What Are The Top 11 CD Bank Rates By Term?
Last updated on 2021/5/7
Building wealth requires earning, saving, and investing. Building wealth takes money handling skills and one way to develop those is to learn about the various methods of savings and investment. While it may be tempting to attempt short cuts like playing long-shot stocks, the sure-fire way to build wealth remains investing in a way that pays a specific return of a minimum yield, hence the popularity of money market accounts, certificates of deposit (CD), and life insurance policies with a cash value account component.
While all three provide a guaranteed pay off, today’s article examines CDs.
What Are The Top 11 CD Bank Rates By Term?
Some CDs do offer a variable rate, but most use a fixed rate. Each CD includes a disclosure statement that explains the CD bank rates. It also details the maturity date, when the bank pays interest (monthly, semi-annually, or annually) plus whether you receive the interest payment via check or electronic funds transfer (EFT). The disclosure also discusses early withdrawal penalties.
Some long-term, high-yield CDs have “call” features, meaning that the issuing bank may choose to terminate – or call – the CD after only one year or some other fixed period of time. Only the issuing bank may call a CD, not the investor. For example, a bank might decide to call its high-yield CDs if interest rates fall. But if you’ve invested in a long-term CD and interest rates subsequently rise, you’ll be locked in at the lower rate.
CD Bank Rates: What is a CD?
A CD combines the premise of a savings account with stock or bond purchase. With a savings account, you can deposit and withdraw money when you like. With a stock purchase, you typically hold the stock for a number of months or years while it gains value.
With a CD, you obtain a savings account purchased for a specific amount, say $5,000, that you hold like a stock for a finite period. Typically, the period of time is six months, one year, or five years. The bank pays a flat interest rate on it that usually does not vary. Just like regular accounts, the CD receives federal insurance in the amount of $250,000 per bank. At the account period end, you cash in the CD for the purchase cost plus interest. If you invested $5,000 for one year at seven percent interest, at the end of that year you cash in the CD for $5,350.
When you cash in or redeem your CD, you receive the money you originally invested plus any interest. Certificates of deposit are considered to be one of the safest savings options. A CD bought through a federally insured bank is insured up to $250,000. The $250,000 insurance covers all accounts in your name at the same bank, not each CD or account you have at the bank.
Stay with me, and see what the best CD bank rates by term are.
Ally
Formerly GMAC, the bank that sounded like it should duet with Ice T, changed its name to Ally in 2009. It offers high-yield CDs of maturity terms from three months to five years with interest rates ranging from 0.20 percent APY to 0.80 percent APY.
You need no minimum deposit to nab this CD. Jump on this bank’s raise-your-rate CD or its no-penalty CD. Ally also charges no maintenance fees. Its withdrawal penalties start lower than other banks, too. The CDs carry a withdrawal penalty of 60 days of simple interest for a two year or shorter-term CD, 90 days of simple interest on a CD with a term ranging from 25 months to three years, 120 days of simple interest on a CD with a term ranging from 37 months to four years, or 150 days of simple interest on a CD with a term ranging from 49 months or more.
American Express
Credit card giant Amex offers CDs, too. This bank offers CDs of maturity terms from six months to five years with interest rates ranging from 0.10 percent APY to 0.55 percent APY. You can start this account with no minimum deposit.
The bank charges no fees. The CDs carry a withdrawal penalty of 90 days of simple interest for a less than one year CD, 270 days of simple interest on a CD with a longer than one to a four-year term, 365 days of simple interest on the withdrawal amount on a CD with a more than four years to a five-year term, and 540 days of simple interest on a more than five-year term CD if you withdraw the principal deposit or close the account early. American Express doesn’t offer a no-penalty CD.
Barclays
Better known for its credit cards, Barclays also offers CDs of maturity terms from three months to five years with interest rates ranging from 0.10 percent APY to 0.25 percent APY. Hold on to your hat, so to speak because there is no minimum deposit to nab this CD.
