Want a risk-free investment that earns you more than 5% a year? Try these CDs. (2024)

With CDs, you tie up your savings for a fixed term. In exchange, you get interest rates that outpace what traditional savings accounts offer. If you’re ready to part with your cash and earn more, the Fortune Recommends ^TM editorial team has rated and ranked the best CDs.

The best CD rates: our top picks*

Find the best CD for you

Use the widget below to find the CDs with the best rates in your area.

The 10 best CD rates overall

Here’s our rundown of the top 10 CDs according to our research, including the key figures you should know before you open an account.

Note: APYs are updated weekly, but are subject to change. Please refer to the website of each provider for the most up-to-date information.

Why we picked it

Alliant made our list because of its solid APYs and variety of customer support options. However, you must be a member to start investing and need at least $1,000 to start.

If you choose Alliant as your financial home, it is a digital credit union, so you won’t have access to physical branch locations. You will, however, be able to contact customer service via email, chat, or phone.

Why we picked it

First Internet has APYs that top 4% on all of the CDs we evaluated. But, you’ll need at least $1,000 to take advantage of these high APYs

If you ever need to contact customer service, First Internet Bank has stellar customer service even though it’s a digital bank with no physical locations: You can access customer service via email, chat, or phone.

Why we picked it

Everbank stood out because of the wide range of term lengths and solid APYs it offers on its CDs. Customers can get an interest rate of close to 4% or higher on all of its CDs. Plus, there’s no minimum opening deposit, so you can start investing regardless of how much you have saved up.

Why we picked it

Regardless of what type of CD you’re looking for, Synchrony Bank has you covered—you’ll have a choice between traditional CDs, a bump-up CD, and a no-penalty CD. To get the most bang for your buck, opt for the 9-month CD, which offers a 5.15% APY.

To get in touch with customer service, you can do so via phone call, live chat, or email.

Why we picked it

With a Marcus CD, you’ll get an APY of 4% or higher, regardless of which term length you choose. Currently, you’ll get the highest rate on their 14-month or 1-year CDs, but opting for a CD with a longer term means you can keep the interest flowing for months or even years to come.

Before you invest, you’ll need at least $500. Make sure to note when your CD matures because it’ll automatically be renewed if you don’t withdraw your money.

Why we picked it

While you’ll need to have a bit of a nest egg built up to invest in a TAB Bank CD, you can receive a whopping 5.27% APY on 6-month, 9-month and 1-year CDs. And if you choose a longer-term CD, you’ll still get an APY above 4%.

When it comes to customer service, you can reach out via phone call (6 a.m. to 7 p.m. MT Monday through Friday and 9 a.m. to 3 p.m. on Saturday) or a secure form on their site.

Why we picked it

Unlike some of the other banks on our list, BMO has brick-and-mortar locations nationwide. But you don’t need to live near a branch to open an account. BMO CDs are available to customers across the country, though the APY may vary based on your zip code.

With BMO, it’s better to opt for CDs with longer terms. Their 3-month and 6-month CDs offer a measly 0.05% APY while their CDs with terms greater than 6 months offer rates that top 4.40%.

Why we picked it

While MYSB Direct doesn’t boast the highest rates on its CDs, it provides a variety of term lengths, allowing you to select a maturity that aligns with your financial goals. Note that MYSB has one of the heftiest early withdrawal penalties, so be prepared to keep your hands off your money or pay up.

MYSB Direct has one physical location in New York City, but you can reach customer service via email or phone.

Why we picked it

Whether you want to invest your money for 6 months or 5 years, Prime Alliance has you covered. Currently, you can get a 4.95% APY on 6 and 12-month CDs. That means if you invested just $5,000 in a 12-month CD, you would earn $247.50 in a year.

With a Prime Alliance CD, you’ll receive interest quarterly. If you ever have trouble with your account, you can contact customer service via phone call or message form on the website.

Why we picked it

Of our top banks, Popular Direct had the steepest minimum opening deposit, clocking in at $10,000. Therefore, this account may not be accessible to everyone, especially those interested in investing a smaller amount of money.

If you do have at least $10,000 to spare, you can earn a generous 5.30% APY on 6 and 12-month CDs.

Highest CD rates by term length

In most cases, financial institutions will vary the APY of a CD depending on the length of time you’re willing to deposit the money. While this doesn’t always mean you’ll earn a higher rate over a longer term, comparing products by term length is worth it to ensure you’re getting the most bang for your buck.

