Certificate of Deposit
Best CD Rates for January 2025: Up to 4.75%
Best 1 Year CD Rates for January 2025: Up to 4.55%
BMO Alto Certificate of Deposit
Minimum deposit
$0
APY
4.20%
Alliant Credit Union Certificate
Minimum deposit
$1,000
APY
4.10%
Bread Savings™️ CD
Minimum deposit
$1,500
APY
4.30%
CIBC Agility™ Online CD
Minimum deposit
$1,000
APY
4.31%
Bask Bank CD
Minimum deposit
$1,000
APY
4.25%
TAB Bank CD
Minimum deposit
$1,000
APY
4.52%
Citizens Online CD
Minimum deposit
$5,000
APY
4.00%
First Internet Bank CD
Minimum deposit
$1,000
APY
4.42%
Live Oak Bank Personal CD
Minimum deposit
$2,500
APY
4.40%
NASA Federal Credit Union Share Certificate
Minimum deposit
$1,000
APY
4.30%
Andrews Federal Credit Union Fixed Rate Share Certificates
Minimum deposit
$1,000
APY
4.25%
E*TRADE CD
Minimum deposit
$0
APY
4.25%
Bank5 Connect High-Yield CD
Minimum deposit
$500
APY
4.25%
Barclays Online CD
Minimum deposit
$0
APY
4.15%
CFG Bank CD
Minimum deposit
$500
APY
4.25%
Newtek Bank CD
Minimum deposit
$2,500
APY
4.25%
Popular Direct CD
Minimum deposit
$10,000
APY
4.50%
Best CD Rates for January 2025: Up to 4.75%
What is a Certificate of Deposit (CD)?
A Certificate of Deposit (CD) is a type of savings account offered by banks and credit unions that holds your money for a fixed period, called the term, in exchange for a higher interest rate than regular savings accounts. CDs are a low-risk investment designed to help your money grow while offering a predictable return.
How a CD Works
- Deposit: You invest a lump sum into a CD account.
- Fixed Term: Your money is locked in for a specific period (e.g., 6 months, 1 year, 5 years).
- Interest: The bank pays you a fixed interest rate for the term.
- Maturity: At the end of the term, you receive your initial deposit plus any earned interest.
Key Features of CDs
- Fixed Interest Rates:
- CD rates are higher than traditional savings accounts and are fixed for the term.
- Rates may vary based on the length of the term and the financial institution.
- Terms:
- Terms typically range from 3 months to 5 years or longer.
- Longer terms usually offer higher interest rates.
- FDIC/NCUA Insurance:
- CDs are insured up to $250,000 per depositor, per bank, ensuring your funds are secure.
- Early Withdrawal Penalty:
- Withdrawing money before the CD matures often incurs a penalty, which may include forfeited interest or a percentage of the principal.
Types of CDs
- Traditional CD:
- Fixed term, fixed rate, and penalties for early withdrawal.
- High-Yield CD:
- Offers higher interest rates, usually available at online banks.
- No-Penalty CD:
- Allows early withdrawals without penalties but may offer slightly lower rates.
- Bump-Up CD:
- Lets you request a higher interest rate if rates increase during your term.
- Step-Up CD:
- The interest rate increases automatically at predefined intervals.
- Jumbo CD:
- Requires a large minimum deposit (e.g., $100,000) and offers higher rates.
- IRA CD:
- Held within an Individual Retirement Account (IRA) for retirement savings.
- Add-On CD:
- Allows additional deposits during the term.
Advantages of CDs
- Higher Interest Rates: Earn more than regular savings accounts.
- Predictable Returns: Guaranteed interest for the term.
- Low Risk: Principal and interest are insured and stable.
- Flexible Terms: Wide range of maturity periods to match your savings goals.
Disadvantages of CDs
- Limited Liquidity: Funds are locked in until maturity, and early withdrawals incur penalties.
- Lower Returns Than Investments: CDs typically earn less than stocks or mutual funds.
- Inflation Risk: Long-term CDs may not keep up with inflation.
Who Should Use CDs?
- Conservative Savers: Ideal for those who prioritize safety over high returns.
- Short-Term Goals: Great for saving money needed in a specific timeframe (e.g., a wedding, down payment).
- Diversified Portfolios: A stable addition to a mix of investments.