Best CD Rates for August 2022

ElitePersonalFinance
Last Update: August 10, 2022 Banking Make Money Save Money Studies

With peace of mind that allows you to set it and forget it, a certificate of deposit (CD) is a solid place to invest your short-term savings. And while capital market participants have to endure volatility to earn a higher return, CDs can help grow your money without taking any risk.

Why Should You Trust ElitePersonalFinance?

With accuracy and accountability in mind, we pride ourselves on presenting the latest information from the most trusted sources. And our goal is to help you find the best products available in the marketplace. Moreover, we hope that our study will make it easier to determine where you should invest your hard-earned savings.

To do so, we analyzed hundreds of CD accounts and organized our findings by those that offer the highest annual percentage yields (APYs). However, what’s the point of a high-interest rate if you can’t depend on your institution? That’s why we ensured that all of the institutions on our list reported being insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).

As a result, the U.S. federal government guarantees all of our recommended CDs up to $250,000 per person, per account.

Best CD Rates for August 2022

We felt it was best to present the institutions that offer the highest APYs for long-term CDs to begin our study. However, if you’re looking for the best options over a shorter time horizon, we’ll cover those details soon. Also, please note that some of the institutions on our list don’t offer CDs across all maturities. As a result, some tables have more or less data, depending on how many institutions offer the selected terms.

In addition, please consider that some of the options on our list are only available in select states. And if you’re curious about whether your region qualifies, please read our full reviews for all of the essential details.

Up first, Edward Jones (1.75%), Ardent Credit Union (1.50%), and Ashland Credit Union/Credit Human (1.40%) have the highest 5-year APYs in the marketplace. And with minimum deposit requirements of $500 or less, they’re solid options if you’re in the market for a long-term CD.

Institution: 5-Year CD APY: Min. Deposit: FDIC/NCUA Insured: Account Fees:
Edward Jones 1.75% $100 Yes $0
Ardent Credit Union 1.50% $100 Yes $0
Ashland Credit Union 1.40% $500 Yes $0
Credit Human 1.40% $500 Yes $0
Keesler Federal Credit Union 1.35% $1,000 Yes $0
Teachers Federal Credit Union 1.35% $1,000 Yes $0
Pentagon Federal Credit Union 1.30% $1,000 Yes $0
First National Bank of America 1.25% $1,000 Yes $0
Connexus Credit Union 1.21% $5,000 Yes $0
Quontic Bank 1.20% $500 Yes $0
First Tech Credit Union 1.15% $500 Yes $0
Comenity Direct 1.10% $1,500 Yes $0
TIAA Bank 1.05% $1,000 Yes $0
Bethpage Federal Credit Union 1.00% $50 Yes $0
Synchrony Bank 1.00% $1 Yes $0
Marcus By Goldman Sachs 1.00% $500 Yes $0
Discover 1.00% $2,500 Yes $0
Popular Direct 1.00% $10,000 Yes $0
Live Oak Bank 0.90% $2,500 Yes $0

Best 3-Month CD Rates

Some banks and credit unions have higher CD APYs depending on their maturities. For example, you might assume that if an institution offers the highest 5-year CD APY, it would also provide the highest 3-month and 3-year CD APYs. However, we found that it doesn’t always work that way. As a result, we organized the data by maturity to help you make the most informed decision.

To that point, we found that Bethpage Federal Credit Union (0.40%), TIAA Bank (0.35%), and Ardent Credit Union (0.25%) have the highest 3-month APYs in the marketplace. Moreover, if you need help determining which product is right for you, we cover the pros and cons in our reviews.

Institution: 3-Month CD APY:
Bethpage Federal Credit Union 0.40%
TIAA Bank 0.35%
Ardent Credit Union 0.25%
Keesler Federal Credit Union 0.25%
Teachers Federal Credit Union 0.25%
Discover 0.20%
Synchrony Bank 0.15%
Popular Direct 0.15%
Edward Jones 0.10%

Best 6-Month CD Rates

Quontic Bank (0.55%), Credit Human (0.50%), and Live Oak Bank (0.50%) have the highest 6-month APYs in the marketplace. Moreover, with many of the best high-yield savings accounts offering APYs in the 0.50% range, purchasing a 6-month CD from Quontic Bank results in a solid interest rate and the ability to avoid locking up your funds for too long.

Institution: 6-Month CD APY:
Quontic Bank 0.55%
Credit Human 0.50%
Live Oak Bank 0.50%
Pentagon Federal Credit Union 0.45%
Bethpage Federal Credit Union 0.40%
TIAA Bank 0.40%
Keesler Federal Credit Union 0.35%
Ashland Credit Union 0.35%
Ardent Credit Union 0.25%
Teachers Federal Credit Union 0.25%
Synchrony Bank 0.25%
Discover 0.25%
Edward Jones 0.20%
Popular Direct 0.15%
First Tech Credit Union 0.15%
Marcus By Goldman Sachs 0.15%

Best 1-Year CD Rates

For CDs that reach the annual milestone, Pentagon Federal Credit Union (0.85%), Live Oak Bank (0.75%), and First National Bank of America (0.65%) have the highest 1-year APYs in the marketplace. As a result, if you don’t need to access your funds and can tolerate the 12-month duration, the options below may be suitable for you.

Institution: 1-Year CD APY:
Pentagon Federal Credit Union 0.85%
Live Oak Bank 0.75%
First National Bank of America 0.65%
Comenity Direct 0.65%
Connexus Credit Union 0.61%
Quontic Bank 0.60%
Bethpage Federal Credit Union 0.60%
Keesler Federal Credit Union 0.60%
TIAA Bank 0.55%
Ardent Credit Union 0.55%
Synchrony Bank 0.55%
Marcus By Goldman Sachs 0.55%
Discover 0.55%
Credit Human 0.50%
Edward Jones 0.50%
Ashland Credit Union 0.45%
Teachers Federal Credit Union 0.40%
First Tech Credit Union 0.25%
Popular Direct 0.15%

Best 2-Year CD Rates

If we extend the investment time horizon, Quontic Bank (0.95%), Edward Jones (0.90%), and Pentagon Federal Credit Union (0.85%) have the highest 2-year APYs in the marketplace. However, please note that fixed-rate CDs often have early withdrawal penalties. As a result, it’s essential to determine whether or not you’ll need to access your funds during the term. If not, one of the options below can fulfill your needs. If so, a high-yield savings account or a CD with a shorter maturity is likely more appropriate.

