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ByTaylor Moore Finance & Insurance Writer

Taylor Moore is the Finance & Insurance Writer for Reviews.com. Her work has been published in Chicago magazine, the Chicago Reader, and elsewhere.

The Best Certificates of Deposit

A certificate of deposit (CD) is a federally-insured savings account that gives you a guaranteed interest rate in return for keeping your cash with the bank for a mandated amount of time. Banks will typically offer a higher interest rate than what’s offered with a regular savings account. A term length can be as short as one month or as long as 10 years, but it’s important to keep your money in a CD until the maturity date (when the CD expires), otherwise you risk penalties for early withdrawal.

CDs are best for people saving toward a particular goal, like a wedding or mortgage, or retirees who want their money to accrue value without subjecting it to the risks of the stock market.

The 5 Best Certificates of Deposit

The Best Certificates of Deposit: Summed Up

  Ally Bank TIAA Bank Marcus by Goldman Sachs Discover Charles Schwab Barclays SunTrust Bank
Best for Overall One-year APY No-penalty CDs Long-term CDs Short-term CDs Online tools Flexibility
One-year CD APY 2.50% 2.50% 2.50% 2.40% 2.07% 2.42% 2.00%
Minimum deposit n/a $5,000 $500 $2,500 $1,000 n/a $2,000
Maturity terms (months) 3, 4, 9, 12, 28, 36, 60 3, 6, 9, 12, 18, 24, 30, 36, 48, 60 6, 9, 12, 18, 24, 36, 48, 60, 72 3, 6, 9, 12, 18, 24, 30, 36, 48, 60, 84, 120 1 - 30 3, 6, 9, 12, 18, 24, 36, 48, 60 6, 12, 18, 24
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*Information correct as of July 26, 2019. Interest rates change regularly, so please refer to the company sites for the most up-to-date rates.

Best
Overall

Ally Bank
Ally Bank
Our top pick with no minimum deposit and consistently high interest rates.
Pros
No minimum deposit
High interest rates
Wide product assortment
Cons
Early withdrawal penalty

Why we chose it

No minimum deposit

Unlike many of its competitors, who require minimum deposits of $1,000 or more, Ally doesn’t have a minimum. Whether you have $50 or $5,000, you can take advantage of Ally’s high-yield CDs, step-up CDs, and no-penalty CDs. This makes Ally the most accessible option for savers, no matter the level of investment.

High interest rates

Ally consistently offers some of the strongest interest rates you’ll find on the market. For a high-yield one-year CD, the APY is 2.50% — nearly the highest in the category. Ally also has a Ten Day Best Rate Guarantee. This means that you’ll receive the best rate that Ally offers if it goes up within ten days of your CD open date. While most of its CDs have fixed rates, the Raise Your Rate CD also has an APY of 2.50% and offers the option to increase your rate once over a two-year term or twice over a four-year term.

Wide product assortment

We’ve awarded Ally “Best Online Bank” and “Best Online Stock Trading Site for Cheap Trades.” In other words, we’re a big fan of its competitive offerings, superior customer service, and accessibility. If you were on the fence about buying a CD from Ally, reviewing its other financial products may make the decision easier.

Points to consider

Early withdrawal penalty

Almost every bank penalizes making early withdrawals from CDs, and Ally is no exception. The penalties charged will depend on your CD term, with exceptions for the depositor’s death or judgment that they’re legally incompetent. For example, if you open a 1-year CD and make a withdrawal before the maturity date, you will owe 60 days worth of interest. Below is a list showing Ally’s early withdrawal penalties for high-yield CDs, according to CD term length (for CDs purchased or renewed on or after 12/7/2013):

CD Term Penalty
24 months or less 60 days of interest
25-36 months 90 days of interest
37-48 months 120 days of interest
49 months or more 150 days of interest

TIAA Bank - Best One-Year APY

Best for
One-Year APY

TIAA Bank
TIAA Bank
Competitive rates, but high minimum deposits
Pros
High one-year CD APY
Variety of CDs
Cons
High minimum deposits

Why we chose it

High one-year CD APY

TIAA Bank consistently offers competitive rates on CDs, whose maturity dates range from three months to five years. As of July 2019, the APY for a one-year Yield Pledge CD is 2.50%. And with its Yield Pledge promise, TIAA guarantees a high yield when opening or rolling over a CD. The bank evaluates competitor yields on a weekly basis in order to ensure that its advertised CD rate is within the top 5%.

