CD rates change weekly, so the highest rate available to you depends on which bank you check and when
A Certificate of Deposit (CD) is a savings account where you agree to leave money untouched for a set period — usually three months to five years — in exchange for a fixed interest rate. Banks currently offer rates between 4% and 5.5% annual percentage yield (APY), depending on the term length and the bank. Longer terms generally pay more than shorter ones, but rates shift constantly as the Federal Reserve adjusts its benchmark rate.
The rate you see advertised is only available at that specific bank, and only for that specific term. A five-year CD at one bank might pay 4.75% APY while another pays 5.2% for the same term. Online banks typically offer higher rates than brick-and-mortar branches because they have lower overhead costs. Credit unions sometimes offer competitive rates to members, though you must join first.
You cannot shop for the single "best" rate and lock it in everywhere — you pick a bank, open the CD there, and that rate is yours for the term you chose. If rates rise after you open the CD, you cannot change it without paying an early withdrawal penalty, which usually costs three to six months of interest.
Key Takeaways
- CD rates vary by bank and term length, and change weekly based on Federal Reserve policy and bank competition.
- Online banks typically offer rates 0.5% to 1% higher than traditional banks because they spend less on physical branches.
- You must choose a specific bank and term before opening a CD; you cannot move the money or change the rate without paying an early withdrawal penalty.
- Longer terms (three to five years) usually pay more than shorter terms (three to six months), but lock your money away longer.
- Credit unions may offer competitive rates to members, but you must join the credit union first and meet their membership requirements.
How to compare CD rates across banks
Start by checking the websites of banks where you already have accounts, then expand to online banks and credit unions. Write down the APY, the term length, and the minimum deposit required for each one. The APY is what matters — not the interest rate — because APY includes how often the bank compounds interest.
Bankrate, DepositAccounts, and the FDIC's National Information Center all publish current rates from multiple banks in one place. These sites update daily or weekly. You can filter by term length and sort by rate to see which banks are paying the most for a three-month, one-year, or five-year CD. The tradeoff is always between rate and access: the highest rates usually require you to lock money away for longer.
Check the minimum deposit requirement before you spend time comparing rates. Some banks require $500 to open a CD; others require $25,000. If you do not have the minimum, that bank is not an option for you, no matter how high the rate is.
Online banks versus traditional banks
Online banks (like Marcus, Ally, and American Express Bank) typically pay 0.5% to 1% more APY than traditional banks because they do not operate physical branches. A five-year CD at a traditional bank might pay 4.5% APY, while the same term at an online bank pays 5.2%. Over five years on a $10,000 deposit, that difference adds up to several hundred dollars in extra interest.
The tradeoff is convenience. You cannot walk into a branch to deposit cash or speak to someone in person. You deposit money by transferring it from another bank account, and you manage the CD entirely online or by phone. If you need to withdraw early, you contact the bank by phone or email to request it.
Online banks are FDIC-insured just like traditional banks, so your money is protected up to $250,000 per account. The rate advantage is real and worth the loss of in-person service for most people.
Credit union CDs and membership requirements
Credit unions sometimes offer CD rates that match or beat online banks, but you must be a member to open one. Membership requirements vary: some credit unions are open to anyone who lives or works in a certain county; others require you to work for a specific employer or belong to a specific organization. A few allow anyone to join by making a small donation to a nonprofit partner.
To find credit unions you may join, search the CO-OP Network or Shared Branch locator on the Credit Union National Association website. Enter your zip code and see which credit unions serve your area and what their membership rules are. If you may have access to, call or visit to ask about their current CD rates and terms.
Credit union CDs are insured by the National Credit Union Administration (NCUA) up to $250,000, the same protection as FDIC insurance at banks. The rates are competitive, but you have to do the membership step first.
Understanding CD terms and early withdrawal penalties
When you open a CD, you choose how long the money stays locked: three months, six months, one year, three years, or five years are common options. The longer you commit, the higher the rate usually is. A six-month CD might pay 4.2% APY, while a five-year CD at the same bank pays 5.1%.
If you withdraw money before the term ends, the bank charges an early withdrawal penalty. This penalty is usually three to six months of interest, though some banks charge more. If you withdraw from a one-year CD after six months, you lose six months of interest even though you earned it. This penalty comes out of your principal, so you may get back less than you deposited.
Before you open a CD, read the bank's disclosure document to see exactly what the penalty is. Some banks state it as a dollar amount; others state it as a number of months of interest. Ask the bank directly if the wording is unclear.
What happens when a CD matures
When the term ends, the CD matures. The bank sends you a notice a few weeks before the maturity date telling you what happens next. You usually have a grace period — often seven to ten days — to decide what to do with the money. During that window, you can withdraw it, move it to another account, or let the bank automatically renew it into a new CD at the current rate.
If you do nothing during the grace period, most banks automatically renew the CD into a new term at whatever rate they are currently offering. This new rate may be higher or lower than your original rate. If rates have fallen, you may want to withdraw the money and move it somewhere else instead of accepting the renewal rate.
Set a calendar reminder for one week before your CD matures so you have time to decide. Do not rely on the bank's notice alone — mail gets delayed, and email goes to spam.
CDs as part of a savings strategy
A CD works best for money you know you will not need for a specific period. If you have an emergency fund, keep that in a high-yield savings account where you can withdraw it anytime without penalty. Use a CD for money you are saving for a known goal — a car down payment in two years, a home repair in three years, or retirement funds you will not touch for five years.
You can also build a CD ladder by opening multiple CDs with different maturity dates. For example, open five one-year CDs, each maturing in a different year. Each year, one CD matures and you can withdraw the money or renew it. This strategy gives you regular access to some of your money while keeping most of it locked in at higher rates.
Compare CD rates to high-yield savings accounts before you decide. A high-yield savings account currently pays 4% to 4.5% APY with no lock-in period and no penalty for withdrawal. If rates are similar and you might need the money, the savings account is the safer choice.
Frequently Asked Questions
Can I move a CD from one bank to another without paying a penalty?
No. If you withdraw the money before the term ends, you pay the early withdrawal penalty. However, you can open a new CD at a different bank with the money after you withdraw it, though you will lose some interest to the penalty.
What if interest rates go up after I open my CD?
You are locked into your original rate for the full term. You cannot change it or move the money without paying the early withdrawal penalty. This is the risk you take when you lock in a rate — if rates fall, you benefit; if rates rise, you do not.
Is my money safe in a CD at an online bank?
Yes. Online banks are FDIC-insured just like traditional banks. Your money is protected up to $250,000 per account. The bank's physical location does not affect the insurance protection.
How often do CD rates change?
Banks change their advertised rates weekly or even daily, depending on Federal Reserve policy and competition. The rate you lock in when you open the CD stays the same for the entire term, regardless of how rates change after that.
Should I open a CD or keep money in a high-yield savings account?
A CD pays slightly more if you commit to a longer term, but a high-yield savings account lets you withdraw anytime without penalty. If you might need the money within a year or two, a savings account is safer. If you know you will not touch the money for three to five years, a CD's higher rate is worth the lock-in.