higher APYs and fixed rates, which may offer greater returns over time. Additionally, CDs are offered in a variety of terms, making it a viable option for savers with short- and long-term goals.

What are the disadvantages of certificates of deposit?

CDs don’t offer the same liquidity as other savings accounts. Should you need to access your funds, you’ll likely be charged a penalty for doing so. Additionally, your overall returns upon your CD’s maturity date could be impacted if the inflation rate increases at a faster pace than your interest earnings.

What is a no-penalty CD?

This type of CD does not charge a penalty for withdrawing funds before your CD reaches maturity. This type of CD is less common than other CD types and may also offer lower APYs than traditional CDs.

What is a brokered CD?

Brokered CDs are purchased and sold through a brokerage account, rather than through a traditional banking institution and may offer higher APYS than CDs offered by banks.

What is a jump CD?

Jump CDs are CDs that allow you to upgrade or “jump” to a higher rate should the rate on your CD term increase after you’ve opened your account.

Is it better to get a CD at a bank or at a credit union?

As long as you meet the membership requirements needed to join a credit union and verify that the financial institutions you’re considering are FDIC or NCUA members, both banks and credit unions offer similar products, including CDs. Rates will vary across the board.

Can you add money to a CD?

When you invest in a CD, you typically deposit one lump sum and then leave it alone until the account reaches maturity. However, some financial institutions offer special types of “add-on” CDs that allow you to deposit additional funds after the initial deposit. The amount and frequency of deposits you’re allowed to make depend on the particular account.

Are short-term or long-term CD rates better?

Generally speaking, long-term CDs offer higher interest rates than short-term CDs. This is because banks reward you with a higher return for committing your money for a longer period of time.

The drawback is that while you may earn more interest with a long-term CD, your money will also be tied up for a longer period. If it turns out you need your money sooner and withdraw it before the CD matures, you’ll have to pay an early withdrawal penalty, which eats into your earnings.

However, the current economic environment can also affect CD rates. In periods of rising interest rates, shorter-term CDs can become more attractive because you can reinvest the funds more frequently at higher rates. This is sometimes referred to as a “CD ladder” strategy, where you stagger the maturity dates of your CDs to balance the benefits of short-term and long-term CDs.

Overall, whether it’s better to choose a short-term or long-term CD depends on your goals, as well as the current interest rate environment.

What is considered a good CD rate?

A “good” CD rate can be somewhat subjective. That’s because you need to strike a balance between the best rate available and the longest amount of time you can afford to keep your money tied up. For example, if you find a CD offering 5% APY, but it requires you to keep your money on deposit for five years, the interest rate may not be worth it. You might need your money sooner, or rates could go higher while you’re stuck earning a lower return.

Generally, a CD rate that’s above the national average is a solid choice. Before opening a CD, compare accounts from multiple banks and see which one offers the highest rate for the term length you want.

Is now a good time to lock in a CD?

CD rates are the highest they’ve been in years. So yes, it’s a good time to put your money in a CD. However, you’ll want to be careful about choosing a term length that’s too long. The Fed has indicated that it isn’t done raising rates, and chances are that CD rates will continue to go up. So if you do lock your money into a CD, aim for a term of two years or less.

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 one-, three-, and five-year CD terms. 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:

  • APY on a one-year term (20%)
  • APY on a three-year term (20%)
  • APY on a five-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 phone support the most weight. 

*Note: Other terms outside of 1-, 3-, and 5-year terms are mentioned in our List but were not considered in our methodology.

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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EDITORIAL DISCLOSURE: The advice, opinions, or rankings contained in this article are solely those of the Fortune Recommends editorial team. This content has not been reviewed or endorsed by any of our affiliate partners or other third parties.