ElitePersonalFinance found the Best CD Rates of December 2025

If you’re looking for a safe place to park your hard-earned cash, certificates of deposit (CDs) remain one of the best options traditional and digital-only banks offer. Today, we highlight some of the best CD accounts available from proven banks like Barclays, Capital One, and Ally, complete with solid annual percentage yields (APYs), protection from market volatility, easy eligibility requirements, and A-rated customer service.

Unlike riskier investments like stocks and ETFs, CDs guarantee a fixed return as long as your funds are untouched for the agreed-upon term. Whether you’re looking to save on a new house or protect recently withdrawn stock proceeds from market volatility, CDs can be an excellent alternative to a high-yield savings account.

Keep reading to learn more about ElitePersonalFinance’s top CD picks, including key features, APYs, how to choose the correct CD account, best practices on reading fine print, alternatives to CDs, and understand why CDs can be an excellent backup plan to your financial goals.

Why You Should Trust ElitePersonalFinance Guides?

At ElitePersonalFinance, we understand that certificates of deposit (CDs) can be an excellent tool for your financial arsenal. Our guide comprises top picks from dozens of legitimate banks and credit unions, with a focus on APYs across terms, no withdrawal penalties, lax minimum deposit requirements, and flexibility options such as no-penalty CDs, bump-up CDs, or add-on CDs for greater diversification across changing interest rate environments.

Ever wanted to know the difference between a short-term 12-month CD and a 5-year CD, and how it ties to your financial goals? Let ElitePersonalFinance provide that insight so that you can be on your way to a solid financial footing in no time.

Ally Bank

If you’re looking for flexible certificate of deposit (CD) options, Ally Bank is an excellent place to start. Proudly proclaiming it’s a “smarter way to watch your money grow” on its homepage, Ally offers a variety of CD products, including traditional high-yield CDs, no-penalty CDs, and “Raise Your Rate CDs” where you can earn an average of 3.9% with no minimum deposit to open.

With Ally Bank, you choose the term length, add funds, and decide whether to roll it over at maturity or not. Please note that an early withdrawal penalty applies, varying according to the CD or IRA CD term. For example, if we withdraw less than 3 months, you incur a day-by-day loss of interest. For withdrawals between 3 and 24 months, the interest is 60 days; for withdrawals between 25 and 36 months, the interest is 90 days.

Today, Ally Bank has garnered more than 2,700 reviews, boasting an average 4.4-star rating on its site. Plus, every CD account is FDIC insured up to $250,000, ensuring that your funds are kept in a safe place. Additionally, a 0.05% Loyalty Reward is applied when you renew your CD, making it even more user-friendly.

What We Like:

• 3% to 3.50% APY on 3-month to 5-year terms
• Variety of CD options such as high yield, no penalty, and Raise Your Rate
• FDIC insured up to $250,000
• $0 minimum deposit requirement

What We Don’t Like:

• No physical branches for in-person support
• Not the best rates compared to credit unions
• Early withdrawal penalties apply to all CDs

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the Ally website or mobile app

Terms: Ally Bank Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 5.00%, depending on the term length. For example, if you deposit $10,000 into a 1-year CD, you could earn up to $500 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on term length, compounding method, and any available promotions.

Discover Bank

One of the most widely recognized banks, Discover Bank, offers a favorable CD program with terms ranging from 3 months to 10 years. The term CDs start at around 3.25% APY and go up to 4.10% APY on mid-to-long-term CDs, making them a solid alternative to Ally, Barclays, or Bread Savings.

However, Discover Bank has a minimum deposit requirement of $2,500, which is significantly higher than that of competing banks, which typically require $0.

In addition to competitive rates, Discover Bank provides FDIC insurance of up to $250,000, offering peace of mind similar to that of Ally, CIT Bank, or Bread Savings. While Discover’s rates aren’t on par with those of digital-only banks or even PenFed Credit Union, it offers a well-known brand with a simple and easy-to-use online interface.

If you’re comfortable putting down a $2,500 minimum deposit with a large, established bank, Discover Bank is a great choice.

What We Like:

• Big established name
• Wide range of CD terms from 3 months to 10 years
• Competitive APYs go up to 4.10%
• Monthly, quarterly, or annual interest payments (or end of maturity)
• FDIC insured up to $250,000

What We Don’t Like:

• $2,500 minimum deposit required
• Early withdrawal penalties apply
• No-penalty or bump-up CDs are not available
• No in-person branches
• Not the highest APYs compared to digital-only banks/PenFed Credit Union

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the Discover website or mobile app

Terms: Discover Bank Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 4.80%, depending on the term length. For example, if you deposit $10,000 into a 12-month CD, you could earn up to $480 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on CD term, deposit size, and any available promotions.

Synchrony Bank

Synchrony Bank is an all-around performer offering several CD types, including a standard 4.25% APY CD, a bump-up CD at 3% APY, and a 13-month, 19-month, or 60-month CD at 4.15% APY. All require no minimum balance, and terms range from 3 months to 60 months.

One of our favorite things about Synchrony Bank is that it offers an easier-to-use CD earnings calculator that allows you to compare CD rates versus competitors. For example, Synchrony rates trump US Bank, Bank of America, and the national average of 1.98% APY. For perspective, an initial deposit of $5,000 over 12 months will give you $200.

Other financial products offered by Synchrony Bank include a high-yield savings account at 3.8% APY and a money market account at a modest 2% APY. Plus, its research section is one of the best we’ve seen, with helpful resources to help you get up to speed on virtually every certificate of deposit-related subject imaginable.

What We Like:

• Strong 4.25% APY CD (3% Bump-Up APY)
• Wide range of CD options
• No minimum deposit required
• Strong resources section and earnings calculator

What We Don’t Like:

• Bump-up CD rates are not the best compared to competitors
• So-so mobile app performance
• No cash bonus promotional offers
• Average customer support

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the Synchrony Bank website or mobile app

Terms: Synchrony Bank Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 5.15%, depending on the term length. For example, if you deposit $10,000 into a 1-year CD, you could earn up to $515 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on CD term, compounding method, and any available promotions.

