Best CD Rates for February 2024: Top Rates Today Up to 5.75% – Mortgage News

Best 3-Month CD Rate: TotalDirectBank ¨C 5.51% APY

• Early-withdrawal penalty: 1 month of interest
• Minimum opening deposit: $25,000
• About: TotalDirectBank is an online-only operation of City National Bank of Florida, established in Miami in 1946. Today, it has over $22 billion in assets.

Pros

• 3-, 6-, and 12-month CDs all have rates of at least 5.50%

Cons

• High minimum opening deposit

• TotalDirectBank can't conduct business in Florida

Best 6-Month CD Rate: Andrews Federal Credit Union ¨C 5.75% APY*

• Early-withdrawal penalty: 3 months of interest
• Minimum deposit: $1,000
• Membership: Anyone can join Andrews by agreeing to a free membership in the nonprofit American Consumer Council and keeping $5 or more in a savings account.
• About: Headquartered in Suitland, Maryland, Andrews FCU dates back to 1948.

*Rate is for new members only.

Pros

• Highest APY available nationwide

• Relatively low minimum deposit requirement

Cons

• Current Andrews FCU members are not eligible for this rate

Best 1-Year CD Rate: T Bank ¨C 5.65% APY

• Early-withdrawal penalty: 3 months of interest
• Minimum opening deposit: $1,000
• About: Headquartered in Dallas, T Bank is part of Tectonic Financial and was established in 2004.

Pros

• Requires only $1,000 to open CD

Cons

• Only one physical location

Best 18-Month CD Rate: XCEL Federal Credit Union ¨C 5.45% APY

• Early-withdrawal penalty: 6 months of interest
• Minimum deposit: $500
• Membership: Anyone can join XCEL by making a $20 donation to the nonprofit Ocean Running Club and keeping $5 or more in an XCEL savings account.
• About: Founded in 1964, its headquarters are in New Jersey.

Pros

• Low minimum deposit

Cons

• Lowest donation required for membership eligibility a bit higher than many other credit unions

Best 2-Year CD Rate: Pelican State Credit Union ¨C 5.27% APY

• Early withdrawal penalty: 9 months of interest
• Minimum deposit: $500
• Membership: Anyone can join Pelican State by making a $5 donation to one of the credit union's affiliated nonprofits and making a $10 opening deposit in a member savings account ($5 goes to a one-time membership fee while the other $5 remains in your savings account as a required minimum balance).
• About: Pelican originally was chartered as Department of Hospitals Credit Union in 1956 in Baton Rouge, Louisiana, where it remains headquartered.

Pros

• Low minimum deposit

Cons

• Half of $10 opening deposit is nonrefundable

Best 3-Year CD Rate: Lafayette Federal Credit Union ¨C 5.10% APY

• Early withdrawal penalty: 12 months of interest
• Minimum deposit: $500
• Membership: Anyone can join Lafayette Federal with a $10 membership in the Home Ownership Financial Literacy Council and $50 or more held in a savings account.
• About: Lafayette Federal dates back to 1935 and is headquartered in Rockville, Maryland.

Pros

• Highest nationally available APY for a CD longer than 24 months

• Low minimum deposit

Cons

• Only branch locations are in Washington, D.C., and the surrounding area.

Best 4-Year CD Rate: Lafayette Federal Credit Union ¨C 4.73% APY

• Early withdrawal penalty: 16 months of interest
• Minimum deposit: $500
• Membership: Anyone can join Lafayette Federal with a $10 membership in the Home Ownership Financial Literacy Council and $50 or more held in a savings account.
• About: Lafayette Federal dates back to 1935 and is headquartered in Rockville, Maryland.

Pros

• Low minimum deposit

Cons

• Only branch locations are in Washington, D.C., and the surrounding area.

Best 5-Year CD Rate: Credit Human

• Term (months): 36¨C59
• Minimum deposit: $500
• Early withdrawal penalty: Greater of $50 or 12 months of interest
• Membership: Anyone can join Credit Human by agreeing to a complimentary membership in the nonprofit American Consumer Council and keeping at least $5 in a member savings account.
• About: The credit union is headquartered in San Antonio and dates back to 1935.