Institution: 2-Year CD APY:
Quontic Bank 0.95%
Edward Jones 0.90%
Pentagon Federal Credit Union 0.85%
Live Oak Bank 0.85%
Keesler Federal Credit Union 0.85%
Credit Human 0.85%
First National Bank of America 0.80%
Comenity Direct 0.75%
Ardent Credit Union 0.75%
Connexus Credit Union 0.71%
Bethpage Federal Credit Union 0.70%
Marcus By Goldman Sachs 0.70%
Ashland Credit Union 0.70%
TIAA Bank 0.65%
Synchrony Bank 0.65%
Discover 0.65%
Teachers Federal Credit Union 0.50%
First Tech Credit Union 0.45%
Popular Direct 0.35%

Best 3-Year CD Rates

Moving further out along the CD curve, Edward Jones (1.25%), Quontic Bank (1.10%), and Ashland Credit Union (1.05%) have the highest 3-year APYs in the marketplace. But as mentioned, some of the options below are not available in all regions. However, we will cover all of the details in our reviews.

Institution: 3-Year CD APY:
Edward Jones 1.25%
Quontic Bank 1.10%
Ashland Credit Union 1.05%
Pentagon Federal Credit Union 1.00%
Credit Human 1.00%
First National Bank of America 1.00%
Comenity Direct 1.00%
Ardent Credit Union 1.00%
Popular Direct 0.95%
Live Oak Bank 0.90%
Connexus Credit Union 0.81%
Keesler Federal Credit Union 0.80%
TIAA Bank 0.80%
Marcus By Goldman Sachs 0.75%
Synchrony Bank 0.75%
Discover 0.75%
Bethpage Federal Credit Union 0.70%
First Tech Credit Union 0.65%
Teachers Federal Credit Union 0.60%

Best 4-Year CD Rates

Finally, Edward Jones (1.45%), Ardent Credit Union (1.25%), and Ashland Credit Union (1.20%) have the highest 4-year APYs in the marketplace. However, with their 5-year APYs 0.20% to 0.30% higher than their 4-year APYs, it’s probably wise to opt for a 5-year CD if your investment time horizon stretches this far.

Institution: 4-Year CD APY:
Edward Jones 1.45%
Ardent Credit Union 1.25%
Ashland Credit Union 1.20%
First National Bank of America 1.10%
Keesler Federal Credit Union 1.10%
Teachers Federal Credit Union 1.10%
Connexus Credit Union 1.06%
Comenity Direct 1.05%
Credit Human 1.00%
Pentagon Federal Credit Union 0.95%
Live Oak Bank 0.90%
TIAA Bank 0.90%
Marcus By Goldman Sachs 0.80%
Discover 0.80%
Bethpage Federal Credit Union 0.80%
Synchrony Bank 0.75%
Popular Direct 0.60%

Edward Jones

5-Year CD APY: 1.75%
Min. Deposit: $100
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

Edward Jones has CDs with terms that range from three months to 10 years and listed APYs that range from 0.15% to 1.75%. Moreover, there are no monthly account fees, and your deposits are FDIC-insured up to $250,000 per person, per account. However, Edward Jones’ disclosures state that certain APYs and maturities “may not be available in all states.” Thus, while the firm doesn’t specifically list any exempt states, certain areas may have restrictions.

In addition, purchasing a CD must be done through an Edward Jones financial advisor. As a result, while some firms allow you to buy online, the option isn’t available at Edward Jones. However, the firm has nearly 19,000 financial advisors across the United States, and its search directory is easy to navigate. Moreover, with more than 15,000 branches in North America, you shouldn’t have any trouble reaching a representative.

However, please note that Edward Jones’ CDs are subject to interest rate risk. For example, if the Fed raises interest rates, the value of your CD will decline. However, this is only a concern if you withdraw your funds before maturity. Conversely, you can’t lose any principal or interest if you hold the CD until the term is up. In addition, Edward Jones may restrict early withdrawals for certain CDs. And when early withdrawals are permitted, you will likely incur a fee to end the agreement early.

Pros:

  • For maturities of three years to five years, Edward Jones has the highest APYs in the marketplace.

Cons:

  • Some of Edward Jones’ CDs may not be available in all states.

Who is the account best suited for?

  • If you want to earn the highest APY, a long-term Edward Jones CD may be right for you.
  • An Edward Jones advisor can help you manage your money more efficiently.

The impact of COVID-19:

With stock markets hitting all-time highs during the pandemic, Edward Jones’ financial advisory service should have prospered. For example, financial advisors charge commissions or earn fees on a percentage of clients’ assets. As a result, Edward Jones’ team should have benefited from record stock market inflows.

Ardent Credit Union

5-Year CD APY: 1.50%
Min. Deposit: $100
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

Ardent Credit Union has CDs with terms ranging from three months to five years and APYs ranging from 0.25% to 1.50%. Moreover, there are no monthly account fees, and your deposits are NCUA-insured up to $250,000 per person, per account. However, please consider that the offer is only available to residents of Pennsylvania. For context, Ardent Credit Union has branches in the Philadelphia area and has more than 85,000 fee-free ATMs in the region.

Moreover, the firm’s disclosures state that early withdrawal penalties can have a substantial impact on your return. For example, if you withdraw a portion of your funds before maturity, you forfeit the interest received up until that date, or 180 days’ worth of interest on the withdrawn amount, whichever is less. Moreover, Ardent Credit Union may require you to provide, in writing, 60 days’ notice of your intention to withdraw the funds. As a result, it’s prudent to choose your maturity wisely to avoid the potential headache.

Also, please note that you have to become a member of Ardent Credit Union to purchase any of its products. For example, you must be a community member in the Philadelphia, Bucks, Chester, Delaware, or Montgomery counties to be eligible. You can also be a relative of a member or a qualified business owner.

Pros:

  • Ardent Credit Union’s 5-year CD has one of the highest APYs in the marketplace.

Cons:

  • The offer is only available in Pennsylvania.

Who is the account best suited for?

  • If you live in Pennsylvania and want to purchase a long-term CD, Ardent Credit Union is a solid choice.

The impact of COVID-19:

Ardent Credit Union has less exposure to capital market activity as a regional institution. As a result, the firm likely focused on providing support and forbearance options during the pandemic.