Marcus by Goldman Sachs

If you’re looking for another competitive CD option, Marcus by Goldman Sachs might be a good fit for you. It offers CD terms ranging from 6 months to 6 years, with rates starting at 3.50% APY for short-term CDs and 4.50% APY for longer-term CDs, making it an attractive option for enjoying steady returns.

Additionally, Marcus by Goldman Sachs requires a minimum deposit of only $500, which is lower than the $2,500 minimum deposit of many competitors, including Discover. Interest is also compounded daily, with FDIC insurance of up to $250,000.

One downside to Marcus by Goldman Sachs is that it does not offer specialty CD options, such as no-penalty or bump-up CDs, which can further compound your funds. Plus, there are no physical branches for in-person service, so you must be comfortable doing everything entirely online. Early withdrawal penalties also apply, and rates are not as competitive as those of top credit unions, such as PenFed Credit Union.

All in all, Marcus by Goldman Sachs offers competitive rates and an intuitive online platform that makes it equally viable for both new and experienced savers.

What We Like:

• Competitive APYs from 3.50% to 4.50%
• Terms from 6 months to 6 years
• Low $500 minimum deposit requirement
• FDIC insurance up to $250,000

What We Don’t Like:

• No no-penalty or bump-up CDs available
• Early withdrawal penalties apply
• Not the highest rates compared to PenFed Credit Union
• No in-person service

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the Marcus by Goldman Sachs website or mobile app

Terms: Marcus by Goldman Sachs Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 5.00%, depending on the term length. For example, if you deposit $10,000 into a 12-month CD, you could earn up to $500 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on CD term, deposit amount, and any available promotions.

Capital One

Capital One Bank’s diverse lineup appeals to all. With term lengths ranging from 6 months to 5 years and no minimum balance requirement, these CDs can help keep your funds safe. As of this writing, the bank offers a 4% APY on 1-year online CDs, a 3.6% APY on 2-year online CDs, and the same APY on 5-year online CDs, which accrue daily but are paid and compounded monthly throughout the term.

Based on these APYs, a 6-month CD can net you $87 in earnings versus $131 for 9 months and $200 for 12 months. However, please note that early withdrawal penalties may apply, and rates are subject to change without notice.

One downside to Capital One is that other banks offer higher rates. However, a combination of low entry requirements, a well-established history, and a strong mobile app makes Capital One a winner in our book.

What We Like:

• 4.09% APY for 1-year online CDs / 3.60% for 2-year and 5-year online CDs
• Terms from 6 months to 60 months
• FDIC insured up to $250,000
• Accrues daily and compounds monthly until maturity

What We Don’t Like:

• Online-only banks offer higher APYs
• Early withdrawal penalties apply
• No no-penalty or “Raise Your Rate” options
• Branches are not available in all states

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the Capital One website or mobile app

Terms: Capital One Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 5.00%, depending on the term length. For example, if you deposit $10,000 into a 1-year CD, you could earn up to $500 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on CD term, balance tiers, and any available promotions.

Limelight

Little-known Limelight Bank (powered by CC Bank) offers CDs with terms ranging from 6 to 36 months, starting at a 3.7% APY. Interest compounds daily, and it’s paid out monthly, helping your savings grow gradually over the chosen term.

However, one downside to Limelight Bank is that a $1,000 minimum deposit is required on all CD accounts, with penalties for early withdrawal (which applies to all banks anyway).

What We Like:

• Terms from 6 to 36 months
• APYs start at 3.7%
• Simple website
• Backed by CC Bank

What We Don’t Like:

• Not the most well-known brand
• Early withdrawal penalties apply
• $1,000 minimum deposit required
  No specialty CDs (like no-penalty or Raise Your Rate)

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the Limelight website

​​Terms: Limelight Bank Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 5.25%, depending on the term length. For example, if you deposit $10,000 into a 12-month CD, you could earn up to $525 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on CD term, deposit amount, and any available promotions.

CIT Bank

Digital-only CIT Bank is one of the banking world’s rising stars, offering competitive terms and rates across several types, including standard term CDs, no-penalty 11-month CDs, jumbo CDs, and TAMP CDs. Terms range from 6 months to 5 years, with daily compounding interest offering a way to provide predictable and safe returns without the stock market’s volatility.

Not to mention, CIT Bank also offers FDIC insurance up to $250,000. However, please note that all CDs require a minimum deposit of $1,000. On occasion, its APY lags behind that of other digital-only competitors, such as Ally or Synchrony Bank.

All in all, look to CIT Bank for competitive APYs across multiple term lengths, backed by a strong brand name.

What We Like:

• No-penalty and jumbo CDs available
• Term CDs start at 3.0% APY
• FDIC insured up to $250,000
• Daily compounding interest for steady growth
• Well-established brand and reputation

What We Don’t Like:

• $1,000 minimum deposit required
• APYs are not as good as Ally’s and Synchrony Bank’s
• Early withdrawal penalties apply
• No physical branches or raise-your-rate CDs available

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the CIT Bank website or mobile app

Terms: CIT Bank Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 5.00%, depending on the term length. For example, if you deposit $10,000 into a 1-year CD, you could earn up to $500 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on CD term, compounding frequency, and any available promotions.

PenFed Credit Union

One of the largest credit unions in the United States, PenFed Credit Union, is a well-rounded performer, offering terms ranging from 6 months to 7 years with APYs up to 3.20%, making it an excellent choice for those with a longer-term view. All deposits are NCUA insured up to $250,000, which is equivalent to FDIC insurance for banks.

Although its name may be deceptive, anyone can open a PenFed Credit Union account. However, be mindful that there is a $1,000 minimum deposit, with rates coming in lower than online-only competitors, especially for shorter terms.