Pros

• Term ranges from 3 years to nearly 5 years

Cons

• Lacks a straightforward early withdrawal penalty

Best 6- to 9-Year CD Rate: Department of Commerce Federal Credit Union*

• Early withdrawal penalty: 6 months of interest
• Minimum opening deposit: $25,000
• Membership: Anyone can join the DCFCU by agreeing to a free membership in the nonprofit American Consumer Council.
• About: Chartered in 1964, DCFCU is headquartered in Washington, D.C., where it operates two branches.

*Rates listed in DCFCU's rate charts are 0.10% lower than what's listed here, for a minimum deposit amount of $500. But the fine print indicates that for deposits of $25,000, a 0.10% premium applies.

Pros

• Can lock in the rate for up to seven years

• Minimal early withdrawal penalty relative to the term

Cons

• Best rate requires $25,000 deposit

Best 10-Year CD Rate: Apple Federal Credit Union ¨C 4.00% APY

• Early withdrawal penalty: All earned interest (36 months maximum)
• Minimum opening deposit: $500
• Membership: Anyone can join Apple Federal by signing up for a $20 membership in the Northern Virginia Athletic Directors, Administrators, and Coaches Association, as well as keeping at least $5 in a savings account.
• About: Apple Federal was founded in 1956 in Virginia, where it operates more than 20 branches.

Pros

• Low minimum opening deposit

Cons

• 10 years is a long time to leave money in a CD

What Is a CD Rate?

A CD rate is an interest rate that shows what a bank or credit union will pay you for depositing your money with them for a certain period of time. For example, if the rate is 5.50% for a 1-year CD, the bank or credit union will pay you 5.50% in interest on your money for keeping it in the account, untouched, for 12 months.

How Does a CD Work?

A certificate of deposit (CD) is similar to a bank deposit account. The difference is what you’re agreeing to when you sign on the dotted line (even if that signature is now digital).

A CD works by locking your deposit up for a set time. When time is up, the CD pays you the set interest rate you agreed to when you opened it. A CD locks you into four specific things:

1. The interest rate: Most CDs pay a fixed interest rate. The bank cannot later change the rate and therefore reduce your earnings. On the flip side, a fixed interest rate may hurt you if rates later rise and you've lost your opportunity to take advantage of higher-paying CDs.
2. The term: This is the length of time you agree to leave your money deposited to avoid any penalty (such as six months or 1 year, etc.) The term ends on the "maturity date," when you can withdraw your money penalty
3. The principal: Except for some specialty CDs that allow add-on deposits, this is the amount you agree to deposit into the CD, at the time of opening.
4. The institution: The bank or credit union where you open your CD will determine aspects of the agreement, such as early withdrawal penalties and whether your CD will be automatically reinvested if you don¡¯t provide other instructions at the time of maturity. Credit unions may also require you to open a high-yield savings account or money market account before you open a CD.

Once your CD is established and funded, the bank or credit union will set the terms and conditions like with most other deposit accounts. You'll get either monthly or quarterly statement periods, paper or electronic statements, and usually monthly or quarterly interest payments deposited to your CD balance, where the interest will compound. The money you put into a CD is insured like other deposit accounts¡ªup to $250,000 per customer, per institution.

Why You Might Not Recognize the Banks and Credit Unions in Our CD Rankings

You typically won't see big names like Chase, American Express, or Bank of America in our rankings of the best CD rates. We do research their rates, but they don't make our list simply because they don't pay enough. Extremely large banks typically don't need to attract customers and deposits in the way that smaller institutions do, so they don't need to use rates as a way to win business. In fact, some of the biggest banks pay interest rates very close to zero, but it depends and can change from month to month. Our best CD rates are based on careful research, and we update this article every day to give you the best CD rates available nationwide.

How Much Does $10,000 Earn in a CD in One Year?

If you invest $10,000 in a CD for one year, you could earn $556¡ªthat's based on the best 1-year CD rate offered right now (5.56% APY). CD rates can change, so locking in a high interest rate today could guarantee you the maximum earnings, especially if CD rates drop by next year.

Who Should Get a CD?

If you’re looking to save money for a certain amount of time and you want to make sure you don’t touch it until you need it, then you should get a CD. If you’re risk-averse and don’t want to invest money in the stock market because there’s no guarantee you’ll see a return, then you should consider a CD. CDs offer a fixed rate of return that guarantees you earnings when the term is over. And right now, CD rates are high¡ªover 4% and 5% in many cases¡ªso you can earn a decent amount on your deposit.

Fast Fact

When asked in January what they would invest in if they had an extra $10,000, 9% of Investopedia readers said they would open a CD, in fourth place behind individual stocks, ETFs, and stock index funds. That¡¯s down from 11% in December.

Types of CDs

• Regular CDs: A regular CD is a CD with a fixed interest rate for a set period. Brick-and-mortar traditional banks, as well as online institutions and credit unions, offer these kinds of CDs. They may also be called traditional CDs.
• Variable-rate CDs: This kind of CD is one where the interest rate can change based on the prime rate, the Consumer Price Index (CPI), Treasury bills, or a market index. The entire term for a variable-rate CD is still fixed, though, and does not change. These are sometimes called “flex” CDs.
• Jumbo CDs: A jumbo CD is a CD that requires a larger opening deposit, such as $50,000 or $100,000.
• No-penalty CDs: A no-penalty CD is exactly what it sounds like¡ªyou do not pay a fee for withdrawing your money early.
• Brokered CDs: A brokered CD is one that an investor can buy through a brokerage firm or from a sales representative other than a bank or credit union.
• Step-up CDs: A step-up CD allows you to increase your interest rate when you can. Your rate is not fixed for the entire term; you can capitalize on higher interest rates with a step-up CD. A step-up CD may also be called a bump-up CD.
• Promotional-rate CDs: This CD offers a promotional rate that may be higher than a regular CD rate and is only offered for a certain time period. You may be able to lock in a high rate by opening this kind of CD within a promotional period, like 30 days or before the end of the month.

Note

Online banks or credit unions tend to offer high CD rates because of the lower overhead costs. If you’re worried about opening an online bank account, just do your research to ensure the institution comes with FDIC or NCUA insurance. It may also be an online arm of a larger, brick-and-mortar institution, which could give you peace of mind. Big banks like Bank of America, Chase, Capital One, Wells Fargo, American Express, and more offer CDs too, but they may not pay the highest CD rates. It’s important to shop around and consider all financial institutions before choosing a CD.

Pros and Cons of CDs

Pros

• Guaranteed yield for the CD’s full term: Most CDs are a fixed-rate product, so you’re guaranteed to earn the rate you lock in until the CD’s maturity date, no matter what the Federal Reserve does with the fed funds rate in the future.
• Higher interest rates than liquid accounts: Banks generally offer higher rates on CDs than on savings and money market accounts, in exchange for you keeping the money in the account and not touching it until you’re allowed to withdraw it.
• Fully predictable earnings and withdrawal date: Because you know the CD’s rate and term, you can calculate exactly how much you’ll earn and when you can withdraw the funds without penalty.
• Extremely safe, with almost no bank or market risk: When you open a CD at an FDIC bank or an NCUA credit union, up to $250,000 in deposits are federally protected against the institution’s failure. You’re also safe from the market volatility¡ªand potential loss in value¡ªthat can occur with stock and bond investments.
• Can deter spending temptations: Withdrawing funds before your CD matures causes you to pay an early withdrawal penalty, which can help keep you from giving in to temptations to dip into your savings for an unplanned purchase. This means a CD could be good for building your emergency fund.

Cons

• Early withdrawal of the funds incurs a penalty: If you do need to withdraw your CD funds before maturity, the bank or credit union will impose an early withdrawal penalty. Typically, it’s calculated as a certain number of months of forfeited interest earnings.
• You can¡¯t add to your deposit: With the rare exception of add-on CDs, you can only deposit funds into the certificate at the time of initial deposit. This means you miss out on compound interest since you’re not able to grow the account and apply the interest rate to your new balance every month like with a savings account.
• If CD rates rise, you may miss out on a higher yield: If you lock in your CD rate, but rates increase shortly after, you may wish you’d waited to score a higher return.
• If CD rates drop, you may wish you¡¯d chosen a longer CD: Though you’ll still be well-served by any CD yield you have locked in before interest rates drop, you may wish you’d locked in a longer-term CD to extend that competitive yield for a longer period.
• Typically return less than stocks over long periods: Though stock investments involve more risk and less predictability, they may offer greater returns over long periods.

How to Choose the Best CD for You

When choosing a CD, consider the following factors:

• Your financial goals: Both short-term goals and long-term goals are important.
• How much money you have to deposit: CDs have minimums, so if you only have $500 to deposit, you'll need to find a CD with that minimum balance requirement.
• How long you can leave that money in the CD without touching it: This will help you determine the right term¡ªwhether that's a one-year CD or a three-year CD.
• Interest rates offered for your term and minimum deposit: The higher the rate, the more you will earn on your deposit during the CD term.
• CD type: Is it a bump-up CD or a regular CD? This will ensure you're choosing one that meets your needs and goals.

Once you choose a CD, open the account, and deposit your money to start earning interest.

Christine DiGangi, Investopedia Product Reviews Team

I had two short-term savings goals, so I looked for a 6-month and a 1-year CD with a high APY that I could ladder. I checked out a few of the options on our list and decided to go with CIT Bank and Bread Savings, because applying for the CDs online was really easy, and they offered mobile apps¡ªI¡¯m one of those people who checks their financial accounts frequently, if not daily. I¡¯d keep accounts with both of them (assuming the rates are good when the two terms end).

What You Need to Open a CD

To open a CD, you’ll need some personal information including, but not limited to:

• Name
• Address
• Phone number

For example, you may need to provide a copy of your license or ID if you don't have an account with that institution already.

When you have that info handy, fill out the application for your CD account:

1. State how you'll fund the CD, whether via direct deposit or another method.
2. Fund the CD.
3. State how you want to receive the interest, all at the end or in monthly installments (if required).

Once you've done all that, you should officially have a CD in your name, though check with the institution to ensure you've taken all the right steps.

How To Build a CD Ladder

Smart CD investors have a specific tactic for hedging against rate changes over time and maximizing their return. It’s called a CD ladder and it enables you to access the higher rates typically offered on 5-year CDs, but with the twist that a portion of your money becomes available every year, rather than every five years. Here’s how to do it.

1. Take the amount of money you want to invest in CDs and divide it by five.
2. Put one-fifth of the funds into a top-earning 1-year CD, another fifth into a top 2-year CD, another into a 3-year CD, and so forth through a 5-year CD. Let¡¯s say you have $25,000 available. That would give you five CDs of varying lengths, each with a value of $5,000.
3. When the first CD matures in a year, you take the resulting funds and open a top-rate 5-year CD.
4. One year later, your initial 2-year CD will mature, and you'll invest those funds into another 5-year CD.
5. Continue doing this every year with whichever CD is maturing until you end up with a portfolio of five CDs all earning 5-year APYs, but with one of them maturing every 12 months, keeping your money a bit more accessible than if all of it were locked up for a full five years.

CDs and Taxes

Just like how the interest you earn on any money you have in savings, money market, and checking accounts is taxable as interest income at both the state and federal levels, the interest you earn on your money in a CD is too.

Your CD earnings will be reported to the IRS in the year they were earned and posted to your account, so that's when they're taxable¡ªeven though you may not withdraw the funds for one or more years into the future.

For example, if you have $1,000 in a 1-year CD with a 5.00% interest rate, you'll earn $50 in interest. You owe taxes on that $50, but not on the $1,000 principal you deposited at the start of the term.

CDs vs. Inflation

In December 2023, inflation was 3.4%, while the top rate offered across all CDs was over 5.50%. CD rates reached historic highs in 2023 as a result of the Fed's rate-hike policy to cool inflation, which had reached 9.1% in June 2022. CDs can help you combat inflation by paying you interest on your money, even though you may be paying more for goods and services. This will not always be the case, though. Interest rates are often increased to help combat high inflation. When inflation drops back to the standard 2% mark the Fed aims for each year, then interest rates may also drop back from their highs.

Alternatives to CDs

CDs vs. Traditional Savings Accounts

Traditional savings accounts tend to offer a low interest rate. Banks or credit unions with no high-yield savings account options may only offer traditional savings accounts that pay 0.01% to 0.10%. While the national average for savings rates is 0.47%, according to the FDIC, many banks pay much less. For example, Wells Fargo’s Way2Save account pays 0.01% APY and Chase offers just 0.01% with its Chase Savings account. When interest rates are high, the top CD rate can be up to 600x the rate you may be earning on your money in a traditional savings account.

