The Best 5-Year CD Rates

When you have cash that you can afford to leave untouched for a longer period of time, a 5-year CD might be a fruitful investment option. Banks and credit unions reward customers with interest payments in return for uninterrupted access to agreed-upon amounts of their cash. The best 5-year CDs have high-interest yields, user-friendly apps and website interfaces and favorable early withdrawal penalties.

The 6 best 5-year CDs of 2020

  • Ally Bank (1.40%) – Best customer satisfaction
  • TIAA Bank (1.60%) – Best for yield pledge promise
  • Synchrony (1.40%) – Best customer perks
  • Marcus (1.65%) – Best rate guarantee
  • Barclay’s (1.40%) – Best online tools
  • Capital One (1.40%) – Best mobile app
Provider 5-Year APY Min. Deposit Early Withdrawal Penalty
Ally Bank 1.40% $0 150 days of interest
TIAA Bank 1.60% $5,000 270 days of interest
Synchrony 1.40% $2,000 365 days of interest
Marcus 1.65% $500 270 days of interest
Barclay’s 1.40% $0 180 days of interest
Capital One 1.40% $0 180 days of interest

Rates accurate as of May 5, 2020.

The 6 best 5-year CDs of 2020

Ally Bank – Best customer satisfaction

Ally offers 5-year CDs with competitive rates and low early withdrawal penalties, all backed by one of the highest J.D. Power scores in the industry.

5-Year APY: 1.40%
Customer satisfaction: 5/5 J.D. Power Circle Rating
Minimum deposit: $0
SimpleScore: 4.4/5

Ally Bank offers 5-year CDs with competitive rates and is one of the banks offering investments with no account minimum. Additionally, Ally Bank high yield CDs only have an early withdrawal penalty of 150 days of interest for five-year terms, which is much lower than many of the other options within the industry.

What’s additionally great about Ally Bank is the company scored the second-highest rating with JD Power on customer satisfaction for direct banking only to be edged out by Charles Schwab Bank. Ally most likely earned this ranking thanks to the user-friendly website, extensive FAQ section and a fully transparent banking process.

TIAA Bank – Best for yield pledge promise

While there’s an abnormally high minimum deposit level, 5-year CDs from TIAA Bank deliver an attractive rate and a promise to always offer a CD rate in the top 5% of the industry.

5-Year APY: 1.60%
Customer satisfaction: N/A
Minimum deposit: $5,000
SimpleScore: 3/5

The first thing that stands out about the 5-year CDs from TIAA bank is the abnormally high minimum deposit. Unlike some of the $0 minimum balance options on the market, TIAA Bank requires a $5,000 minimum in order to open a CD account. This might be a turnoff to some newer investors or people looking for a smaller investment option.

The bank’s Yield Pledge Promise is an attractive feature to consider. Weekly, TIAA Bank assesses the other CD options on the market to make sure its advertised rates are within the top 5% of competitive accounts. Investors that want to make sure they’re getting a great rate now and in the future if they rollover CD accounts upon maturity may like what TIAA Bank is offering.

Synchrony – Best customer perks

Synchrony has several different CD options available with competitive APY rates, including impressive rates on shorter-term options.

5-Year APY: 1.40%
Customer satisfaction: N/A
Minimum deposit: $2,000
SimpleScore: 3.75/5

There are several pros and cons of investing with Synchrony for a 5-year CD. The minimum deposit is higher than some options at $2,000 but not as high as TIAA Bank, which can be good for beginning investors. The APY is competitive, and the same rate is available on a 4-year CD if you’re looking for a shorter option. Additionally, the 1-year CDs through Synchrony return a 1.00% APY.

If you’re concerned you may have to withdraw your funds early, Synchrony might not be the best option as the bank charges an entire year’s worth of interest as an early withdrawal penalty. Compared to the industry, this is rather high on 5-year and longer CD accounts.

Marcus – Best rate guarantee

Investors looking for industry-leading rates need not look any further as Marcus delivers an impressive 1.90% APY on 5-year CDs with a low minimum deposit to get started.

5-Year APY: 1.65%
Customer satisfaction: N/A
Minimum deposit: $500
SimpleScore: 3.75/5

It’s hard not to be attracted to an APY rate of 1.90%, which is one of the highest available industrywide. Additionally, Marcus offers a 10-Day CD Rate Guarantee. This guarantee says that if CD rates go up during the first 10 days you open and fund your account, Marcus will up your rate. If you’re worried rates may go up in the near future, this guarantee protects you.