It offers very competitive online CDs. The CDs carry a withdrawal penalty of 90 days of simple interest for a less than a two year CD, 180 days of simple interest on a CD with a longer than two-year term. The only bummer is the bank does not offer a no-penalty CD.
Capital One
You probably know Capital One best for its credit cards, but it also offers CDs of maturity terms from six months to five years with interest rates ranging from 0.10 percent APY to 0.40 percent APY. Celebrate because there is no minimum deposit to nab this CD.
It offers very competitive high yield CDs with low fees. The CDs carry a withdrawal penalty of 90 days of simple interest for a year or less CD, 180 days of simple interest on a CD with a longer than one year term.
Marcus by Goldman Sachs
The investment firm of Goldman Sachs also has a consumer bank division, Marcus. It offers CDs of maturity terms from six months to six years with interest rates ranging from 0.15 percent APY to 0.60 percent APY. The minimum to plunk down is $500.
The bank guarantees you will receive the highest CD rate it offers within 10 days of your account opening. The high-yield CDs carry a withdrawal penalty of 90 days of simple interest for a less than 12 month CD, 270 days of simple interest on a CD with a one to a five-year term, and 365 days of simple interest on a CD more than a five-year term. The bank offers three options for no-penalty CDs - seven, 11, or 13 months. You can withdraw from it starting seven days after the CD funding, but no partial withdrawals are allowed.
Investors eAccess
The online division of Investors Bank offers CDs of maturity terms from six to 10 months with an interest rate of 0.15 percent APY. This CD requires a tiny $500 minimum deposit. Choose from a six or ten-month CD or a no-penalty CD. The CDs carry a withdrawal penalty of 90 days of simple interest for its 10 month CD.
Comenity Direct
Another bank largely known for its credit cards, this retail partner offers CDs of maturity terms from one to five years with interest rates ranging from 0.70 percent APY to 0.90 percent APY. You need a minimum deposit of $1,500 to get this CD. Choose from five terms and get interest that accrues and compounds daily. Its withdrawal penalties start higher than others.
The CDs carry a withdrawal penalty of 180 days of simple interest for a one to three year CD or 365 days of simple interest on a CD with a longer than four-year term. No partial withdrawals, no matter how badly you want that money.
Synchrony Bank
Once known as GE Capital Retail Bank, Synchrony offers CDs of maturity terms from three months to five years with interest rates ranging from 0.15 percent APY to 0.80 percent APY. There is no minimum deposit. Check out its CD special, but read the specialty terms carefully. Regular or specialty, you pay no monthly service fee.
These CDs carry a withdrawal penalty of 90 days of simple interest for a less than 12 month CD, 180 days of simple interest on a CD with a one to a four-year term, and 365 days of simple interest on a CD more than a four-year term. You can withdraw earned and credited interest during the CD’s current term with no penalty.
Citizens Access
This bank offers CDs of maturity terms from one to five years with interest rates ranging from 0.10 percent APY to 0.25 percent APY. You need significant savings for this CD; it requires a $5,000 minimum deposit.
The bank charges no fees. You get the option of adding your interest to the CD principal or transferring it to another bank account. The CDs carry a withdrawal penalty of 90 days of simple interest for a one year or less CD, 180 days of simple interest on a CD with a longer than one year term.
Amerant Bank
This community bank with locations in high-income areas offers CDs of maturity terms from one to five years with interest rates ranging from 0.25 percent APY to 0.50 percent APY. The minimum deposit for this CD is actually pretty significant. You need $10K just to start it. The maximum account deposit for these CDs is half a million dollars.
Amerant, a bank with physical offices in Florida and Texas, designs its CDs for higher-income individuals. It offers very competitive interest rates. It offers special terms and rates, so withdrawal penalties vary. Despite its physical locations, you cannot purchase these CDs in Florida or Texas.