Ashland Credit Union

5-Year CD APY: 1.40%
Min. Deposit: $500
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

At Ashland Credit Union, you can invest in CDs with terms that range from six months to five years, with APYs that range from 0.35% to 1.40%. Moreover, there are no monthly account fees, and your deposits are NCUA-insured up to $250,000 per person, per account. However, unlike the options above, you need at least $500 to invest. Also, Ashland Credit Union has branches in three states — Kentucky, Minnesota, and Ohio. And you have to live, work, worship, or attend school in one of these areas to be eligible for membership. As a result, the offer isn’t available nationwide.

However, if you meet the eligibility requirements, you can increase your APY. For example, $35,000 or more investments qualify for jumbo dividend rates. And here, APYs range from 0.45% (three months) to 1.50% (five years). As a result, if you have a large amount to invest, there is a 0.10% increase in APYs across all maturities. Again though, Ashland Credit Union charges a penalty fee if you withdraw your funds before the CD matures. As a result, please consider your time horizon before taking the plunge.

Pros:

  • Ashland Credit Union’s 5-year CD has the third-highest APY on our list.

Cons:

  • The offer is only available in three states.

Who is the account best suited for?

  • If you live in Kentucky, Minnesota, or Ohio, Ashland Credit Union’s 5-year CD offers plenty of value.

The impact of COVID-19:

With its business focused on deposit accounts and loans, the pandemic may have been immaterial to Ashland Credit Union. However, given the material increase in the money supply, the firm should have increased its asset base.

Credit Human

5-Year CD APY: 1.40%
Min. Deposit: $500
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

At Credit Human, you can choose from CDs with terms ranging from six months to 10 years and APYs ranging from 0.50% to 1.40%. Moreover, there are no monthly account fees, and your deposits are NCUA-insured up to $250,000 per person, per account. Also, at 0.50%, Credit Human has the second-highest 6-month APY on our list. As a result, investing your money in a Share Certificate is a wise short-term decision until you figure out your long-term goals.

However, please note that Credit Human’s services are only available in Texas. As a result, you need to be active in local communities to qualify for membership. For context, roughly 33% of Credit Human’s members reside outside Texas. However, they’re housed under brands like CU Factory Built Lending, Mountainside Financial, and Credit Acquisition Resources Systems (or CARS). As a result, the CDs above are best for individuals in The Lone Star State.

Moreover, with a relatively low minimum deposit requirement of $500, you don’t need a large sum to purchase a CD. However, like the other options on our list, Credit Human imposes penalties if you withdraw your funds before maturity, and these charges can be “substantial” for tax-deferred alternatives. As a result, please consider the pros and cons before investing.

Pros:

  • Credit Human’s 6-month CD has the second-highest APY in the marketplace.

Cons:

  • The offer is only available in Texas.

Who is the account best suited for?

  • If you live in Texas and have short-term savings to invest, Credit Human checks off all the boxes.

The impact of COVID-19:

With its business structured around deposits and loans, Credit Human is less active in the capital markets. However, the firm helped ease Americans’ burden during the pandemic by offering loan extensions and processing deferment requests.

Keesler Federal Credit Union

5-Year CD APY: 1.35%
Min. Deposit: $1,000
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

Keesler Federal Credit Union offers CDs with terms that range from three months to five years, with APYs that range from 0.25% to 1.35%. Moreover, there are no monthly account fees, and your deposits are NCUA-insured up to $250,000 per person, per account. However, the group requires a minimum of $1,000 to purchase a CD. Conversely, CDs held within IRA accounts have no minimum deposit requirements. As a result, if you open a retirement account at Keesler Federal Credit Union, you should be able to avoid the $1,000 condition. Also noteworthy, individuals who invest $100,000 or more receive a 0.10% APY increase across all maturities. However, early withdrawal penalties apply if you have a change of heart, so please consider this before investing.

Also, Keesler Federal Credit Union has 39 branches across Mississippi, Louisiana, Alabama, and the United Kingdom. And to obtain membership, you need to be an active community member in one of these regions. As a result, the group’s products are not available nationwide.

Pros:

  • Keesler Federal Credit Union’s 5-year CD has one of the highest APYs on our list.

Cons:

  • The offer is only available in three states.

Who is the account best suited for?

  • If you live in Mississippi, Louisiana, or Alabama, Keesler Federal Credit Union can help you earn a high CD return.

The impact of COVID-19:

Keesler Federal Credit Union has a wide range of financial products and provided clients with loan assistance during the pandemic. In addition, with financial markets buoyed by unprecedented stimulus measures, the firm’s wealth management division likely benefited from the increased activity.

Teachers Federal Credit Union

5-Year CD APY: 1.35%
Min. Deposit: $1,000
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

With a solid slate of long-term CDs, Teachers Federal Credit Union offers terms that range from three months to five years, with APYs that range from 0.25% to 1.35%. Moreover, there are no monthly account fees, and your deposits are NCUA-insured up to $250,000 per person, per account. However, like Keesler Federal Credit Union, you need a minimum of $1,000 to start investing. Also, the firm has 32 branches across Long Island, Queens, and Manhattan, New York. However, Teachers Federal Credit Union’s website does not state that you have to live in these regions to become a member. Moreover, you can open other accounts online, and the firm has a mobile app. As a result, its CDs may be available nationwide. However, it’s prudent to double-check and see if your region qualifies.

Also, please note that Teachers Federal Credit Union’s CDs incur early withdrawal penalties depending on the maturity:

  • For CDs with terms of one year or less, you forfeit all of your dividends or 180 days’ worth of interest, whichever is less.
  • For CDs with terms of more than one year, you forfeit all of your dividends or 270 days’ worth of interest, whichever is less.

As a result, if you invest in a 1-year CD, six months’ worth of interest is gone if you withdraw your money three months before it matures. As a result, it’s crucial to determine how soon you will need your funds before you decide to invest.

Pros:

  • Teachers Federal Credit Union’s 5-year CD has a solid APY, and may be available nationwide.

Cons:

  • None.

Who is the account best suited for?

  • If you live in New York State, Teachers Federal Credit Union offers several financial products with competitive rates.

The impact of COVID-19:

With a specialization in consumer and business banking, Teachers Federal Credit Union helped more than 375,000 members navigate the pandemic. Moreover, with its mobile app allowing customers to bank 24/7, the firm’s technological infrastructure helped offset the temporary closure of its branches.

Pentagon Federal Credit Union

5-Year CD APY: 1.30%
Min. Deposit: $1,000
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

Pentagon Federal’s Money Market Certificates should be on your radar. For context, they’re nearly identical to CDs: they require you to lock in your funds for a specified period, and early withdrawal penalties apply. Also, the minimum deposit is $1,000. However, Pentagon Federal’s MMCs have terms ranging from six months to seven years, and APYs ranging from 0.45% to 1.50%. To that point, its 1-year MMC has a 0.85% APY, and its 15-month MMC has a 1.00% APY. Moreover, there are no monthly account fees, and your deposits are NCUA-insured up to $250,000 per person, per account. As a result, the interest rates are attractive if you’re comfortable locking in your funds for these durations.