What We Like:

• 6 months to 7-year terms
• NCUA insured up to $250,000
• Strong APYs starting at 3.20%
• One of the largest credit unions in the United States

What We Don’t Like:

• $1,000 minimum deposit required
• Early withdrawal penalties apply
• No-penalty or raise-your-rate CDs not available
• Must be a PenFed Credit Union member before joining

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Must be a PenFed Credit Union member
• $5 minimum deposit to join
• Completed application through the PenFed Credit Union website, mobile app, or branch

Terms: PenFed Credit Union Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 5.25%, depending on the term length. For example, if you deposit $10,000 into a 12-month CD, you could earn up to $525 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on CD term, membership eligibility, and any available promotions.

Barclays

Barclays Bank offers CDs with competitive APYs, ranging from 3.8% APY on a 6-month term to 3.25% APY for a 60-month term. Like Ally Bank, it also comes with no minimum balances or hidden monthly fees, with easy funds transfers and interest that compounds daily, allowing for steady growth of funds over time. Additionally, it provides a straightforward application process.

Plus, we appreciate Barclays’ extensive FAQ section, which explains online CDs well, answering questions such as what happens to your account when your CD matures and how to renew them, along with penalties for early termination.

As for downsides, Barclays does not offer specialty CDs, such as no-penalty or bump-up options, which limits its versatility, especially when interest rates rise due to economic conditions. Additionally, there are no physical branches, so you must be entirely comfortable with online account management.

All in all, if you’re looking for easy-to-understand CDs with decent returns, Barclays is an excellent option to consider.

What We Like:

• No minimum deposit required
• Competitive APYs starting at 3.25% (60 months)
• Wide range of CD terms (12 to 60 months)
• FDIC insured up to $250,000

What We Don’t Like:

• No no-penalty or raise-your-rate CDs available
• No in-person branches
• Early withdrawal penalties apply to all CDs
• Rates may change at any time

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the Barclays website or mobile app

Terms: Barclays Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 5.00%, depending on the term length. For example, if you deposit $10,000 into a 1-year CD, you could earn up to $500 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on CD term, balance tiers, and any available promotions.

Bread Savings

When it comes to certificates of deposit, little-known Bread Savings isn’t an all-out winner. Savers can enjoy a 4.15% APY on a 1-year CD, which increases to 4.50% APY on 5-year terms, ranking among the highest on our list.

One downside to Bread Savings is that there are no specialty CD products here (such as no-penalty or bump-up CDs). It also requires a higher minimum deposit than most ($1,500), which is a significant drawback compared to Barclays or Ally, which do not require minimum deposits. However, it balances out with no monthly service charges, daily interest compounding, and an intuitive and easy-to-use online app.

If you’re comfortable with a $1,500 minimum deposit, Bread Savings is a quick and easy way to park your cash for the long run.

What We Like:

• 4.15% APY on 1-year CD, up to 4.50% on 5-year terms
• Daily interest compounding
• No monthly service fees
• Easy-to-use online platform

What We Don’t Like:

• $1,500 minimum deposit required
• No specialty CDs (no-penalty or bump-up)

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the Bread Savings website

Terms: Bread Savings Certificates of Deposit are savings accounts with fixed terms. They offer APYs as high as 5.15%, depending on the term length. For example, if you deposit $10,000 into a 1-year CD, you could earn up to $515 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties apply. Actual yield depends on CD term, deposit amount, and any available promotions.

E*Trade

E*Trade allows its customers to enjoy CDs starting at 3.9% for 6 months and up to 4% for 12 months. Terms go from 6 months to 60 months. Like many of our recommendations, there are no monthly fees and no minimum deposit requirement, with interest compounding daily, along with a 10-day rate guarantee. This benefit allows you to get a better interest rate, whether it’s the rate you opened it at or the day you add funds within a 10-day window.

E*Trade also offers a modest 0.05% APY with ATM refunds nationwide at select locations.

As of this writing, each rate is also offering up to $1,000 for a limited time, as long as you open a new brokerage account with a qualifying deposit by October 31st with a promo code. If you’re into stocks and looking for a new brokerage, then this may be a worthwhile offer.

Plus, E*Trade is strong with other savings products as well. For example, its premium savings accounts offer a 3.75% APY (0.9 times the national average) with increased FDIC insurance up to $500,000.

What We Like:

• Yields of 3.9% to 4% on CDs
• Terms from 6 months to 60 months
• 10-day rate guarantee
• No minimum deposit required
• Premium savings account offers 3.75% APY
• Up to $1,000 cash bonus for new brokerage accounts

What We Don’t Like:

• Low 0.05% APY on some accounts
• Not the highest CD rates compared to competitors
• Large brokerage deposit required for $1,000 bonus

Eligibility & Next Steps:

• US citizen or permanent resident
• Valid social security number
• Linked bank account to fund the CD
• Completed application through the E*Trade website or mobile app

Terms: E*TRADE Certificates of Deposit are available through its brokerage platform. They offer APYs as high as 5.25%, depending on the term length and issuing bank. For example, if you deposit $10,000 into a 12-month CD, you could earn up to $525 in interest at maturity. There are no monthly maintenance fees, but early withdrawal penalties may apply depending on the issuing bank. Actual yield depends on CD term, issuing institution, and any available promotions.

What Is a Certificate of Deposit (CD)?

A certificate of deposit (CD) is an investment vehicle offered by banks and credit unions, allowing you to earn a guaranteed interest rate (usually starting at 3%) for keeping your funds safely invested for a fixed term, ranging from 3 months to 7 years.

Unlike traditional savings accounts, CDs require that you do not withdraw funds. For example, if you open a 12-month CD with a $20,000 deposit at 4.25% APY, then you know how much daily compounding interest you’ll earn before the end of the lockup term or maturity date.

Additionally, there are type recommendations, such as Ally Bank and Barclays Bank, which do not have minimum deposit requirements, making them a low-barrier option for anyone seeking savings growth. On the flip side, Limelight Bank and CIT Bank require a minimum deposit of around $1,000 (versus $1,500 for a Bread Savings account), which have higher-than-average APYs to compensate.

As an example, if you use Capital One or Discover Bank to deposit $10,000 into a 12-month CD at 4.25% APY, then you will earn close to $430 in guaranteed interest without worrying about macroeconomic conditions, rising interest rates, or general market volatility.

Looking to deposit $20,000 in a CD with PenFed Credit Union at a 4.35% APY? If so, you also enjoy steady growth while minimizing risk.

All in all, certificates of deposit are an excellent way to park cash for a specific medium-term goal where you do not need immediate access to funds.

Are CDs Safe Investments?

Yes, certificates of deposit are well-known for being one of the safest investments around. When opening an account through Synchrony, Bread Savings, or Discover, all deposits are protected up to $250,000 per institution per depositor (with FDIC-equivalent NCUA protection for PenFed Credit Union funds). In the event your bank becomes bankrupt or fails, your money remains intact.

However, there is an opportunity cost to parking your funds in a certificate of deposit. After locking your funds, they cannot be accessed until maturity unless you pay an early withdrawal penalty, often comprising several months of lost interest. Expect a lost opportunity cost if interest rates rise while your funds are locked. That’s why CDs are typically viewed as less flexible than savings accounts, which allow for unlimited monthly withdrawals.

However, if you’re looking for guaranteed returns and FDIC backing up to $250,000, then certificates of deposit are one of the best ways to keep your cash safe.

Is It Worth Opening a CD Instead of a Savings Account?

Deciding between a CD and a savings account depends on your financial goals. Are you looking for higher liquidity versus higher yields? If you’re seeking high liquidity, then savings accounts at places like Ally or CIT Bank may do the job, allowing you to withdraw anytime without accruing penalties. They are a better option for building an emergency fund or covering significant expenses, such as vacations.

In turn, certificates of deposit require that you keep your funds locked for a fixed term, in exchange for a guaranteed APY. For example, if Ally pays a 3.50% APY, alternatives like Bread Savings can beat it by offering a 12-month CD at 4.25% APY. If you have a $10,000 deposit, then an extra 0.75% means hundreds of dollars worth of additional interest over multiple years.

One strategy is to incorporate a hybrid approach, keeping liquid funds in savings accounts while allocating extra funds to a CD, diversifying your investments. That way, you enjoy both easy access and growth potential simultaneously.

What Are Typical CD Terms and Rates?

Expect CD terms ranging from 3 months to 7 years, where the longer the term, the higher the APY (in most cases). For example, Ally Bank may offer a 6-month CD at 3.50% APY, whereas Bread Savings might offer a 5-year CD at 4.50% APY. Others, like Capital One, provide middle options such as a 1-year term at 4.25% APY.

However, there are exceptions. If there is high competitiveness between banks looking to attract deposits, then short-term CDs can outperform longer-term CDs.

Some banks also offer specialty CDs. For example, Ally offers Raise Your Rate CDs that allow you to increase your APY if interest rates rise during your term. By contrast, Barclays sticks to standard fixed-rate CDs without add-on features, while PenFed Credit Union occasionally offers promotional rates that outperform competitors on specific terms. Specialty products, such as no-penalty CDs from CIT Bank or bump-up options from Ally, can provide more flexibility, but not every institution offers them.

Shopping around is crucial. For instance, Limelight Bank offers 3.70% for a 6-month CD, while Discover Bank offers 4.25% for the same duration. Those differences can be significant, depending on the amount of money you’re investing.

Pros and Cons of Investing in CDs

Here are the pros and cons of investing in certificates of deposit:

Pros

Safe Returns

One of the best things about certificates of deposit is that they offer predictability and safety, regardless of macroeconomic conditions. Unlike stocks and ETFs, which fluctuate wildly, CDs provide a fixed interest rate for a set period of months or years, allowing complete transparency into how much you earn. That way, you can better plan for a down payment on a home or a larger expense.

Regardless of how equities perform, a CD that pays 5% over 12 months will provide precisely that, making it a great low-risk investment strategy.

FDIC/NCUA Insurance Protection

A second benefit of certificates of deposit is that they are insured by the FDIC or NCUA up to $250,000 per depositor, which provides peace of mind knowing that your funds are protected in the event of a bank failure. Not even corporate bonds or mutual funds can promise this.

Higher APYs Than Savings Accounts

Typically, certificates of deposit offer higher APYs than savings accounts. CD rates from reputable firms like Marcus by Goldman Sachs, Ally, or Synchrony are up to 10 times higher than the national average relative to savings accounts.

For example, a typical savings account may pay only 0.4%, while a 12-month CD pays 4.25% APY on a $10,000 balance, which yields immediate dividends, resulting in a difference of more than $300. With the power of compounding, a wider gap emerges across multiple years, making CDs a low-risk and innovative strategy for both beginners and advanced savers.

Suitable for Long-Term Goals

CDs are utilized to work towards larger future expenses. For example, if you know you need $32,000 in three years for a down payment on a home, then a 36-month CD will ensure that you meet your goal, as long as you don’t withdraw the funds. Additionally, expert strategies, such as CD laddering, allow you to take advantage of staggered maturities by using multiple CDs, thereby enjoying both liquidity and higher yields.

Cons

Not So Liquid

One of the significant downsides to CDs is limited liquidity. When you agree to sign up for a certificate of deposit, you are not allowed to touch your funds until you reach the maturity date, unless you want to pay an early withdrawal fee. Penalties typically begin at 3 months’ worth of interest and can reduce your balance.

If you’re looking for greater liquidity, then savings accounts or money market accounts are recommended.

Early Withdrawal Fees

One major drawback of CDs is that if you withdraw funds before maturity, you’ll pay a penalty, which usually amounts to 3 to 6 months’ worth of interest or even higher. If you withdraw too early, you can tap into your original principal on shorter-term CDs.

For example, if you withdraw from a 12-month CD after only a month, you can lose more than you’ve earned, so careful planning is essential to ensure you only need the money in the long term.

Inflation

Unfortunately, certificates and other positive-pay options fall within the 3% to 4% range, so a 5% inflation rate will erode your purchasing power. If you want to increase assurance in periods of high inflation, Treasury Inflation-Protected Securities (TIPS) may be a better option.

Lower than Average Returns Compared to Stocks

Ultimately, stocks, bonds, or mutual funds are the primary options for maximizing returns. Don’t expect to be significantly wealthy with certificates of deposit, even in high-growth market conditions. That’s why CDs are encouraged to complement existing investments, not serve as a principal investment.

How to Choose the Best CD Account

Here’s a step-by-step guide on how to choose the best certificate of deposit account:

What Are Your Goals?

Are you looking to cover funds for a short-term expense or a longer-term goal, such as saving for a home down payment? One of the first steps is to understand your timeline, allowing you to select the correct term length. For example, if it’s January and you plan to take a vacation by the end of the year, then a 6-month CD may be worthwhile.

In turn, if you’re looking to save for a down payment, then longer-term CDs in the three- to seven-year range may be a good option. Additionally, if you have already invested in stocks, consider CDs as part of a broader investment strategy that complements your stock holdings, ETFs, and bonds, making it a worthwhile low-risk proposition.

Compare Annual Percentage Yields (APYs)

All of our recommendations offer competitive rates across various CD term lengths and significantly higher APYs than traditional brick-and-mortar institutions, such as Chase, Bank of America, and Wells Fargo. It’s essential to compare short-term, midterm, and long-term rates to find the best option for you.

At the same time, understand if you’re interested in compounding daily, monthly, or annually. Typically, daily compounding yields higher results, which add up over time. Strive to strike a balance between higher APYs and frequent compounding to maximize your returns.

Look into CD Laddering

As you assess term lengths and flexibility, it’s essential to consider CD laddering, where you can take out multiple CDs with staggered maturity dates, allowing you to split your funds and take advantage of increased liquidity and the ability to earn higher long-term rates.

Look into Fees and Early Withdrawals

Another key factor in selecting the best certificate of deposit is assessing early withdrawal penalties, which can significantly reduce your interest earnings if you withdraw funds before the maturity date. Be sure to carefully review all terms and conditions with your bank or credit union to understand any applicable fees and penalties. At the same time, consider maintenance fees. Most of our recommendations come with no hidden costs, so your returns are not significantly affected.

Don’t Forget Account Minimums

Keep in mind that every bank has different minimum deposit requirements to open a certificate of deposit. For example, Marcus by Goldman Sachs only requires a $500 minimum, whereas Bread Savings requires a $1,500 minimum. You’re looking to lock this away for the long term, so ensure you don’t need the funds immediately.

Remember, you’ll have easier access to certificates of deposit with smaller minimums, whereas a larger minimum portion of your balance, albeit at higher APYs, requires more planning, so tread carefully.

No-Penalty, Bump-Up, Promotional APYs and More

When choosing a certificate of deposit, consider not only the interest rate and term length, but also the certificate’s features and benefits.

Today, banks are competing against each other to attract customers, offering extra features and perks such as no-penalty CDs, bump-up CDs, promotional rates, and loyalty bonuses.

No-penalty CDs are just that – no penalties. For example, CIT Bank offers an 11-month no-penalty CD that allows you to withdraw your entire balance and accrued interest without incurring early withdrawal penalties, making it easier to access for a larger purchase. Ally Bank also offers no-penalty CDs.

In contrast, bump-up CDs allow you to take advantage of rising interest rates by allowing you to bump your rate to a higher APY if the bank increases its own, at any time during your term. For instance, if you open a 2-year CD at a 4% APY and the bank later raises its rates to 4.215%, you don’t have to open a new account to adjust your CD to the new yield. My friend, I like it over traditional CDs, where you have a fixed rate for the entire term length.

On the flip side, you can also take advantage of promotional APYs. Recently, Bread Savings offered a 5-year CD with a 4.50% APY for new customers, which could be a nice trade-off to its $1,500 minimum. However, we encourage you to read the fine print and understand when rates expire or what the larger minimum balance requirement is.

With the power of daily compounding, you can enjoy steady growth over time, mixing promotional APYs with standard CD rates.

What Is the Difference Between Fixed Rate and Variable Rate CDs?

Not all CDs are equal; there are two main types: fixed-rate and variable-rate CDs. Let’s help you understand the difference between each of them.

Fixed-rate CDs have a guaranteed interest rate that remains constant for the entire term. For example, if you open a 4% APY 12-month CD at Ally, you will enjoy that rate for the entire year, making it a favorable proposition for the low-risk investor.

In turn, the variable-rate CD rate changes according to the prime rate. For example, if you have a 3% APY variable CD, it can increase to as high as 4% if the Federal Reserve raises interest rates. At the same time, if they decide to drop it, it can go below 2%, which makes it a riskier approach.

To summarize, fixed rates have locked-in rates, whereas variable rates fluctuate depending on market conditions.

What Are the Different Types of CDs?

Different types of CDs vary in terms of your savings goals, need for quick access to cash, and the amount of risk you’re willing to take.

They include traditional, no-penalty, bump-up, jumbo, and IRA accounts.

Let’s go over each in-depth and how you may decide upon either one:

Traditional CDs

Traditional CDs are the most common type of CD available. Set aside a fixed amount of money for a predetermined term, ranging from 3 months to 5 years, and receive a guaranteed interest rate from the bank. Withdrawals will incur penalties, which usually equate to several months’ worth of interest.

If you’re an investor seeking a predictable return without the volatility of the stock market, then traditional CDs may be a suitable option.

No-Penalty CDs

No-penalty CDs do not charge any early withdrawal penalties. That way, you don’t have to sacrifice all of your earned interest. In exchange, you can expect lower annual percentage yields compared to traditional CDs. All in all, consider no-penalty CDs if you prefer flexibility with penalty-free withdrawals, albeit at lower APYs.