Variety of CDs

In addition to its flagship Yield Pledge CD, TIAA Bank also offers a basic CD with a minimum deposit of $1,000 and a bump-rate CD with a minimum of $1,500. This 3½-year bump-rate CD allows you to increase your APY once during the term of the CD.

Points to consider

Better APYs and minimum deposits elsewhere

Opening a Yield Pledge CD — our recommended CD — with TIAA Bank is not for the faint of heart (or wallet). To open it, you need to deposit a minimum of $5,000 with the bank. TIAA’s basic CD has a minimum deposit of $1,000, but its interest rate is 2.25%, which is higher than the average, but falls short considering you can get an interest rate of 2.50% with no minimum deposit from Ally. TIAA’s bump-rate CD has a minimum deposit of $1,500 and a high interest rate of 2.60%, but it only comes with a term length of 3½ years.

Marcus by Goldman Sachs - Best No-Penalty CDs

Best for
No-Penalty CDs

Marcus by Goldman Sachs
Marcus by Goldman Sachs
No-penalty CDs offer flexibility in exchange for lower rates
Pros
CDs with no penalty
Low minimum deposit
Cons
Higher APYs with other CDs

Why we chose it

CDs with no penalty

Marcus by Goldman Sachs, an online bank for savings accounts and loans, offers a variety of competitively priced CDs, one of which is a no-penalty CD. It comes with three short-term maturity dates: seven months (2.15%), 11 months (2.20%), and 13 months (2.35%). A no-penalty CD offers you the flexibility to withdraw your money in case of an emergency or in case you want to invest in a different CD with a higher return.

Low minimum deposit

To open a CD account, you only need to deposit $500. While you can go with a no-minimum-deposit option like Ally, $500 is still a low starting amount compared to other banks (Discover requires $2,500, for example).

Points to consider

Higher APYs with other CDs

The lack of an early withdrawal penalty is a great perk, but if you have no plans to withdraw that deposit, you may be better off investing in a CD with a higher interest rate. For example, Ally, TIAA, and Barclays all offer one-year CDs with APYs at or above 2.50%. Even within the Marcus family, a High-Yield CD for that maturity date has an interest rate of 2.50% APY.

Discover - Best Long-Term CDs

Best for
Long-Term CDs

Discover Bank
Discover
Strong option for long-term investor able to deposit $2,500 on the front end
Pros
CD terms up to ten years
Competitive APY rates
Cons
High minimum deposit

Why we chose it

CD terms up to ten years

Discover is our only contender to offer a CD with a maturity date as long as ten years. The maximum maturity date offered by the other banks was about five years.

Competitive APY rates

The interest rates for Discover CDs tend to be competitive with the rest of the market. As of July 2019, the APY for a one-year CD is 2.40% and increases gradually with each available maturity date, topping out at 2.70% APY for a ten-year CD.

Points to consider

High minimum deposit

To invest in a Discover CD, you need to be able to put up at least $2,500 for a minimum deposit. This is expensive compared to some of our other picks, with minimums as low as $1,000, or even no minimums.

Charles Schwab - Best Short-Term CDs

Best for
Short-Term CDs

Charles Schwab
Charles Schwab
Great for existing Charles Schwab customers and those who need short-term CDs
Pros
CDs starting at one month
Integration with brokerage account
Cons
Lower APY rates

Why we chose it

CDs starting at one month

Schwab is the only contender to offer a CD with a maturity date as short as one month. The rest of our top picks start at three months or six months. This is a decent option if you’re testing the waters of CDs and don’t want to tie your cash up in a years-long CD you may not be ready for. At the end of the maturity date, you can choose to renew the CD, reinvest in another CD, or choose an entirely different issuer.

Integration with brokerage account

Schwab CDs can be seen online in your Schwab brokerage account, rather than the issuing institution, so you’re able to view and manage your investments in one central place.