CDs vs. High-Yield Savings Accounts

If you just aren’t sold on committing your funds for a certain amount of time, or simply can’t afford to because you may need the money in the near term, a high-yield savings account. You’ll be free to withdraw and deposit funds as you like, though some institutions will limit how many withdrawals you can make each month. Some savings accounts may also require a minimum balance.

CDs vs. Money Market Accounts

If you’re looking for other high-yield accounts, a money market account may serve your needs. Money market accounts offer the feature of allowing you to write checks on the account. They may also come with minimum deposit or balance requirements like savings accounts, and money market account rates can easily compete with savings account rates.

You can always find the top nationally available rates in our daily rankings of the best high-yield savings accounts and best money market account rates. Both accounts have deposit insurance through the FDIC or NCUA.

Note

Some money market accounts come with debit cards, but money market accounts tend to act more like savings accounts.

CDs vs. Bonds

If you’re interested in venturing out of the bank and into the world of bonds, you have numerous options. You could put cash savings into U.S. government I bonds, which are designed to track or beat the inflation rate. Or you could invest in U.S. Treasuries, in which you lend money to the U.S. government for a fixed amount of time. The Treasury notes with durations of four weeks to one year are called T-Bills.

Another option is corporate and municipal bonds. Though it’s difficult to research individual bonds on your own, you can easily invest in a bond mutual fund or bond exchange-traded fund which is diversified across a bundle of different bond issues. You can also enter and exit these funds at any time.

CDs vs. Brokerage Accounts

If you have a brokerage account, you can also hold savings in the brokerage¡¯s cash reserve account or their money market fund (not to be confused with the money market accounts offered by banks). Just be sure to research what rate you¡¯ll earn because in many cases, these brokerage cash accounts pay far less than what you can earn by keeping your money in an outside CD, savings account, or money market account.

Note

Some brokerages may also offer brokered CDs, another option if you’re already investing with a broker and want to open a CD.

CDs vs. Annuities

An annuity is a type of fixed-income investment provided by financial institutions. You can buy an annuity and pay into it with monthly payments or a lump sum. Then, in the future, you receive fixed monthly payments. Annuities are insurance contracts that can guarantee income. While they are similar to a CD in that the income is guaranteed as long as you follow the rules of the contract, they are not as short-term as CDs may be. Annuities are most often used in retirement planning. CDs can also be used for retirement planning, but they are usually bought and held for terms of 6 months to 5 years, rather than an annuity which could be owned for 20 years, or something similar. There may also be different withdrawal rules and limits, as well as tax consequences with annuities.

CDs vs. Treasury Bills

Treasury bills are debt obligations backed by the U.S. government. They usually have maturities of one year or less. That timing is similar to CDs with shorter terms, but Treasury Bills may not offer the same level of return on the investment. Rates are comparable, around the 4.50% to 5.50% mark as of January 2024, but they can fluctuate daily.

CD rates can also change daily. The thing with T-bills is that you buy them at a discount and when they mature, you receive the full amount back, plus a little more. For example, you might buy a $1,000 T-bill for $950. When the bill matures, you will get $1,000, or $50 more than what you paid for it. This increase of $50 is the interest you earn. CDs are a little less complicated, where you put in a set amount, and then receive a fixed interest rate when it matures.

Frequently Asked Questions

• Who Has the Highest CD Rate Right Now?

  The highest-paying CD right now is from Andrews Federal Credit Union, which offers a rate of 5.75% APY on a 6-month CD with a minimum deposit of $1,000. That could change, though, as interest rates fluctuate daily and institutions can offer CDs with high interest rates for as long or as short of a time as they want.

• Are CDs Safe?

  CDs are safe because they are usually offered by banks or credit unions which are insured by the FDIC or NCUA. This means your money at a bank or credit union, across all of your accounts (CDs, savings, and checking, etc.) is insured for up to $250,000. CDs also come with virtually no risk since the interest rate is usually fixed; you'll know what to returns to expect before even opening the CD.

• How Have CD Rates Changed Over Time?

  The top CD rates have changed over time, from around 1.35% in 2021, to over 5.50% by the start of 2024. This is because CD rates typically follow the trend of the fed funds rate. So when the fed funds rate is low, CD rates tend to be low. When the fed funds rate is high, CD rates tend to be high. To combat high inflation between 2021 and 2023, the Fed raised the fed funds rate. By December 2023, the fed funds rate was a target of 5.25%-5.50%, and the best CD rates were between 5.25% and 5.70%.