The tables in the collapsible drawers below show examples of top rates by term length. Information in the Notes columns will describe basic information about qualifications for these accounts, however, you should always refer to the institution itself for the most accurate information. Rates are updated weekly on Wednesdays.

Complete guide to CDs

There are several terms and strategies you should familiarize yourself with in order to develop a CD strategy that works well for you. Here are some of the basics:

What is a certificate of deposit?

With CDs, or certificates of deposit, customers receive a fixed interest rate in exchange for tying up their money for a fixed period. Interest is typically paid on a regular basis, either daily, monthly, or quarterly.

After a CD reaches maturity—or the end of its term—you can withdraw the money you deposited initially, plus any earned interest. If you tap your money before the CD’s term is up, most CDs charge an early withdrawal penalty which is usually worth a few days or months of interest.

Typically, upon maturity, your CD is automatically renewed. If you don’t want to roll over your money into a new CD, you’ll usually be given a grace period during which you can choose to withdraw your funds.

Types of CDs

There are various types of CDs you can choose from depending on how much money you’d like to deposit into your CD, whether you’d prefer to have access to your money before maturity, and more. A few of the most common types of CDs include:

How are CD rates determined?

CD rates are set by your individual bank or financial institution. Although, there are several factors that can influence these rates.

This includes the length of your CD term (longer-term CDs usually offer higher rates than shorter-term ones) and type of CD, the amount of your initial deposit (some CDs offer tiered interest rates), benchmark interest rates set by the Federal Reserve, and temporary promotional offers offered by your financial institution.

What is the APY on a CD?

APY stands for "annual percentage yield." It's a way to calculate the total amount of interest that you can earn on an investment such as a CD in one year, taking into account the effect of compounding interest.

The APY of a CD will depend on the interest rate offered by the bank or financial institution, the frequency of compounding (daily, monthly, annually, etc.), and the length of the term of the CD. As of early 2024, the best CD rates are over 5% but may fall over the course of the year as the Federal Reserve makes adjustments.

What are CD ladders and how do they work?

For savers who are on the fence about locking away their funds in a CD for an extended amount of time, you’re not alone. While some CDs offer terms that are just a few months long, other CDs take years to mature—usually, you earn a higher rate with these CDs, but you’ll have to part with your money for longer.

One way to score the benefits of both short and long-term CDs is to set up a CD ladder. This is a savings strategy where you split your savings between several CDs of varying maturities.

Here’s how a CD ladder works: If you want to invest $3,000, you would invest $1,000 each in three CDs of staggering maturities—let’s say 1-year, 2-year, and 3-year. When each CD matures, you reinvest that money in a 3-year CD. That way you have access to cash every year.

Do I have to pay taxes on CD interest?

If you opt for a CD as your primary savings vehicle, you should be aware that interest earned on the funds you deposit are considered taxable interest by the IRS. The interest you earn is subject to federal and state income tax.

Your financial institution will typically send you a 1099-INT statement for any interest earned over $10, and the amount you owe will depend on how much interest you’ve earned and your tax bracket.

If you withdraw funds from your CD early, you can also expect to see those penalties on your 1099-INT form.

Is a certificate of deposit considered a safe investment?

Certificates of deposit are considered safe investments so long as they are helped by FDIC- or NCUA-insured financial institutions which insure your deposits up to $250,000 per depositor, per bank, for each account ownership category or up to $250,000 per share owner, per insured credit union, for each account ownership category.

How to choose the best CD

Every CD is a little different, so you’ll want to pay close attention to the account features and fine print before deciding where to put your savings. You’ll want to consider a few factors when choosing a CD:

• Term length: Your CD’s term length tells you how long it takes to mature. CD term lengths can be as short as one week or as long as 10 years. Choose a term length that meets your needs and aligns with your financial goals.
• APY: The annual percentage yield on your account significantly affects how much your money will grow. The higher the rate, the more you can expect to earn in interest. Typically, the best CD rates are applied to longer term lengths.
• Minimum deposit: Most, but not all, banks and credit unions require that you invest a minimum amount of money to open a CD. The minimum opening deposit can range from a few dollars to thousands. Most CDs require depositing a lump sum and don’t allow additional contributions. Make sure you can meet the minimum opening deposit requirement.
• Penalties: Not all CDs carry early withdrawal penalties, but if yours does, you could lose out on your earned interest and some of your principal balance. You may not be able to plan for an early withdrawal, but it’s good to know the penalty if you need to touch your money early.
• Deposit insurance: FDIC and NCUA insurance provides depositors with insurance coverage if their bank or credit union fails—up to $250,000 per depositor or share owner. Double-check that your account is insured to protect your money if there’s a bank failure.

