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Compare Top Best Rate CD accounts and find the option that’s right for you.
- Up to 600$ welcome bonus
- Time deposit with up to 5,85% interest p.a.
- No account management fees
Best Rates for December 2023
Best Rates for December 2023
CD Account
Member FDIC
APY
5.85%
- Up to $600 Welcome Bonus
MIN DEPOSIT
$5,000
CD Account
Member FDIC
APY
5.60%
- Up to $600 Welcome Bonus
MIN DEPOSIT
$5,000
CD Account
Member FDIC
APY
5.57%
- Up to $600 Welcome Bonus
MIN DEPOSIT
$5,000
CD Account
Member FDIC
APY
5.50%
- Up to $600 Welcome Bonus
MIN DEPOSIT
$5,000
If you’re looking to earn more interest on your money than you would in a traditional savings account, a Certificate of Deposit (CD Account) may be a good place to start. With APYs significantly higher than the national average, certificates of deposits offer a secure alternative for earning more passive income on funds you want to keep in your bank
What Is a Certificate of Deposit - (CD)
A certificate of deposit (CD) is a savings product that earns interest on a lump sum for a fixed period of time. CDs differ from savings accounts
because the money must remain untouched for the entirety of their term
or risk penalty fees or lost interest. CDs usually have higher interest
rates than savings accounts as an incentive for lost liquidity.
- Top-paying certificates of deposit (CDs) pay higher interest rates than the best savings and money market accounts in exchange for leaving the funds on deposit for a fixed period of time.
- CDs are a safer and more conservative investment than stocks and bonds, offering lower opportunity for growth, but with a non-volatile, guaranteed rate of return.
- Virtually every bank, credit union, and brokerage firm offers a menu of CD options.
- The top nationally available CD rates are typically five to eight times higher than the industry average for every term, so shopping around delivers significant gains.
- Although you lock into a term of duration when you open a CD, there are options for exiting early should you encounter an emergency or change of plans.
Certificate of Deposit vs Savings Account Example:
Let’s say you have $5,000 in a traditional savings account earning .2% interest, but you’re considering opening a CD Account account with 5.4% APY.
At the end of a 12-month period, your $5,000 in the traditional account will have earned about $10. Rolling that into a CD account would garner closer to $270.
What Are Certificate of Deposit Used For?
Certificate of Deposits are often used as a place to store money for fixed term for earning more interest on savings that you need to access quickly. For example, a high-yield savings account can be an ideal place for an emergency fund, because you can benefit from a healthy interest rate on money you don’t touch often, but you can still withdraw your assets without penalty within an average of 24-48 hours (subject to account policies on withdrawal limits).
High-yield savings accounts are not as commonly used for longer-term savings goals, since there are alternative financial instruments that can offer a better return. Check out our CDs page for more options for your longer-term savings goals.
What Are Certificates of Deposits (CDs) Used For?
When you open a Certificate of Deposit (CDs), you will be provided with fixed APY that your account is earn over the course of a year. This rate is fixed and will not change. After the maturity of the investment and in case of an extension, the APY may change
When the Fed decreases its rate the APY on CD Accounts will stay the same. In times of high interest rates it can be helpful to secure long-term high interest rates
You may also find some CD rates are compounded daily, instead. The method of calculation is fairly similar to the monthly model, with one difference: your interest is compounded up to 365 times in a year, instead of 12. (Note that the exact number can vary between 360 to 365, depending on the institution.)
What Are the Limitations or Downsides of Certificates of Deposits (CDs)?
Similar Limitations to Savings Accounts
Like traditional savings accounts, Certificate of Deposits (CDs) may be subject to opening balance requirements, minimum balances, monthly maintenance fees, and/or transfer frequency caps. These can vary widely by the institution you open an account with, so ensure that you are comfortable with the terms before opening your account.
CDs vs. a Savings or Money Market Account
CDs are a special type of savings instrument. Like a savings or money market account, they provide a way to put money away for a specific savings goal—such as the down payment on a house, a new vehicle, or a big trip—or to park funds that you simply don’t need for day-to-day expenses, all while earning a certain return on your balance.
But whereas savings and money market accounts allow you to vary your balance by making additional deposits, as well as up to six withdrawals per month, CDs require one initial deposit that stays in the account until it reaches its maturity date, whether that’s six months or five years later. In return for giving up access to your funds, CDs generally pay higher interest rates than savings or money market accounts.
Are Certificates of Deposits (CD) Safe?
Most banks that offer Certificate of Deposits are insured by the FDIC. The standard insurance amount is $250,000 per depositor, per insured bank, for each ownership category. For example, if you had a CD Accounts and a Roth IRA at the same bank, those are separate ownership categories and would qualify for two instances of the $250,000 insurance policy. If you had multiple Certificates of Deposits under the same bank, their aggregate must be below the insurance amount to maintain coverage. You can read more about this policy on the FDIC’s Insured Deposits brochure.
If you have concerns about your account’s APY, your investment is guaranteed. The term: This is the length of time that you agree to leave your funds deposited to avoid any penalty (e.g., 6-month CD, 1-year CD, 18-month CD, etc.) The term ends on the maturity date, when your CD has fully matured and you can withdraw your funds penalty free.
What Are the Requirements for Opening a Certificate of Deposit (CDs) ?
Opening requirements for Certificate of Deposit vary by institution, but the personal information required is the same. Financial institutions will ask for:
Your name
Contact information (phone, email, address)
Social Security number
Age
- Verification Document Scan (DL)
If you are opening a joint account, you will need all of the same personal information from that additional owner. Note that you must be 18 or older to open an account on your own, but someone under 18 can be included in a joint CD account with a legal guardian.
Some opening requirements may include linking to the account that will fund the Certificate of Deposit and/or depositing a specified minimum amount of money.
What Should You Look For in a Certificate of Deposit (CDs) ?
There are plenty of options for Certificate of Deposit (CDs), so make sure you’re opening the right one for you by considering the following:
FDIC insurance: This one will likely be a given, but check for it just in case and ensure the balance you deposit is within the $250,000 limit.
Initial deposit: Many financial institutions will allow you to open a Certificate of Deposit with a low initial deposit. If this is something that appeals to you, look for one that has low deposit requirements.
Minimum balance: Some banks will advertise a higher APY that is only accessible if you maintain a certain average monthly balance; others will provide the same APY no matter what you have in your account.
Fees: Review all documentation around potential fees. Ones to look out for include but are not limited to minimum monthly balance, account maintenance, excessive transfers, and printed statement fees.
APY: This is likely what drew you to the account. Although this rate does change over time, some financial entities historically offer better APY than others.
Key Takeaways
Certificate of Deposits provide the opportunity to earn significantly more interest on your money than you would in a traditional savings account and they offer a wide choice of term-lengths to access to your funds, beginning with 1 months. This makes them especially useful for shorter-term savings goals or for maintaining money that you need fast access to, but don’t necessarily expect to use frequently. View our latest Certificate of Deposits (CDs) rates here.
