Finding The Best CD Rates
Looking around for the best CD rates is worthwhile, as a difference of a few tenths of a percentage point in a rate adds up over time.
To find the best rates, you’ll need to do some legwork. The good news is that most research can be done online.
For the top nationally available bank CD rates, head to the CD Rates Leaderboard, which we update daily.
We also track the highest CD rates from credit unions and local banks. While these deals beat the Leaderboard, they either aren’t available nationally or are at credit unions, which aren’t Leaderboard-eligible because of membership fees and other restrictions.
To find deals specific to your locale, start by checking your banking institution’s current CD rates.
If you bank with a “big bank,” you’ll likely find lower than average CD rates there. Don’t be tempted to invest with them because it seems like the easiest solution.
Instead, use those rates as a benchmark, and search the Internet for higher rates. Community banks usually beat the rates at big banks, and even on the CD Rates Leaderboard. Many list deposit rates on their websites, making CD comparison shopping easy, as well as the footprint of the community they serve.
You’ll also find top CD rates at many local credit unions, but you have to take into account how much it costs to join. A significant membership fee, even if the amount remains on deposit in a savings account, subtracts from the earnings on a CD.
Look for CD “specials” or “deals” that institutions offer at different points of the year to attract investors. Be sure to read the fine print, as these may require deposits of new money, or funds not already on deposit there, or have an unfortunate maximum deposit amount.
(You always want to call a bank or credit union and confirm a CD rate is still valid before making a trip to a branch to purchase your certificate of deposit.)
Online-only banking services are also an option for finding good CD rates, as are brokerage firms. Brokerage firms have access to large blocks of CDs that they trade and thus may be offer better rates than banks.
Why CDs Are Safe
A CD is insured, making it one of the safest investments. The Federal Deposit Insurance Corporation, better known as the FDIC, insures funds up to $250,000 for CD deposits in banks; the National Credit Union Administration insures credit union deposits for the same amount.
In other words, you’re never going to lose money on a CD that is federally insured. It’s a win-win situation, except that this low risk comes at a cost: relatively low returns.
Why Certificates of Deposit Pay Higher Rates
A CD typically pays higher rates than a savings account — much higher in strong economic times. This is because once you put your money into a CD, you aren’t able to access it for the duration of the CD without paying a penalty.
Penalties vary by financial institution, but six months of interest is most common for early withdrawal.
How To Buy A CD
Investing in a CD isn’t difficult. Simply go to your bank or any other financial institution offering CDs and tell them you’re interested in investing in a CD. After filling out a form and receiving instructions on how to transfer funds, you’ll have yourself a CD.
Your CD will pay you interest, which you may either spend or reinvest to earn more interest (this is called compounding and is recommended as it will grow your investment faster). When your CD matures, you will have a few days to decide on whether to take your funds or roll them over into a new CD.