Jumbo CDs

If you have a substantial amount of money on hand, you may benefit from Jumbo CDs, which require a minimum deposit of $100,000 or more.

Jumbo CDs favor higher deposits with higher interest rates than traditional CDs. It’s an excellent way to protect large amounts of cash without incurring market risks, although you may defer to treasuries for higher rates with the same level of risk.

Bump-Up CDs

Bump-up CDs allow you to increase your rate once or twice during the entire CD term if the bank raises its rates.

For example, suppose you open a 3% CD and the same term CD rises to 4%. In that case, you can request a bump-up and keep it for the entirety of the term, which is an excellent option if current macroeconomic conditions signal rising interest rates. However, you may see initial rates on bump-up CDs that are lower than those on traditional CDs, compensating for this benefit.

IRA CDs

IRA CDs offer the same advantages as an Individual Retirement Account (IRA). Earned exclusively through retirement accounts, you can opt to pay all taxes up front with a traditional IRA or once you’ve withdrawn with a Roth IRA, making it an excellent choice for conservative investors who are approaching retirement age.

However, keep in mind that there is limited liquidity, and early withdrawal fees are not only charged by your bank but also by the IRS.

What Federal Protections Are Available for CD Investors?

Whether it’s Marcus by Goldman Sachs, CIT Bank, Discover, or any of our other recommendations, CDs have essentially been proven to be one of the safest ways to park your money, thanks to FDIC insurance, which protects your deposit up to $250,000 per depositor of the institution. All principal and accrued interest remain safe, even if the bank goes bankrupt, so you can breathe easy.

Keep in mind that credit unions operate slightly differently and are regulated by the NCUA, which provides the same $250,000 protection as it did in 2000.

Beyond FDIC and NCUA protection, bank rules also mandate clear disclosure of interest rates, fees, and penalties, ensuring that all investors are equally informed.

How CDs Compare to Bonds and Treasury Securities

Bonds and Treasury securities work very differently from certificates of deposit.

For starters, CDs offer a fixed rate of return over a specified term from 3 months to 7 years. In contrast, bonds pay you periodic interest but have different levels of risk depending on the creditworthiness of the issuer. The US government backs Treasuries, which have much longer maturities that can last from several weeks up to 30 years.

For example, if you deposit $20,000 in a two-year CD at Discover Bank, you will know precisely how much interest you’ll earn over the term. When comparing it to a corporate bond that earns 4% annually, the issuer may face financial trouble, which forces your principal to be at risk.

In turn, consider certificates of deposit for fixed, predictable returns and bonds for a higher level of risk, with periodic interest payments. However, the latter does not compare to safer Treasuries, as the US government backs them. Some of the most experienced investors you’ll see diversify across all of these types to enjoy liquidity as well.

Best Strategies for Laddering CDs

Laddering CDs allows you to hold multiple certificates of deposit with different maturity dates, benefiting from a hybrid of easy access to cash and long-term growth.

Instead of applying for one CD and locking all your money in it, taking out a one-year, three-year, or five-year CD allows you to spread out your funds so that some money is readily available while the rest earns yield. It allows for greater flexibility, as you can reinvest maturing CDs at new, higher rates while protecting the higher yields associated with longer-term CDs.

Here are some of our favorite strategies for laddering CDs:

Equal Spacing

One of the most common CD laddering strategies involves dividing your money equally among CDs with different maturity dates, such as two-year and four-year terms.

For example, if you have $30,000, you can place $10,000 into Capital One’s one-year CD, Ally Bank’s 3-year CD, and AXA’s 5-year CD. After one year, the first CD matures, allowing you to withdraw it and reinvest it in the three- and five-year CDs, thereby rotating all positions to generate a steady cash flow and benefit from longer-term APYs.

Short-Term Liquidity

If you’re looking to prioritize quick access to your money, create a ladder with short maturity dates, such as 3 months, 6 months, and 12 months.

For example, if you put $10,000 into SoFi’s 3-month CD, $8,000 into Chase’s 6-month CD, and $8,000 into Ally Bank’s 12-month CD, you can take advantage of reinvestments and money withdrawals every quarter. If you don’t need the cash, you can reinvest it back into your CDs.

Consider this one of the better strategies if you’re saving for a short-term goal, such as an emergency fund or vacation.

Long-Term Yield Ladder

If you want to take advantage of interest rates before they rise, focus on CDs with longer maturity dates, such as three- or four-year CDs and 5-year CDs.

For example, suppose you have $50,000 and invest $10,000 in a three-year Ally CD, $10,000 in a four-year CD, and $30,000 in a five-year Barclays CD. In that case, you can enjoy a higher yield for years, especially if you predict interest rates to drop, resulting in a near-guaranteed higher rate today.

Hybrid Ladder

The hybrid ladder approach combines traditional CDs with no-penalty CDs, offering greater flexibility. This allows you to liquidate and earn higher APYs simultaneously.

For example, if you take $25,000 and put $10,000 into a no-penalty 12-month CD, $8,500 into a two-year CD, and $9,500 into a 5-year CD, you can withdraw from the no-penalty CD without losing earned interest, while keeping the rest earning higher yields.

In short, equal spacing, short-term liquidity, long-term yield ladders, and hybrid ladders are all excellent strategies you can use to take advantage of higher liquidity and enjoy interest earned from longer-term rates.

Alternatives to Certificates of Deposit

Seeking increased growth, higher liquidity, or other benefits that CDs do not provide?

Some alternatives to consider:

Stocks

Investing in stocks allows you to purchase a fraction of a company, enabling you to capitalize on its potential for growth. However, they’re not insured like CDs, meaning you can lose a large portion of your principal if the market drops. With the S&P 500 returning an average of about 10% per year, it beats CD rates by a considerable margin.

For example, if you had invested $10,000 in PLTR at the start of 2025, you could have earned more than a thousand percent return on your investment. Plus, you can buy and sell shares at any time, making it one of the most liquid assets available.