As for early withdrawal fees, the penalties are steep. For example, withdrawing your money within the first year results in the forfeiture of 365 days of dividends. And after one year, the penalty is 30% of potential gross rewards had the MMC reached maturity. However, while Pentagon Federal has roughly 50 branches in 13 states the firm’s products are available nationwide, and you can apply for membership online with only a $5 deposit. As a result, Pentagon Federal’s 1-year MMC — which has the highest APY in the marketplace for that category — is a solid option for all Americans.

Pros:

  • Pentagon Federal’s 1-year MMC has the highest APY in the marketplace.
  • The offer is available nationwide.

Cons:

  • None.

Who is the account best suited for?

  • If you’re comfortable banking online, Pentagon Federal’s 1-year MMC should be at the top of your list.

The impact of COVID-19:

While the coronavirus pandemic impacted some Pentagon Federal branches, its mobile app helped clients navigate the uncertainty. In addition, the credit union offered forbearance options that helped ease the burden. However, like the other institutions on our list, Pentagon Federal’s APY was impacted by the Fed’s monetary policy.

First National Bank of America

5-Year CD APY: 1.25%
Min. Deposit: $1,000
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

First National Bank of America has CDs with terms that range from one year to seven years and APYs that range from 0.65% to 1.35%. Moreover, there are no monthly account fees, and your deposits are FDIC-insured up to $250,000 per person, per account. However, you need to make a minimum deposit of $1,000 to start investing.

Despite that, First National Bank of America doesn’t list any restrictions for its online CDs. For example, the community bank is headquartered in Michigan and serves customers in the surrounding areas. As a result, all of its branches are in the state. However, the firm doesn’t list any state restrictions for its online CDs. In addition, its FAQs reveal that online CDs have the same APYs as in-branch CDs. Thus, the offer should be available nationwide. However, please note that First National Bank of America provides a detailed breakdown of its early withdrawal fees. The charges are as follows:

  • For CDs with terms that range from one to 11 months, the early withdrawal penalty is 90 days’ interest.
  • For CDs with terms that range from 12 to 23 months, the early withdrawal penalty is 180 days’ interest.
  • For CDs with terms that range from 24 to 47 months, the early withdrawal penalty is 360 days’ interest.
  • For CDs with terms that range from 48 to 84 months, the early withdrawal penalty is 540 days’ interest.

Pros:

  • First National Bank of America’s CDs have solid APYs and they should be available nationwide.

Cons:

  • None.

Who is the account best suited for?

  • First National Bank of America is a solid fallback option if you can’t obtain a CD with a higher APY.

The impact of COVID-19:

First National Bank of America likely benefited less than others during the pandemic since it doesn’t have a capital markets division. However, deposits should have increased, and its mobile app helped Americans keep track of their finances while mobility restrictions were in place.

Connexus Credit Union

5-Year CD APY: 1.21%
Min. Deposit: $5,000
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

With a smaller slate of maturities and mid-range APYs, Connexus Credit Union is neither hot nor cold. For example, its CDs have terms that range from one year to five years, and its APYs range from 0.61% to 1.21%. Moreover, there are no monthly account fees, and your deposits are NCUA-insured up to $250,000 per person, per account. However, with a $5,000 minimum deposit requirement, Connexus Credit Union has some of the highest eligibility standards on our list. As a result, other CDs in the marketplace have more value.

Despite that, you can open a Connexus Credit Union CD online, and the firm’s products are available across 50 states. And with 24/7 access to your account online or through Connexus Credit Union’s mobile app, it’s a solid backup plan if you don’t qualify for a CD elsewhere. As for early withdrawal penalties, the firm’s charges vary by maturity:

  • For CDs with terms of one year or less, the early withdrawal penalty is 90 days’ interest on the amount withdrawn.
  • For CDs with terms of more than one year and less than five years, the early withdrawal penalty is 180 days’ interest on the amount withdrawn.
  • For CDs with terms of more than five years, the early withdrawal penalty is 365 days’ interest on the amount withdrawn.

Pros:

  • Connexus Credit Union’s CDs have solid APYs and are available nationwide.

Cons:

  • The minimum balance to start investing is $5,000.

Who is the account best suited for?

  • Connexus Credit Union is a solid fallback option if you can’t obtain a CD with a higher APY.

The impact of COVID-19:

With financial markets uplifted during the pandemic, Connexus Credit Union’s free investment consultation service likely encouraged clients to invest and increased the firm’s fee income. In addition, the firm helped eligible clients obtain their advanced Child Tax Credit payments.

Quontic Bank

5-Year CD APY: 1.20%
Min. Deposit: $500
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

Quontic Bank is a solid digital solution for your short-term savings. However, all of your banking occurs online, and there is no in-person service. Despite that, its CD terms range from six months to five years, and its APYs range from 0.55% to 1.20%. More importantly, Quontic Bank’s 6-month and 2-year CDs have the highest APYs in the marketplace for their respective categories. And of course, there are no monthly account fees, and your deposits are FDIC-insured up to $250,000 per person, per account. As a result, if you’re comfortable managing your money online, then Quontic Bank is one of the best in the business.

Moreover, you only need $500 to get started, and you can open an account in as little as three minutes. However, please note that early withdrawals are only permissible if Quontic Bank grants the request. If not, you may have to wait until your CD matures to obtain your funds. In addition, approvals are subject to the following charges:

  • For CDs with terms of one year or less, you forfeit all interest.
  • For CDs with terms of more than one year and less than two years, you forfeit one years’ interest.
  • For CDs with terms of two years or more, you forfeit two years’ interest.

Also, it’s important to remember that if your early withdrawal penalty exceeds your interest earned, Quontic Bank may deduct the amount owing from your principal balance. As a result, it’s crucial to stay the course once you enter the agreement.

Pros:

  • Quontic Bank’s 6-month and 2-year CDs have the highest APYs in the marketplace.

Cons:

  • None.

Who is the account best suited for?

  • Quontic Bank provides loans to low-income families, immigrants, and other marginalized individuals.
  • If you’re passionate about the cause, a Quontic Bank CD may be right for you.