How to calculate CD earnings potential

To calculate your earnings from a CD, you’ll need touse the following formula: A = P(1+R/N)(NT). Where ‘A’ represents the value of your CD, including interest. ‘P’ is equal to your principal balance or initial deposit. ‘R’ represents your yearly interest rate, in this case it would be your APY. ‘N’ represents the compound frequency of your CD in a given year, and ‘T’ represents the number of years until your CD’s maturity date.

Pros and cons of CDs

While CDs can be attractive for their high interest rates, they aren’t a perfect fit for everyone. Let’s review some of the pros and cons.

Advantages of certificates of deposit

CDs offer many advantages for savers, including higher APYs and fixed rates, which may offer greater returns over time. Additionally, CDs are offered in a variety of terms, making it a viable option for savers with short- and long-term goals.

Disadvantages of certificates of deposit

CDs don’t offer the same liquidity as other savings accounts. Should you need to access your funds, you’ll likely be charged a penalty for doing so. Additionally, your overall returns upon your CD’s maturity date could be impacted if the inflation rate increases at a faster pace than your interest earnings.

Alternatives to CDs

CDs differ from other savings accounts in a few key ways. This type of account not only functions differently, but it may be better suited for a certain type of consumer who is saving for a goal with a specific timeline.

• Access to your savings: CDs don’t offer the same level of access to your savings that a traditional savings account or money market account would. Once you agree to your CD term, your money will sit, untouched, and accrue interest for the duration of your term until your CD hits maturity. Making a withdrawal early would result in an early withdrawal penalty.
• CDs usually offer higher APYs at a fixed rate: One of the major selling points for a CD account is that, typically, CDs offer a fixed APY at a higher rate than other types of savings vehicles. That means that you’ll be able to take advantage of a higher rate for an extended period of time, and you’ll have the peace of mind knowing that once you’ve locked in your rate, your APY won’t fluctuate during your term in response to external factors like federal funds rate increases.

CDs vs. high-yield savings accounts

High-yield savings accounts work in the same way as traditional savings accounts. It’s a deposit account at a credit union or bank that you can use for saving and earning interest on your money—usually at a higher rate. This type of savings account differs from CDs in that they offer greater access to your funds, rather than requiring you to lock away your funds for a set amount of time. As such, there's no penalty for making withdrawals.

CDs vs. money market accounts

Money market accounts function as a hybrid between savings accounts and checking accounts. Similar to CDs, these accounts typically offer much higher APYs than checking accounts, but may still offer some of the same features including check writing, debit card access, and the ability to make withdrawals and deposits via ATM. Like a CD, this type of account may also be of interest to savers who have the ability to make a larger opening deposit.

Read more: Compare CDs vs. money market accounts

CD rates by state

While many banks are available nationwide, there are also hundreds of smaller institutions that may only serve customers in a more localized region. Here are the banks in each U.S. state with the highest CD rates.

View CD rates in:

• California
• Florida
• New Jersey
• New York
• Texas

Our methodology

The Fortune Recommends^TM team compared certificates of deposit (CDs) from more than 45 major banks, credit unions, and online-only banks that offered one-, three-, and five-year CD terms. Our top picks are available to customers across the U.S. no matter where you’re located, subject to the terms of each CD.

For our best overall CD rates, we ranked the best overall CDs in the following categories and weighted each category as outlined in the percentages below:

• Number of terms offered (15%): When you opt for a bank or credit union that offers a wide array of CD terms, you have a greater chance of finding a CD that aligns with your investment horizon. We evaluated financial institutions based on the number of CD terms they provide. Banks with more CD terms ranked higher.
• Number of terms with above-average rates (60%): To determine which banks had the best rates, we looked at whether they offered above-average APYs on a wide range of term lengths.
• Minimum deposit requirement (20%): To open a CD at any financial institution, the institution will require that you deposit a minimum dollar amount. We thought a lower minimum was preferable and rated banks with lower minimum deposit requirements higher.
• Customer service (5%): Top picks offer customers three ways to get in contact: chat support, by phone, or email. Among the three options, we gave phone support the most weight.

We think the best CDs offer APYs at least twice the national average for one-year, three-year, and five-year terms. We didn’t include brokered CDs on our list, which are riskier because they are sold on the secondary market through brokerages.

CD rates, fees, and minimum deposit requirements may be limited-time offers, and APYs are subject to change. The FDIC or NCUA insures all the banks and credit unions on this list. Terminating your CD before it matures may incur a penalty fee, which varies by bank and credit union.

Frequently asked questions