For such a high APY rate, it’s a welcomed sign to see a minimum deposit of only $500. Accounts with Marcus can be opened in minutes, and the bank’s U.S.-based contact support center is open seven days a week in case you need any additional assistance.

Barclay’s – Best online tools

Barclay’s has great rates on 5-year CDs as well as shorter-term CDs available to customers accompanied by some helpful online tools for investing.

5-Year APY: 1.40%
Customer satisfaction: N/A
Minimum deposit: $0
SimpleScore: 3.75/5

Barclay’s 5-year CD rates are on par with the highest offered in the industry. What’s more attractive is that the 1.85% APY is available not just on 5-year CDs, but all CD terms from 12 months out to 60 months. If you’re not sure the term length you want yet, Barclay’s may have the flexible options you’re looking for.

What’s additionally great is that Barclay’s has several great online tools to help you through the CD investing process. The bank offers CD calculators, CD laddering tools and an online savings assistant that helps you make a plan to reach your financial savings goals. Overall, Barclay’s is a well-rounded and attractive 5-year CD option.

Capital One – Best mobile app

Capital One’s 5-year CDs have a slightly lower APY rate than most of the industry, but come with a great customer satisfaction rating and an industry-leading mobile app for account management.

5-Year APY: 1.40%
Customer satisfaction: 4/5 J.D. Power Overall Satisfaction Rating
Minimum deposit: $0
SimpleScore: 4/5

While APYs are a little lower than some of the other options available, there are still some things to be excited about with Capital One’s 5-year CDs. If you’re looking for a user-friendly experience, you’ll be interested in checking out Capital One’s mobile app.

The app received 4.7 out of 5 stars in the App Store based on over 240,000 reviews. Customers can create an account and invest in a CD right from their mobile phone, and check their credit scores, without ever needing to talk to anyone or get on a computer. Add this to no account minimums and a great J.D. Power overall satisfaction rating, and you’ve got a viable candidate for your CD investment needs.

What is a 5-year CD?

Certificates of deposit (CDs) are a type of investment offered by banks and credit unions. CDs reward investors with regular interest payments in return for uninterrupted access to an agreed-upon amount of cash. CDs come with varying term lengths anywhere from three months out to as long as 20 years.

Here’s an example of how CDs work. A 5-year CD for $500 would require an investor to put $500 into a separate account and leave it untouched for the full 5-year period. This means no deposits into or withdrawals from the account — although some banks will allow for additional deposits. In return for doing this, the bank will add interest payments to the account regularly throughout the 5-year term.

How should I choose the right 5-year CD?

The name of the game with finding the best CD investment option is rate shopping. Before you look at rates, though, you need to check a few must-have items off the list. The CD must be offered through a bank or credit union that you trust, and the funds must be federally insured through the FDIC or NCUA. Additionally, you must be able to meet the minimum required deposit for a particular CD to be a viable option.

Once you’ve found the banks and credit unions that fit those particular criteria, it’s time to find the best rate of return. If you think you might have a need to access your funds early, you should consider the CDs with the most favorable early withdrawal penalties. Ideally, you leave the money untouched, but in unexpected or emergency circumstances, you’ll want to know what the effects will be.

What are early withdrawal penalties?

The reason banks and credit unions reward you with interest on your CDs is that they will be using your funds for other bank activities like investments and loans. When you need your money early, it can cost the bank or credit union money with its other activities.

Because of this, financial institutions will charge penalties for accessing your funds early. These penalties are generally based on how long the CD term is, the size of the CD and how long you left the money untouched.

The bottom line

Finding the best 5-year CD rates ensures you’ll get the highest return possible on your invested funds. By choosing only to work with banks and credit unions that offer federally insured accounts, you know your funds are protected. Thankfully, many of the top banks and credit unions in the country offer highly competitive rates that check all of the other necessary boxes.

Methodology

The Simple Score was created with you in mind, to simplify the process of making complex investment decisions, for your peace-of-mind – and wallet. We rated top 5-year CD providers based on different categories: minimum deposit, APY, customer satisfaction and customer support.

Customer satisfaction ratings were scored based on J.D. Power’s U.S. Retail Banking Survey (2019). We also lean on our editorial expertise and industry knowledge to help choose and rank each provider. Our ratings are meant to be a directional and helpful tool to help you in the process of choosing a 5-year CD. Be sure to continue your research and shop around for the CD provider that fits your specific needs.

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