The impact of COVID-19:

As another digital bank aiming to make its mark in the U.S., COVID-19 helped Quontic Bank reach a larger audience. Moreover, as a company with a predominantly remote workforce, the pandemic did little to disrupt its operations. However, like the other institutions on our list, Quontic Bank’s APYs were impacted by the Fed’s monetary policy.

First Tech Credit Union

5-Year CD APY: 1.15%
Min. Deposit: $500
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

As another offering that falls near the middle of our range, First Tech Credit Union has CDs with terms ranging from six months to five years and APYs ranging from 0.15% to 1.15%. Moreover, there are no monthly account fees, and your deposits are NCUA-insured up to $250,000 per person, per account. However, please note that you must become a member to invest at First Tech Credit Union. And while the firm states that there are “hundreds of ways” to qualify, it lists the following criteria:

  1. A family or household member has an account.
  2. You or your family member work for one of the companies on its sponsor list in Oregon.
  3. You work in or call Lane County, Oregon, your home.
  4. You have a Computer History Museum or Financial Fitness Association membership.

In addition, First Tech Credit Union states that you can obtain membership assistance at one of its branches. And with locations in eight states, help should be available to Americans in these regions.

What’s more, the firm’s disclosures state that early withdrawals will cost you 180 days’ interest on CDs with terms of more than one year to two years. And for CDs with terms that stretch beyond two years, the charge is 270 days’ interest. Also, for maturities of one year or less, the firm adheres to the Fed’s penalty guidelines.

Pros:

  • First Tech Credit Union’s CDs have competitive APYs

Cons:

  • The offer is only available in select states.

Who is the account best suited for?

  • First Tech Credit Union is a solid fallback option if you can’t obtain a CD with a higher APY.

The impact of COVID-19:

First Tech Credit Union had something to offer everyone during the pandemic with a plethora of products available. And by providing assistance programs and emergency loans with 3.25% APRs, the firm did its part to help struggling families recover financially from the outbreak.

TIAA Bank

5-Year CD APY: 1.05%
Min. Deposit: $1,000
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

TIAA Bank has CDs with terms that range from three months to five years, and APYs that range from 0.35% to 1.05%. Moreover, there are no monthly account fees, and your deposits are FDIC-insured up to $250,000 per person, per account. In addition, while TIAA Bank’s long-term CDs are relatively unattractive, its 3-month CD has the second-highest APY in the marketplace. In addition, TIAA Bank allows you to purchase a CD online. As a result, the offer should be available nationwide, and it may fit your short-term investing needs.

However, please note that you need $1,000 to invest, and its early withdrawal penalties are tiered. For example, calling your funds before maturity will cost you 22 days of interest on a 3-month CD and 91 days of interest on a 1-year CD. Thus, it’s essential to understand the risks before you invest.

Also noteworthy, TIAA Bank offers in-person customer service at nine U.S. branches. However, all of them are in Florida. Thus, if you value non-arm’s length customer service, a TIAA Bank CD may be the most attractive option for residents of the Sunshine State. Similarly, TIAA Bank also offers wealth management solutions. And if you’re looking for investment advice that goes beyond savings, the firm has 146 office locations across the United States.

Pros:

  • TIAA Bank’s CDs have competitive APYs and should be available nationwide.

Cons:

  • None.

Who is the account best suited for?

  • TIAA Bank’s CDs may meet your objectives if you live in Florida and value in-person service.

The impact of COVID-19:

While its deposit accounts were less affected, TIAA Bank’s wealth management division likely thrived throughout the pandemic. With stock markets hitting all-time highs and management fees likely following suit, TIAA Bank was among the pandemic winners.

Bethpage Federal Credit Union

5-Year CD APY: 1.00%
Min. Deposit: $50
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

With one of the lowest minimum deposit requirements on our list, Bethpage Federal Credit Union is a solid choice for small savers. For example, you can get started with as little as $50, there are no monthly account fees, and your deposits are NCUA-insured up to $250,000 per person, per account. Likewise, Bethpage Federal Credit Union has CDs with terms ranging from three months to five years and APYs ranging from 0.40% to 1.00%. Moreover, with its 3-month CD yielding 0.40%, the APY is the highest on our list. As a result, it’s an excellent option for a quarterly investment.

Furthermore, Bethpage Federal Credit Union’s services are available to anyone that makes a $5 minimum deposit. However, some states aren’t accepted when applying for CDs online. For example, the firm rejected our applications when setting Wisconsin, Vermont, and California as our locations. As a result, buying a CD is only possible in certain states if you already have a loan outstanding with Bethpage Federal Credit Union.

Likewise, the firm discloses that early withdrawals may be subject to “penalties.” However, the specifics are not listed, and Bethpage Federal Credit Union doesn’t make its fine print easy to find. As a result, we prefer institutions that present the good and the bad in one place.

Pros:

  • Bethpage Federal Credit Union’s 3-month CD has the highest APY in the marketplace.

Cons:

  • The offer is only available in select states.

Who is the account best suited for?

  • If you live in New York State and value in-person service, Bethpage Federal Credit Union has 34 branches.

The impact of COVID-19:

While coronavirus disruptions led to the closure of some of Bethpage Federal Credit Union’s branches, its digital banking solutions helped clients manage their daily finances. Moreover, with stock markets rising during the pandemic, the firm’s portfolio analysis and wealth management divisions should have prospered.

Synchrony Bank

5-Year CD APY: 1.00%
Min. Deposit: $1
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

While Synchrony’s APYs are lower than comparable offers, the bank has the advantage of allowing you to purchase the investments online. As a result, there shouldn’t be any restrictions, regardless of your state of residence. Moreover, Synchrony has CDs with terms ranging from three months to five years and APYs ranging from 0.15% to 1.00%. Moreover, there are no monthly account fees, and your deposits are FDIC-insured up to $250,000 per person, per account. Furthermore, Synchrony has the lowest minimum deposit requirement on our list. Also beneficial, Synchrony is transparent and discloses its early withdrawals fees under its FAQ section:

  • For CDs with terms of one year or less, you forfeit 90 days’ interest.
  • For CDs with terms of more than one year and less than four years, you forfeit 180 days’ interest
  • For CDs with terms of more than four years, you forfeit 365 days’ interest.

Thus, if you think that a Synchrony CD may be right for you, there are plenty of deposit options to choose from:

  • First, you can create an internal transfer from another Synchrony Bank Account.
  • Second, you can transfer funds from an external account using an electronic funds transfer (EFT).
  • Third, you can use Synchrony’s mobile check deposit service and add funds using your smartphone or tablet.
  • Fourth, you can set up a direct deposit.
  • Fifth, you can initiate a wire transfer.
  • Finally, you can mail Synchrony a personal check.

Pros:

  • Synchrony’s 5-year CD has a solid APY, and should be available nationwide.
  • Synchrony has the lowest minimum deposit requirement on our list.

Cons:

  • None.

Who is the account best suited for?

  • Synchrony is a solid fallback option if you can’t obtain a CD with a higher APY.

The impact of COVID-19:

Running the race to gain new clients, Synchrony enhanced its notoriety during the pandemic. However, with an APY that doesn’t necessarily stand out from the crowd, Synchrony may have to increase its promotions in 2022 to maintain the momentum.

Marcus By Goldman Sachs

5-Year CD APY: 1.00%
Min. Deposit: $500
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

Marcus By Goldman Sachs has CDs with terms that range from six months to six years, with APYs that range from 0.15% to 1.00%. Moreover, there are no monthly account fees, and your deposits are FDIC-insured up to $250,000 per person, per account. In addition, the $500 minimum deposit requirement is relatively small compared to the floors set by other institutions on our list. Likewise, you can open a Marcus By Goldman Sachs CD online, and the product is available nationwide. As a result, it’s a solid choice if you live in an area that’s out of reach of one of our higher-APY options.

And like Synchrony, Marcus By Goldman Sachs clearly outlines its early withdrawal penalties under its FAQ section:

  • For CDs with terms of one year or less, you forfeit 90 days’ interest.
  • For CDs with terms of more than one year and up to five years, you forfeit 180 days’ interest
  • For CDs with terms of more than five years, you forfeit 270 days’ interest.

In addition, Marcus by Goldman Sachs offers a wide range of products — including personal loans, credit cards, business lines of credit, and wealth management solutions. And with the group’s personal loans free from sign-up, prepayment, and late fees, they’re a much better option than swiping your credit card. For example, Marcus by Goldman Sachs offers personal loans that range from $3,500 to $40,000, with terms that range from 36 to 72 months. And the group’s APRs range from 6.99% to 19.99%, depending on your creditworthiness. As a result, with the average credit card interest rate in the U.S. ranging from 16.22% to 23.94%, consulting with Marcus by Goldman Sachs is a solid credit decision.

Pros:

  • Marcus by Goldman Sachs’ 5-year CD has a solid APY, and should be available nationwide.

Cons:

  • None.

Who is the account best suited for?

  • Marcus by Goldman Sachs is a solid fallback option if a CD with a higher APY is out of reach.

The impact of COVID-19:

As a subsidiary of Goldman Sachs Bank, the latter benefited materially from COVID-19. With investment banking and capital markets activity booming during the pandemic, the group could do what it does best. However, the Fed will likely have to move the needle for savers to realize any benefits.

Discover

5-Year CD APY: 1.00%
Min. Deposit: $2,500
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

Discover has a solid slate of CDs, and its online-only presence means that its products are available nationwide. Moreover, there are no monthly account fees, and your deposits are FDIC-insured up to $250,000 per person, per account. However, the firm requires a $2,500 minimum deposit, which is high relative to comparable offers on our list. Moreover, Discover’s CDs have terms ranging from three months to 10 years, and APYs ranging from 0.20% to 1.00%. As a result, none of the offerings stand out from the crowd. However, the firm is highly transparent when it comes to early withdrawal fees:

  • For CDs with terms of less than one year, you forfeit three months’ interest.
  • For CDs with terms of one year to less than four years, you forfeit six months’ interest.
  • For CDs with terms of four years and less than five years, you forfeit nine months’ interest.
  • For CDs with terms of five years and less than seven years, you forfeit 18 months’ interest.
  • For CDs with terms of seven years to 10 years, you forfeit 24 months’ interest.

For your reference, Discover also has an attractive portfolio of credit cards with no annual fees and APRs that range from 11.99% to 22.99%. In addition, Discover offers personal loans that range from $2,500 to $35,000 with APRs that range from 5.99% to 24.99%. As a result, Discover has plenty of financial products with highly competitive terms.

Pros:

  • Discover’s 5-year CD has a solid APY, and should be available nationwide.

Cons:

  • The minimum balance to start investing is $2,500.

Who is the account best suited for?

  • If you’re already a client and enjoy banking under one roof, a Discover CD may be right for you.

The impact of COVID-19:

Known for its low fees, Discover hopes that its CDs will generate more inflows. Moreover, with a plethora of banking products that help you make the most of your money, consumers should keep Discover on their radars.

Popular Direct

5-Year CD APY: 1.00%
Min. Deposit: $10,000
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

While Popular Direct’s CDs have respectable APYs, the firm’s minimum deposit requirement of $10,000 is by far the highest on our list. As a result, its products are inaccessible to investors with small accounts. However, there are no monthly account fees, and your deposits are FDIC-insured up to $250,000 per person, per account. And if you think that Popular Direct is suitable for you, the firm’s CDs have terms that range from three months to five years, with APYs that range from 0.15% to 1.00%. Moreover, since Popular Direct is a digital bank, its products are available nationwide. However, there are no branches or physical locations. In addition, the group doesn’t have an ATM network. But you can link an external bank account and transfer funds to and from other institutions.

Also, while it takes a little digging to find, Popular Direct is transparent about its early withdrawal penalties:

  • For CDs with terms of less than 91 days, you forfeit 89 days’ interest.
  • For CDs with terms of 91 days or more and less than one year, you forfeit 120 days’ interest.
  • For CDs with terms of one year or more and less than three years, you forfeit 270 days’ interest.
  • For CDs with terms of three years or more and less than five years, you forfeit 365 days’ interest.
  • For CDs with terms of five years or more, you forfeit 730 days’ interest.

Pros:

  • Popular Direct’s CDs have competitive APYs, and should be available nationwide.

Cons:

  • The minimum balance to start investing is $10,000, and it’s by far the highest on our list.

Who is the account best suited for?

  • If you’re already a client and valuePopular Direct’s customer service, its CDs may be right for you.

The impact of COVID-19:

It’s tough to determine the pandemic’s impact on Popular Direct. For example, the firm should have benefited from the unprecedented increase in the money supply. However, since the terms of its CDs are much less competitive than comparable offers, Popular Direct doesn’t seem to be fighting for new business.