High-Yield Savings Accounts

High-yield savings accounts (HYSA) are an excellent alternative to CDs. Unlike traditional savings accounts, HYSAs can earn interest rates ranging from 3% to 5%, depending on the bank and prevailing macroeconomic conditions.

For example, Ally Bank offers an excellent high-yield savings account program that does not lock your funds into a fixed term, on top of features like visual spending trackers and automatic transfers. They are also FDIC or NCUA-secured for greater peace of mind.

Bonds

Want to loan money to a corporation or government? Bonds offer regular interest payments and greater predictability than stocks. For example, a 4% 10-year US Treasury bond offers consistent returns without market volatility affecting your equities.

Bonds work best when saving for medium- to long-term financial goals, such as early retirement, while protecting against stock market volatility. For example, during the 2008 crash, bonds increased in value, making them a perfect fit for the defensive investor. Experienced investors leverage bonds as part of a balanced portfolio that also includes CDs and stocks.

Money Market Accounts

Money market accounts offer higher returns than traditional savings accounts while providing additional benefits such as check writing and debit card access. Like treasury bills, they’re also low risk. It’s not uncommon to earn a 4% APY at Capital One 360 or CIT Bank, with no withdrawal restrictions and FDIC insurance.

If you can manage minimum balance requirements and slightly lower APYs relative to long-term CDs, money market accounts could offer a reasonable return.

ETFs

Robo-advisors like Betterment, Wealthfront, or Vanguard Digital Advisor offer low-cost ETFs comprising a mix of stocks and bonds. ETFs are classified into different risk categories, from low to aggressive. For example, depositing $20,000 in a moderate-risk ETF that splits holdings between S&P 500 index funds and US Treasury ETFs offers nice market exposure.

ETFs are driven by algorithms that utilize tax loss harvesting, enabling higher returns over time compared to traditional CDs. All in all, if you want daily liquidity, easy access, and higher long-term returns than CDs, ETFs are a viable option.

In short-term investments, savings accounts, bonds, money market accounts, and ETFs are five excellent alternatives to CDs, varying in terms of risk tolerance, liquidity, and potential returns.

What Are the Best CD Accounts Right Now?

The best CDs are found at digital banks like Ally and CIT Bank.

Ally offers strong all-around performance, combining competitive CD rates with a highly intuitive mobile app. They offer high-yield CDs from 12 to 60-month terms, as well as Raise Your Rate (“bump-up”) CDs and no-penalty CDs that accommodate a wide range of user profiles.

Additionally, it has no minimum deposit requirement, making it very beginner-friendly.

CIT Bank offers plenty of flexibility with no-penalty CDs, allowing you to withdraw funds without losing accrued interest, making it an ideal solution for savers who don’t want to be locked in long-term while earning higher-than-average returns.

In short, consider Ally if you’re looking for a variety of CDs across multiple types, and CIT Bank for one of the best no-penalty CDs available.

How to Open a CD Account

Here’s a step-by-step guide on how to open a CD account

Why Do You Want a CD?

Before opening a CD account, you’ll want to understand why you need it and when you’ll need access to the cash. Are you looking to put down a down payment on a new home in 5 years or keep your money steady for 2 years to avoid volatile market conditions?

Depending on the goal, that’s the term that you should choose. Using the down payment example, consider a 5-year CD. By understanding your target, you will avoid early withdrawal penalties and avoid losing a portion of your interest later.

Shop Around

We recommend that you use our guide to evaluate a minimum of three banks and compare APY, daily versus monthly compounding interest, minimum deposit requirements, and all terms and conditions. Keep in mind that online banks like Ally and SoFi provide better yields than traditional banks and credit unions.

For example, consider Ally for high-yield multiple-year CDs versus Citibank for no-penalty CDs. Don’t fall for promotional rates as well. It’s essential to check the compounding frequency, as daily compounding earns more interest than quarterly compounding. Please also note the required minimum balances.

Here, you also want to pay close attention to early withdrawal penalties. Be sure to clearly understand the formula, e.g., 60 days of interest for a one-year CD or 6 months’ interest for a 2-year CD.

Pick the Right CD Product

There are several types of CDs available to you, including traditional fixed-rate, no-penalty, bump-up, and jumbo CDs for deposits of $100,000 or more. Don’t forget about IRA CDs for tax advantages. If you’re more concerned about quick access than high yield, consider no-penalty CDs. In turn, if rates are expected to increase in the future, you should consider bump-up CDs.

It’s all about understanding your current position and determining which product is right for you.

Verify FDIC/NCUA Insurance

Avoid scams altogether by ensuring that your funds are protected up to $250,000 per depositor per institution at FDIC-insured or NCUA-insured banks. If you have access to more than $250,000, it makes sense to spread funds across two or three different banks to stay fully insured.

Be cautious of scam sites or unregulated platforms that promise outrageously high yields, particularly in the 7% to 8% range. If you doubt whether a website is insured, visit the FDIC’s BankFind Suite tool (fdic.gov) to find out. If your bank is not listed in the database, run.

Get All Supporting Documentation Together and Apply

Once you have verified all the above, it’s time to gather all the required documents to determine eligibility.

At a minimum, you should have your government-issued photo ID, Social Security number, and a linked account (ACH) ready to receive deposits from. If you’re considering PenFed Credit Union, you’ll need to become a member first, which requires a small qualifying deposit.

From there, you can apply. Digital-only banks enable you to be approved within minutes through complete digital verification, whereas traditional banks typically require in-person sign-ups. There are several funding methods to choose from, including ACH transfer, mobile check deposit, and wire transfer. Of these funding methods, wire transfers are the fastest, and ACH transfers take several days.

Once You’ve Funded

After you fund the CD using your preferred method, watch for the bank’s confirmation number via email or text message, which will include your CD account number and other account details, such as the maturity date. Be sure to know how to set a calendar reminder to stay on track. As a best practice, you should set the maturity date 30 days out so you can decide what to do at that point (take the money out, reinvest it elsewhere, or roll it over to a new CD).

Overall, opening a CD account is a straightforward process. With each step, you’ll be on your way to safeguarding your money for greater peace of mind.

How to Spot Legitimate CD Offers and Avoid Scams

One of our most significant recommendations for spotting legit CD offers is to start with the institution. Legit institutions will protect your deposits up to $250,000 per account holder (FDIC or NCUA), which many scammers do not offer. Marcus by Goldman Sachs, CIT Bank, Ally Bank, and other recommended banks fit the bill.

Second, we encourage you to read the fine print carefully. Always ensure that terms are clearly stated, including the offered APY, term length, early withdrawal penalties, minimum deposit requirements, and perks that can accelerate your growth, such as no-penalty options. Understand that any early withdrawal penalty cuts three months’ worth of interest off your funds, where a competitive 4.25% APY with daily compounding at Ally Bank no longer matters.

Lastly, look into your bank’s secure login features; they should include two-factor authentication to prevent unauthorized users from accessing your account.

How We Picked These Accounts

When evaluating and compiling our list of the best certificates of deposit, we relied on accurate and tested performance over flashy marketing jargon. With predictable returns and a safe place to park cash, we evaluated several factors, including APY strength, term flexibility, fees, early withdrawal penalties, and support for the everyday bank customer.

Rates & Terms

Not only is it limited to the advertised APY, but one of our determining factors is interest rates across different term lengths. We prioritize banks with reliable rate histories. For example, Marcus by Goldman Sachs has consistently maintained a rate in the 4.2% to 4% range on 12- to 18-month terms, holding firm against competitors.

In turn, we prioritize institutions that apply high rates, regardless of whether it’s a short, mid-range, or long CD term, keeping mid-range savers in mind. Look for banks with competitive rates across multiple terms. For example, CIT Bank offers competitive rates on 6-month and 2-year CDs, allowing greater flexibility in selecting the proper maturity date.

Fees and Penalties

If you’re not careful, fees and penalties can eat into your earnings, so we prioritize certificates of deposit with no hidden charges or excessive withdrawal penalties.

It’s all too common for banks to charge unnecessarily high early withdrawal penalties that are not proportionate to the actual term. On the other hand, some banks charge only 6 days’ worth of interest for a 12-month CD, whereas competitors offer 6 months’ interest or more.

Pay attention to setup and maintenance fees as well. One of our recommendations is that Discover Bank does not charge monthly service fees or hidden charges throughout the term, allowing for greater transparency for the everyday saver with no surprise costs cutting into your bottom line.

Reputation

At ElitePersonalFinance, we’re only concerned with institutions that have the best reputations, which include positive first-time feedback on third-party review sites like TrustPilot and the Better Business Bureau. A stable track record is key. For example, Marcus by Goldman Sachs offers complete protection from one of the most reputable financial firms in the world, giving customers increased confidence that their deposits are managed correctly.

Not to mention, Synchrony Bank holds strong Better Business Bureau ratings with consistently high marks across every category, such as customer satisfaction and digital accounts.

Frequently Asked Questions

How does a certificate of deposit differ from a savings account?

The main difference is that CDs lock in your funds for a set period with a higher APY to compensate. In contrast, traditional savings accounts offer greater liquidity, albeit at lower interest rates. In turn, when deciding between each one, go for certificates of deposit for predictability and savings accounts for easier access to your money.

Are certificates of deposit safe?

Yes, certificates of deposit are very safe. All of our recommended banks offer FDIC or NCUA insurance of up to $250,000 per depositor per institution, which means your money is protected in the event of bankruptcy or disruptive macroeconomic conditions.

What happens if I withdraw my money from a CD before the maturity date?

If you withdraw from a CD early, you can expect to pay an early withdrawal penalty, which is usually a portion of the interest earned. For example, it’s not uncommon to lose 3 to 6 months’ worth of interest. However, more and more banks are offering no-penalty CDs in exchange for lower rates.

How are CD interest rates determined?

Several factors influence CD rates, including the Federal Reserve’s benchmark status, macroeconomic conditions, and the bank’s own policies. Keep in mind that the higher the rate, the longer the term, which is why we encourage you to consider online-only banks like Ally, as they often offer more competitive rates compared to traditional banks.

What is CD laddering?

CD laddering is an investing strategy where you open multiple CD accounts with different maturity dates, such as one year and three years. Upon reaching the maturity date for each one, you reinvest the proceeds into a longer-term CD, which offers flexibility when accessing cash and taking advantage of higher interest rates.

How frequently do CDs pay interest?

The frequency at which CDs pay interest depends on the bank’s policies and the type of CD you have. You can expect to receive interest on a monthly or quarterly basis. Payouts vary with daily compounding, so we recommend reviewing the bank’s terms and conditions to determine when you will receive your interest payment.

What are specialty CDs?

The most popular specialty CDs include no-penalty CDs (with withdrawals at no penalty), bump-up CDs (which raise your rate if the bank increases its own rate during your term), and jumbo CDs, which typically apply to larger deposits and offer greater flexibility than standard fixed-rate CDs.

Do I pay taxes on CD earnings?

Yes, CD earnings are considered taxable income, which is subject to taxation at both the federal and state levels. All banks are required to file a Form 1099-INT, which reports your earnings if you earn more than $10 in interest. That’s why we recommend consulting with a tax advisor if you hold multiple CDs. If you don’t want to pay any taxes, then consider tax-advantaged accounts like IRAs to cut down on the taxes your interest accrues.

Conclusion

Deciding whether to open a certificate of deposit or stick with a traditional savings account usually depends on several factors, such as your liquidity needs, accessibility, and long-term growth goals. By locking in your funds for a fixed term with a certificate of deposit, you’ll typically earn higher APYs than with savings accounts, giving you the potential to earn hundreds of dollars more over the life of the deposit. Ultimately, CDs provide an excellent conservative investment option that safeguards your cash and helps keep you on a solid financial footing.