Friday, 8 December 2023
Updated on Wednesday, April 13, 2022
Certificates of deposit (CDs) are safe, conservative savings vehicles that lock up your money for a guaranteed return after a set term duration. We’ve compiled the highest CD rates today for many terms. PenFed Credit Union was selected as the best overall financial institution for CDs, based on the average rate offered between its 1-year, 3-year and 5-year terms.
PenFed Credit Union Money Market Certificates |
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PenFed Credit Union makes it very easy to join: if you fund a Regular Share account or a Premium Online Savings account with an opening deposit of $5, you can become a member. As far as credit union membership requirements go, it doesn’t get much simpler than PenFed. PenFed’s Money Market Certificate works much like a traditional CD. They also offer an IRA Certificate and a Coverdell Education Savings Certificate. The minimums for the money market and IRA CDs are $1,000, while the minimum for the Coverdell CD is $500.
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Lafayette Federal Credit Union Fixed-Rate Certificates |
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Lafayette Federal Credit Union is located in the Washington, D.C., area and has membership criteria related to living and working in that region — but the credit union offers membership eligibility if you join the Home Ownership Financial Literacy Council. In addition to the traditional CDs offered by Lafayette, there are variable rate certificates: they have lower dividend rates than traditional CDs and also have early withdrawal penalties, but there’s a lower minimum balance to open an account (just $50) and the APY offered on the balance is subject to change.
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KS StateBank Certificates |
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KS StateBank is based in Manhattan, Kan., and has six locations in the state and one branch in Phoenix. Anyone in the country can open a CD with KS StateBank. Additionally, it offers online, mobile and telephone banking for all of its deposit accounts. KS StateBank has among the highest CD rates among banks and credit unions we analyzed, reaching 2.10% APY for a 5-year term. In addition to its standard CDs, it also has a 27-month “jump-up” CD and internet-only jumbo CD.
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Luana Savings Bank Certificates |
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Luana Savings Bank is based in Northeast Iowa and was founded in 1908. It specializes in agricultural lending, and is one of the largest agricultural lenders in Iowa. In addition to its certificates, it also offers a variety of other deposit products, loans and add-on services like bookkeeping. In addition to its strong CD rates, Luana Savings Bank also offers a wide variety of term lengths, providing enhanced flexibility to customers. For instance, if its 3-year CD is just a bit too long for your preferences, the bank also has a 30-month CD at only a slightly lower APY.
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First National Bank of America Certificates |
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First National Bank of America has been in business for more than 65 years. Besides deposit accounts, it provides a range of banking services including personal banking and commercial and mortgage loans. Its strong CD rates go all the way up to 1.90% APY for a 7-year term. If you don’t wish to hold your money in a CD for that amount of time, its 5-year CD at 1.80% APY is also a solid choice.
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Popular Direct Certificates |
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Popular Direct offers a robust digital platform for those who prefer to manage their money online, backed by a parent company, Popular Bank, that has a 122-year history. The bank’s CDs offer competitive rates for term lengths of more than a year, including a 3-year CD with a 1.60% APY and a 5-year CD with a 1.85% APY. Interest on Popular Direct CDs compounds daily.
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CFG Bank Certificates |
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CFG Bank is a relative newcomer that was founded in 2009. In addition to CDs, it provides checking accounts, money market and savings accounts, and online and mobile banking tools. CFG Bank offers CDs at five different term lengths. While those are fewer term options than most other institutions on this list, CFG Bank’s interest rates are competitive, reaching up to 1.62% for a 5-year CD.
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Synchrony Bank Certificates |
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Synchrony Bank is an online bank that offers a variety of savings products, as well as credit cards. They also have a wide range of CD term lengths. Rates get significantly more competitive for CDs of longer term lengths, particularly more than two years. Its 5-year CD stands out with an APY of 2.00%.
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| Term | Financial institution | APY | Minimum deposit to earn APY |
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| 7-month | Lafayette Federal Credit Union | 1.01% | $500 |
| 1-year | CFBank | 1.25% | $10,000 |
| 2-year | Genisys Credit Union | 1.60% | $500 |
| 3-year | PenFed Credit Union | 2.10% | $1,000 |
| 4-year | PenFed Credit Union | 2.25% | $1,000 |
| 5-year | PenFed Credit Union | 2.50% | $1,000 |
Some financial institutions offer CDs with different conditions than the standard single deposit with a fixed term and early withdrawal penalties.
A certificate of deposit has some drawbacks, namely that you can’t access your funds without penalty before the maturation date. Unlike a savings account, which allows for at least a few withdrawals per month, a CD is a deposit account that sacrifices some liquidity (in other words, access to your money) for marginally better interest rates.
However, those rates are low right now. According to the FDIC, the average rate offered on a 1-year CD right now is just 0.15% — which would translate to a yield of $15 on a deposit of $10,000. While the accounts featured on our MagnifyMoney list have much better rates than average, the highest 1-year CD currently offered is CFBank’s 1.25% APY CD. A $10,000 deposit would yield $125.
In an environment of low interest rates and high inflation, a CD may actually depreciate in value, especially over the long run. It’s difficult to predict future interest rate trends, but in the event that the Federal Reserve raises the federal funds rate, the interest rates on deposit accounts figure to rise as well. In that case, a key advantage of CDs — that your interest rate is guaranteed for the duration of your term — may actually become a disadvantage if you’re stuck with a lower rate.
One long-term alternative to a CD is an I savings bond, which is issued by the U.S. Treasury. The current rate on I bonds is 7.12% APY, and you have to wait at least a year to redeem the bond — if you redeem it within five years, you lose the last three months of interest. Otherwise, market investments (which carry some risk), other bonds or even precious metals like gold may be a better way to store your funds when inflation exceeds the rate paid on CDs.
A certificate of deposit (CD) is a type of bank account that allows you to make a one-time deposit with a guaranteed interest rate over a predetermined time duration. You usually cannot withdraw funds before the maturation date without incurring a penalty.
The best traditional CD rate offered among financial institutions reviewed by MagnifyMoney is PenFed Credit Union’s 2.50% APY for a 5-year term. There is a minimum of $1,000 to open a CD with PenFed Credit Union.
Since the start of the coronavirus pandemic and the Federal Reserve’s subsequent decision to slash the federal funds rate, the rates offered on CDs have fallen to a low point. Banks are also holding significant deposits, which creates less incentive to provide competitive rates on deposit accounts.
Among financial institutions surveyed by MagnifyMoney, CFBank had the best 1-year CD rate, while PenFed Credit Union had the best rates for 3- and 5-year CDs.
MagnifyMoney reviewed data from DepositAccounts, covering hundreds of banks and credit unions in order to source a list of the best nationally available financial institutions for CDs and CD rates. Every institution we feature is covered with Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA) insurance.
We chose the best financial institutions for CDs by averaging the rates they offered on 1-year, 3-year and 5-year CDs. Other factors like the availability of alternative CD structures were not considered during account selection.
We highlighted the best CD rates for specific terms only if they have a minimum deposit of $10,000 or lower.
Source: https://www.magnifymoney.com/blog/earning-interest/best-cd-rates967994263/
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