Live Oak Bank

5-Year CD APY: 0.90%
Min. Deposit: $2,500
Monthly Service Fee: $0
FDIC/NCUA Insured: Yes
Learn More

As the final option on our list, Live Oak Bank has CDs with terms ranging from six months to five years and APYs ranging from 0.50% to 0.90%. Moreover, there are no monthly account fees, and your deposits are FDIC-insured up to $250,000 per person, per account. Likewise, while its $2,500 minimum deposit requirement is near the high-end of our range, the firm’s short-to-medium term CDs are pretty competitive. For example, Live Oak Bank’s six-month and 1-year CDs have the second-highest APYs on our list. As a result, they’re solid options if you don’t plan to invest your money for several years.

In addition, because the firm is a digital bank, it doesn’t have any branches or physical locations. However, its products should be available nationwide since you can open and manage your account online or through its mobile app.

Furthermore, its early withdrawal penalties are clearly outlined under its FAQ section, and the charges roughly align with its competitors. For example, for CDs with terms of less than two years, the early withdrawal penalty is 90 days’ interest. Likewise, for CDs with terms of two years or more, the early withdrawal penalty is 180 days’ interest.

Pros:

  • Live Oak Bank’s six-month and 1-year CDs have the second-highest APYs on our list.
  • Its products should be available nationwide.

Cons:

  • The minimum balance to start investing is $2,500.

Who is the account best suited for?

  • If you can meet the $2,500 minimum, you can’t go wrong with a 1-year CD at Live Oak Bank.

The impact of COVID-19:

While ‘big business’ thrived throughout the coronavirus pandemic, lockdowns disproportionately affected small businesses. And offering more than just CD accounts, Live Oak Bank was there to lend a helping hand.

What is a CD?

A CD is a savings product with a fixed interest rate and a fixed duration. For example, your APY remains constant throughout the life of the investment, and your funds should remain invested until your maturity date arrives. Moreover, the U.S. federal government guarantees your principal and accrued interest.

Please note that CDs are similar to money market instruments and commercial paper securities. The primary purpose of the trio is to offer borrowers a reliable timeline of when debt repayment is due. Conversely, a high-yield savings account provides institutions with short-term capital. This is because your deposits are considered liabilities on bank and credit union balance sheets. And because the money is yours and not theirs, institutions offer interest-accruing products to win new customers and increase their deposit base. However, high-yield savings accounts allow you to withdraw your money at any time without penalty. As a result, banks have to set aside capital to ensure they have enough cash to meet depositors’ withdrawal requests. However, the more money they set aside, the less profit they can make by lending that money out to other borrowers.

And this is where CDs become essential.

Since CDs have fixed maturities, they allow institutions to plan and streamline their repayment schedules. Moreover, they enable them to move money around without worrying about a borrower asking for the proceeds the next day. As such, that’s why nearly all CDs have early withdrawal penalties. In addition, since the product is structured to provide the lender with peace of mind, they insist on being compensated if you change your mind.

Is a CD Right For Me?

The latest release from the FDIC shows that U.S. national average CD rates range from 0.03% to 0.28% on maturities that range from one month to five years. As a result, all of the options on our list outperform the competition, and you really can’t go wrong with any of them.

CD Terms: U.S. National Average Rate:
1-month CD 0.03%
3-month CD 0.06%
6-month CD 0.09%
1-year CD 0.13%
2-year CD 0.17%
3-year CD 0.21%
4-year CD 0.22%
5-year CD 0.28%

However, to determine if a CD is suitable for you, it’s helpful to conduct a cost-benefit analysis. For example, CDs have low guaranteed returns and zero risk. In contrast, other investments — like the stock market — offer higher future returns but incur more risk. As such, you should think about your risk tolerance to determine if a CDs APY meets your needs.

For example, if a 10% loss of your principal makes you more unhappy than the delight you obtain from achieving a 10% gain, then volatility may not be right for you. As such, a CD is likely a more suitable investment. Conversely, if you’re comfortable with the ups and downs inherent with mutual funds and real estate and want a higher return, a CD may not meet your goals.

Finally, your time horizon is also important. Mutual funds and other financial market securities are less predictable over the short term. As a result, if you plan to make a down payment on a home or need to pay your child’s tuition in the next six to 12 months, investing the proceeds in the stock market may not be the best decision. Conversely, if you’re saving for retirement and plan to invest the money for the next 10 to 40 years, then the stock market is likely more suitable for you than a CD.

What Makes a Great CD Investment?

When investing your hard-earned savings, we all know that returns are significant. As a result, that’s why we organized our list by the institutions that offer the highest APYs. And if the products are nearly identical, doesn’t it make sense to lend your money to the institution that provides the highest return? However, while returns are a close second, security is the most crucial factor. That’s why we only chose CD investments where the institutions report being insured by the FDIC or the NCUA. As a result, if the product you’re considering doesn’t explicitly cite federal insurance by one of these two agencies, you may want to look elsewhere.

Furthermore, fees are also significant. You want to ensure there are no monthly maintenance fees or hidden administrative charges. We found that some institutions are more transparent with their costs than others when creating our list. For example, some firms have their fees listed below their CD maturity tables or FAQ sections. However, others write that charges apply in the fine print on the bottom of the page. As a result, it requires a little digging to uncover the truth. All in all, we value companies that are transparent about the positives and the negatives of their products. And we believe that doing so demonstrates a lot about their integrity.

Finally, customer service is also valuable. If you have any questions about your CD, you should be able to contact a representative and have your issue resolved promptly. As such, considering all of the above will help make your CD investment a pleasant experience.

Do CD APYs Vary by Region?

Yes. As we mentioned in our reviews, community institutions often have the most attractive APYs. And why is this? Well, behemoth banks like Chase Bank and Bank of America have nationwide service. As a result, their vast networks allow them to play hardball with savers. In a nutshell: if you want a service that goes wherever you go, you have to accept a lower return on your savings products.

In contrast, community banks and credit unions are niche institutions. They only operate in specific regions, and their products are not available nationwide. For example, Ardent Credit Union’s five-year CD has a 1.50% APY. And the institution offers a higher interest rate to help win new clients. However, the product is only available in Pennsylvania. Thus, Chase Bank and Bank of America don’t compete with Ardent Credit Union nationwide. As a result, they don’t need to match the higher APY since most Americans can’t apply anyway.

Likewise, Pentagon Federal’s 1-year MMC has an APY of 0.85% — the highest on our list. Moreover, you can purchase the MMC online, so the offer is available nationwide. However, the credit union has roughly 50 branches in 13 states. As a result, Chase Bank and Bank of America don’t have to compete with Pentagon Federal nationwide regarding in-person services.