PurePoint Financial
This division of MUFG Union Bank offers CDs of maturity terms from six months to five years with interest rates ranging from 0.15 percent APY to 0.25 percent APY. Hold the phone. You need a minimum deposit of $10K for this CD, too. It keeps its withdrawal penalties simple.
The CDs carry a withdrawal penalty of 181 days of simple interest on their CDs regardless of the term. It does offer no-penalty CDs. You can invest in one with a term of 11, 13, or 14 months.
CD Bank Rates: Picking a CD
Skip the Japanese noise section and head right over to low risk, moderate yield CDs. You could waste a lot of time hunting down high yield CDs, but why waste time? You could locate one today to purchase that would provide for you the ideal CD. Think about a few things before you jump ahead to the top eleven list. You have a few considerations before you make a purchase. While the rates are good on each of our picks, you need to choose the CD that fits your financial needs and the length of time you feel comfortable investing the funds.
Okay, if you do not have financial goals, stop for a moment, and set some. Perhaps you would like to own your home outright by the time you reach 45 or 50. You can totally do this! You have to make a plan and you must stick to it. So, think about your financial goals. In this process, make a list of all of your assets such as your savings account, treasury bills, money market accounts and funds, stocks, bonds, etc. Consider what you can liquefy if you suddenly needed money. Since you are investing cash equivalents, you need to consider inflation risk. That refers to the risk inflation rises faster than your CD matures with its interest payments.
Banks usually offer numerous lengths, so you may think you bought a five year CD when it actually has a term of 10 or 20 years. Always obtain the maturity date in writing before you buy it.
The term refers to a CD that the bank can terminate after a specific period of time. You do not get the same option. If interest rates change, the bank can call the CD. You will get back the original deposit, plus unpaid interest that accrued to that point, but you might lose that awesome interest rate it had and may find it tough to find one of the similar rates.
A massive difference exists between a “federally insured one-year non-callable” and a “federally insured one-year cashable” CD. The former means the bank cannot call the CD for one year and it is insured by the feds. The latter means the CD has a one-year term until you can cash it and it is insured by the feds. You need to understand the interest rate, whether it is fixed, meaning it remains the same throughout the life of the CD, or variable, meaning it can change during the maturing term of the CD.
The cashable date or maturity date lets you know when you can cash out the CD without a penalty, obtaining your full deposit back plus the earned interest. You also need to understand the difference between types of variable-rates. A “bonus rate” or “multi-step” interest rate or CD bank rate either decreases or increases on a prescribed schedule. Indexed variable-rates decrease or increase according to a specified market index`s performance.
If you have an emergency and must liquidate the CD, you need to know in advance how much money you will lose. It is best to purchase CDs when you know you have ample funds available you could quickly liquefy. Brokered CDs can carry a higher penalty than others.
If you want to buy from a broker, vet them well first. They do not have certification or licensing procedures, so you need to check them with the Better Business Bureau to see if they have complaints against them or fraud accusations. Also check them with the SEC, FINRA, and the state securities regulator. Finally, do an Internet search on Bing or Google since many people do not file official complaints, but may write reviews on Yelp or Yahoo or Google Business. Find out their details such as their method of recordkeeping. Make sure the brokerage does not invest group monies into CD purchases.
Determine which institution issues the certificate. You need to ensure that you do not invest more than $250,000 in CDs in one bank since that would jeopardize a portion of your money since federal protections only extend to $250,000.
CD Bank Rates: Where to Buy a CD
Tower Records jokes aside, you typically purchase CDs from a bank. Other options include brokerage firms, credit unions, and independent salespeople also called deposit brokers. You can sometimes obtain a CD with a higher interest rate from one of these brokers because they forge agreements with banks to sell a specific number of CDs for the bank.
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Conclusion
Do not stop learning by just reading this article. Use the financial management tools offered on this site and your own research to become a savvy investor. Start by investing in one of these CDs with the best CD bank rates. Also, don’t forget to keep up upgrading your saving. If you don’t have a savings account yet and you are thinking about opening one, take a look at savings account options below: