One of the best investments that carry a guaranteed return is a certificate of deposit. If you’re considering adding a CD to your investment portfolio, you’re probably searching for the best 3-year CD rates available.
While the rate of return is extremely important, you should also be weighing your options based on a few other important criteria. The best 3-year CDs offer lower opening account minimums and come from banks that have simplified the banking process with customers in mind.
The 6 best 3-year CDs of 2020
- Ally Bank (1.00%) – Best customer satisfaction
- TIAA Bank (1.05%) – Best for yield pledge promise
- Synchrony (.85%) – Best customer perks
- Marcus (1.00%) – Best rate guarantee
- Barclay’s (0.85%) – Best APY
- Capital One (0.80%) – Best mobile app
| Provider | 3-Year APY | Min. Deposit | Early Withdrawal Penalty |
|---|---|---|---|
| Ally Bank | 1.00% | $0 | 90 days of interest |
| TIAA Bank | 1.05% | $5,000 | 180 days of interest |
| Synchrony | .85% | $2,000 | 180 days of interest |
| Marcus | 1.00% | $500 | 270 days of interest |
| Barclay’s | 0.85% | $0 | 180 days of interest |
| Capital One | 0.80% | $0 | 180 days of interest |
Rates accurate as of August, 2020
The 6 best 3-year CDs of 2020
Ally Bank – Best customer satisfaction
Customers looking for 3-year CDs with no minimum deposit, a competitive APY rate and low early withdrawal penalties should check out the online bank Ally.
3-Year APY: 1.00%
Customer satisfaction: 5/5 J.D. Power Circle Rating
Minimum deposit: $0
SimpleScore: 4.4/5
It’s hard to ignore a bank that scored a 5 out of 5 with J.D. Power for customer satisfaction. Investors looking for 3-year CDs should consider Ally Bank as a candidate for more reasons than just a bunch of happy customers. The bank offers industry-competitive rates, no minimum deposit and streamlined online experience.
People who might be interested in CDs but have concerns they may need access to their funds early should consider Ally Bank’s 3-year CDs. The bank only charges 90 days of interest on funds withdrawn early. Compared to the rest of the banking industry, this leads the way.
TIAA Bank – Best for yield pledge promise
TIAA bank pledges that its 3-year CD rates will always be in the top 5% of the industry thanks to the bank’s Yield Pledge Promise.
3-Year APY: 1.05%
Customer satisfaction: N/A
Minimum deposit: $5,000
SimpleScore: 3/5
If you’re worried about missing out on the best rates, you’ll enjoy the Yield Pledge Promise from TIAA Bank. The bank searches the market every week to see what other competitive banks are offering for APY rates on CD investments. If TIAA Bank is not offering a rate in the top 5%, the bank adjusts its published rates.
The one major drawback to TIAA Bank is the high minimum account requirement. To open a CD with the bank, you will need to pony up $5,000. For smaller investors or people not ready to commit a larger sum of money for three years, this is not an ideal option.
Synchrony – Best customer perks
While you will need a few more dollars to get started with Synchrony, the company offers competitive APY rates and the ability to easily withdraw your interest earnings at no penalty.
3-Year APY: .85%
Customer satisfaction: N/A
Minimum deposit: $2,000
SimpleScore: 3.75/5
3-year CDs from Synchrony are available starting at $2,000, which is higher than many other banks that are moving towards the low or no-deposit minimum CD. While this is not as limiting to smaller investors as TIAA Bank, it’s still something that needs to be considered in the selection process.
One of the nice customer perks available to Synchrony customers is the ability to withdraw the interest from your CD accounts with no penalties. You’ll be able to transfer these funds to a high-yield savings account with Synchrony or to an external bank account.
Marcus – Best rate guarantee
It’s hard not to get excited about the 1.00% APY on Marcus’ 3-year CDs that comes with a 10-day CD Rate Guarantee for anyone that has the fear of missing out on a better rate.
3-Year APY: 1.00%
Customer satisfaction: N/A
Minimum deposit: $500
SimpleScore: 3.75/5
Those investors worried about opening a CD account and waking up tomorrow only to find out you missed out on a better rate, will be interested in Marcus. The bank offers a 10-Day CD Rate Guarantee that says if a better rate comes up during the first 10 days after you open and fund your account, Marcus will honor the higher rate. If the rate goes down, you’ll keep the higher rate.
On top of the rate guarantee, Marcus has many other attractive features on its 3-year CDs. The APY is one of the highest, minimum deposits are only $500 and the customer support team is open seven days a week and is based in the U.S.
Barclay’s – Best APY
Barclay’s offers a decent 1.00% APY on 3-year CDs that come with no account minimum — and the rate is available on all CDs from one year to five years.
3-Year APY: 0.85%
Customer satisfaction: N/A
Minimum deposit: $0
SimpleScore: 3.75/5
Barclay’s offers 0.85% APY on all CDs from one year to five years, in case you’re looking for different term lengths. Furthermore, the bank offers a helpful CD ladder simulator with real-time rates to help you calculate what you’d earn on different CD ladder terms and deposits amounts.
In addition to an attractive rate, Barclay’s has some super-helpful online tools to aid in the CD investing process. All for free, you can use the CD calculator, CD ladder calculator and Savings Assistant. These tools can help significantly in figuring out the best CD and savings options to help you meet your goals.
Capital One – Best mobile app
A high J.D. Power satisfaction rating and an impressive mobile app are just two of the features that come with a Capital One 3-year CD account.
3-Year APY: 0.80%
Customer satisfaction: 4/5 J.D. Power Overall Satisfaction Rating
Minimum deposit: $0
SimpleScore: 3.6/5
Capital One 3-year CDs have no minimum account balance and offer an APY of 0.80%. Compared to the industry, this rate of return is a little lower than what you can find at other banks and credit unions. But that doesn’t mean you should fully write Capital One off your list.
The bank has an impressive J.D. Power Overall Satisfaction Rating and one of the most user-friendly and highly recommended mobile apps on the market. The mobile app is completely free and gives users the ultimate in flexibility to open accounts, manage accounts and handle many popular banking functions from the palm of their hands. While the rate might not be the best, the user experience could make up for it.
What is a 3-year CD?
A CD or certificate of deposit is an investment option offered by banks and credit unions. When you invest in a CD, you agree to put a certain amount of cash into an account and leave it untouched for a fixed period. The bank uses this money for other activities like loans and investments. In return for your help, the bank pays you interest. A 3-year CD is a certificate of deposit that the fixed period the money should remain untouched is three years.
How should I choose the right 3-year CD?
Choosing the right 3-year CD is an important process because you want to ensure your money is protected and you’re getting the best return available. When shopping for the right fit, make sure you’re looking at the rate of return (APY), FDIC or NCUA insurance, early withdrawal penalties, minimum deposits, customer service and any other incentives offered by the financial institution.
What are early withdrawal penalties?
Financial institutions use the money invested in CDs to make other investments or offer loans to other customers. Because of this, the bank or credit union is counting on having uninterrupted access to the money you’ve agreed not to touch. When you need the money early, it can harm the rest of the bank’s business operations.
If you withdraw your money from a CD early, you will pay early withdrawal penalties. These penalties will never be on the principal you invested but will be on the interest you have earned. Generally, a bank or credit union will recoup some of the interest your account has earned.
The bottom line
3-year CDs are a great investment when you’re looking for a guaranteed return and have some extra cash. To make sure you get the best bang for your buck, take some time to find the right investment CD provider for you. Remember, while the APY rate is important, other factors such as minimum deposits, federal insurance and early withdrawal penalties should be weighed in the decision-making process.