The bottom line?

When it comes to CDs and savings accounts, the smaller the institution, the better. Our analysis shows that regional and online-only institutions offer the highest APYs. And since all of these firms are insured by the FDIC or the NCUA, your money is safe. As a result, while you may sacrifice nationwide coverage or in-person service, the higher return is usually worth it.

What Happens When My CD Matures?

If you haven’t invested in a CD before, please consider that your investment automatically rolls over after it matures. For context, this means that nearly all CD providers will reinvest your funds once again for the identical duration. Moreover, if you don’t want to renew the CD for another term, you must contact the institution and notify them of the withdrawal request. Under most circumstances, you have 10 to 15 calendar days to make the arrangement. And during this time, your funds can be withdrawn without penalty. However, after this grace period ends, the institution may charge you an early withdrawal penalty similar to the potential charges applied to your original investment. Thus, it’s essential to monitor your maturity date.

In addition, your extended CDs’ APY may not match your original APY. For example, your new APY will likely reflect the change if the Fed lowers interest rates during the initial investment’s term. Conversely, if the Fed raises interest rates, your new APY will likely rise as well. As a result, it takes a little more effort to manage a CD than a high-yield savings account.

What are Early Withdrawal Penalties and Why Do They Matter?

As mentioned throughout our guide, you want to pay close attention to early withdrawal penalties. For context, you trigger the infraction when you withdraw money from your CD before its maturity date. And with institutions’ levying material charges — that can range from half or all of your earned interest — it’s crucial to know your time horizon before you enter the agreement.

As an example, Marcus By Goldman Sachs and Synchrony charge 90 days’ interest if you withdraw money from a CD that has a duration of one year or less. Thus, for a 3-month CD, you forfeit all of your scheduled interest. For a 6-month CD, you forfeit half of your scheduled interest. And for a 1-year CD, you forfeit a quarter of your scheduled interest. As a result, a change of heart can wipe out months of returns. Furthermore, the charges increase with your CDs’ duration. For example, Synchrony charges an early withdrawal penalty of 365 days’ interest for CDs with terms of more than four years. As such, if you withdraw your money after one year, you forfeit all of your earned interest.

Also, please note that some institutions will deduct the charge from your principal if the penalty exceeds your earned interest. For example, if the early withdrawal penalty is one-year interest on a multi-year CD and you withdraw your money after six months, your earned interest only covers half of the charge. As a result, the other half may (depending on the institution) be deducted from your principal, leaving you with a loss. Thus, we hope you will consider the ramifications of early withdrawals before purchasing your first CD.

For context, no-penalty CDs allow you to withdraw your money at any time. However, they usually have lower APYs than CDs with fixed terms. In addition, many penalty and no-penalty CDs don’t allow partial withdrawals. As a result, if you’ve invested $5,000 and want to take out $500, the only option is to withdraw all of your money. Thus, you should consider whether accepting a lower APY is worth the flexibility of penalty-free withdrawals.

Should I Invest in CDs or High-Yield Savings Accounts?

While the decision is a matter of personal preference, we think it’s prudent to stick with high-yield savings accounts in the short term. To explain, CDs have fixed interest rates, while high-yield savings accounts have variable interest rates. Thus, when the Fed raises interest rates, your high-yield savings accounts’ APYs should increase right away, while your CDs’ APY remains constant. On the flip side, if the Fed lowers interest rates, your high-yield savings accounts’ APYs should decrease right away, while your CDs’ APY remains constant. As a result, determining the optimal asset requires you to understand monetary policy and monitor the U.S. Federal Funds Rate.

However, Fed Chairman Jerome Powell said on Jan. 26 that the FOMC is “of a mind to raise the Federal Funds Rate at the March meeting.” Thus, with less than two months until liftoff likely begins, high-yield savings accounts’ variable APYs should increase when the announcement occurs. In contrast, if you invest in a 6-month CD today, your fixed APY will be in effect until the maturity date. As a result, the analysis looks like this:

  • High-yield savings accounts are better investments when interest rates are increasing.
  • CDs are better investments when interest rates are decreasing.

All in all, the current economic climate leads us to believe that high-yield savings accounts are the better short-term option. However, once the Fed concludes its rate hike cycle, purchasing a CD with a high long-term interest rate will likely prove beneficial.

What is Deposit Insurance and How Does it Work?

A CD is a federally-guaranteed savings product. For example, your investment is insured up to $250,000 per person, per account by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). Moreover, if any institutions on our list fail, the U.S. federal government will reimburse the proceeds in full. So it works like this: if you invest $10,000 in a CD with a 1% APY, you will earn $100 in interest after one year. And if your institution makes some poor money decisions and files for bankruptcy at that time, the U.S. federal government will reimburse your $10,000 principal investment and your $100 of accrued interest for a total of $10,100.

For context, the FDIC is an independent agency of the U.S. federal government that promotes public confidence by guaranteeing deposits if member institutions default. The agency also examines and supervises roughly 4,000 banks and savings institutions to ensure operational safety. Likewise, the NCUA is essentially the FDIC for credit unions. For example, it’s an independent U.S. federal agency that Congress created to protect Americans that deposit their money at credit unions. And like the FDIC, deposits are insured up to $250,000 per person, per account.

Are CDs Taxable Investments?

Yes. CDs are taxed similar to savings accounts. For context, you can defer the tax if you hold the CD in an IRA account. However, the tax treatment is specific to the IRA account and not the CD itself. In the absence, your CD interest is taxed as income, and you should receive tax forms from your institution to declare the earnings when you file your taxes.

What to Expect From CDs in 2022

While CD APYs have suffered throughout the coronavirus pandemic, there may be light at the end of the tunnel. For example, the Fed’s latest Summary of Economic Projections (SEP) shows that the median participant expects three interest rate hikes in 2022. As a result, institutions will likely increase their promotional CD offers in the coming months. In addition, there is plenty of checking and savings account bonuses available right now. If you’re interested in learning more, you may find our list of the best bank bonuses advantageous. Moreover, if you wait until the Fed officially raises rates, you’ll likely end up with a more attractive CD APY. However, as mentioned, high-yield savings accounts are probably the safer bet in 2022.

Conclusion

With plenty of attractive CDs available in the marketplace, it’s possible to have your short-term savings work for you. Moreover, with all of the institutions on our list exceeding the U.S. national average, you can obtain a higher interest rate if you extend your horizon beyond traditional banks. As a result, while high-yield savings accounts remain our product of choice in 2022, CDs are a close second.

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