• Are Higher CD Rates Coming?

  CD rates took off in 2023. In 2024, there's no sure answer as to what CD rates will do. CD rates are closely tied to the fed funds rate. In December 2023, the Federal Reserve?held interest rates steady, keeping it at a 22-year high for the third meeting in a row. The Fed's December 2023?dot plot shows that no members of the rate-setting committee predict another rate increase in 2024. Instead, expectations are for three rate cuts in 2024, for a total drop of 0.75%. If those rate cuts happen, then CD rates will likely follow suit. Of course, nothing is certain. But in anticipation, CD rates softened more in January 2024 and so there may be more rate drops this year.

• Are There Fees Associated With CDs?

  There are not usually fees associated with the CD that you want to open. However, you may be required to open a savings account at the institution before you can open the CD there. This could require a deposit of $5 or more. Additionally, some credit unions ask new members to make a charitable donation in order to sign up for an account, and this could cost up to $40.

• How Long Can You Have Money in a CD?

  CD terms often range from 3 months to 10 years, so you can have your money in a CD for generally any length of time in between. Some CDs have terms of 8 or 9 months, others have 15-month terms, and there are 1-year, 2-year, 3-year, 4-year, 5-year, 6-year, 7-year, 8-year, and 10-year terms¡ªthough the longer terms may be offered by fewer banks or credit unions.

• Is It Worth Putting Money in a CD Right Now?

  Putting money into a CD right now may be a smart move if you're looking to earn a high interest rate on money you don't need. CD rates are over 5.00% for many terms right now, and locking up your money for six, 12, or even 24 months could help you in the long run if CD rates decline in the next year or two.

• What Is Considered a Jumbo CD?

  A CD with a minimum deposit requirement of $100,000 or more is usually considered a jumbo CD. While the required minimum deposit is higher than traditional CDs, the interest rates on jumbos are not always higher. That means you could earn a higher interest rate by depositing $100,000 in a traditional CD instead of a jumbo CD. Just shop around to learn which CD is best for your money and situation.

• Financial Institutions We Reviewed

  We researched and reviewed over 250 banks, credit unions, and financial institutions to find the best CD rates you see above on this list. While we write individual reviews for most, we do not always write reviews for those we would not recommend. Below are the banks, credit unions, and financial institutions we researched along with links to individual company reviews to help you learn more before making a decision:

  1st Source Bank, 5star Bank, ableBanking, Abound Credit Union, Achieva Credit Union, Affinity Federal Credit Union, Affinity Plus Federal Credit Union, Air Force Federal Credit Union, Alabama Credit Union, Allegacy Federal Credit Union, Alliant Credit Union, Ally Bank, Amerant Bank, American 1 Credit Union, American Express, American Heritage Credit Union, Andrews Federal Credit Union, Apple Federal Credit Union, Banco do Brasil Americas, Banesco USA, Bank of Baroda, Bank5 Connect, Bank7, Texas Capital Bank, bankESB (Easthampton Savings Bank), BankUnitedDirect, Barclays, BBVA Bank, Bellco Credit Union, Blue Federal Credit Union, BMO, BMO Alto, BrioDirect, Cadets Federal Credit Union, California Coast Credit Union, Capital One, Capitol Federal Savings Bank, CD Bank, CFG Bank, Chase Bank, Chevron Federal Credit Union, CIBC (Agility Banking), CIT Bank, Citibank, Citizens Access, Citizens Trust Bank, Colorado Federal Savings Bank, Bread Savings, Communitywide Federal Credit Union, ConnectOne Bank, Connexus Credit Union, Consumers Credit Union, Corporate America Federal Credit Union (CAFCU), Credit Union of Denver, Credit Union of the Rockies, Digital, Federal Credit Union, Discover Bank, DollarSavingsDirect, Dover Federal Credit Union, Dow Credit Union, Evergreen Bank Group, RocklandTrust Bank, Elements Financial, EmigrantDirect.com, Liberty Federal Credit Union, Fidelity Investments, Financial Partners Credit Union, Financial Resources Federal Credit Union, First Financial Credit Union, First Financial Northwest Bank, First Internet Bank, First National Bank of America, First Technology Federal Credit Union, Fort Bragg Federal Credit Union,