Points to consider

Lower APY rates

While Schwab CD rates are on the higher end of the financial industry spectrum (one-year CD APY is 2.07%), our other picks have APYs that exceed 2.50%. That half of a percentage point can make a big difference over time, so we recommend weighing the convenience of a Schwab CD with the potentially lower earnings.

Others to Consider

Barclays - Best Online Tools

Many of our top picks offer online calculators on their sites that will allow you to see how much interest you’ll make at the end of each term, but Barclays was the only one to take it a step further and recommend a CD ladder investing strategy. If you input your preferred ladder term (three to five years) and how much you want to deposit, you can see Barclays’ recommendation on how to maximize your earnings by staggering CD maturity dates. This is a high-yield strategy that allows you to take advantage of strong interest rates while maintaining some degree of flexibility, in case you want to withdraw some of the principal and interest at any point in the ladder term.

SunTrust Bank - Best for Flexibility

SunTrust Bank’s regular CDs are perfectly acceptable, middle-of-the-road picks in our contender list, but what we liked the most was its Advantage CDs product. The Advantage CD allows you to add funds to the principal at the guaranteed interest rate. This is unique because most competitors only have an allowance of one week to one month after the account opening where you can add cash to the CD before it’s locked in for the term. The Advantage CD also offers one penalty-free withdrawal of your balance and interest per term, and gives you higher interest rates if you set up a monthly auto-transfer of $50 or more. The disadvantage is that at least one owner of this CD is required to have a SunTrust Personal Checking Account, so we can only recommend this for those who already bank with SunTrust or were considering it.

Certificate of Deposit FAQ

What is a certificate of deposit?

A certificate of deposit (CD) is a type of savings account that comes with a fixed rate of return and a fixed withdrawal date (known as a maturity date). The bank agrees to give you an interest rate higher than a regular savings account in return for keeping your cash with them for a certain period of time (known as a term length). This term length can be as short as one month or as long as ten years.

What’s the difference between a CD, a savings account, and a money market account?

CDs, savings accounts, and money market accounts are typically insured by the FDIC or NCUA. We do not recommend using these products with any banks or credit unions not covered by these government agencies. While funds in a CD are generally untouchable without penalty, you can add funds and withdraw funds freely from savings accounts and money market accounts (the exception being Schedule D, a federal rule that says you can’t make more than six transfers or withdrawals from an account per statement cycle). Though the APYs of CDs often vary from week to week, once you’ve opened an account, you’d typically have the same fixed interest rate throughout the term, whereas the interest rate for your savings account or money market account will change regularly.

Can I access the money in a CD?

CDs must remain with the bank for the specified time period, otherwise you risk early withdrawal penalties that could eat into your interest and possibly your initial deposit. “If you cash out prior to maturity, the penalty could involve some initial loss of your investment, so be very careful about what maturity you invest in,” says Greg McBride, CFA, who is Senior Vice President, Chief Financial Analyst of Bankrate. “In other words, if you need the money in a year, don’t put it into a two-year CD. You’re not going to come out ahead.” You also usually aren’t able to add money to the principal of the CD mid-way through, either; you would instead need to buy another CD.

Should I invest in CDs?

CDs are valuable for people who are looking to save for specific goals, like a mortgage or a child getting married. CDs are essentially risk-free because they’re insured by the FDIC or NCUA, meaning you won’t lose your money if the institution goes under. You won’t experience any of the volatility that comes with investing in the stock market, since you receive a guaranteed and fixed interest rate (APY).

How do I get the most out of CDs?

One strategy that people use with CDs is called laddering. With a CD ladder, you buy multiple CDs with different maturity dates, which allow you to take advantage of multiple interest rates and multiple opportunities to withdraw cash if you need it. “The laddered structure smooths out peaks and valleys in interest rates and provides a more predictable stream of interest income,” McBride says.

Barclays, which we awarded “Best Online Tools,” has a useful CD Ladder calculator on its website. You would input your ladder term (number of years that the money will be invested) and your initial deposit amount, and from there, you’re given a basic CD ladder strategy that includes which CD lengths you’d need to invest in initially and how much interest you would make at the end of the ladder term. (In our example case, if we invested $10,000 into Barclays CDs for three years using the recommended strategy, we would have $10,784.67 at the end of the term length, or $784.67 in earnings.)

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