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.

In this article

    The 6 best 5-year CDs of 2021

    • Ally Bank (1.10%) – Best customer satisfaction
    • TIAA Bank (1.35%) – Best for yield pledge promise
    • Synchrony (1.00%) – Best customer perks
    • Marcus (.60%) – Best rate guarantee
    • Barclay’s (0.85%) – Best online tools
    • Capital One (1.00%) – Best mobile app

    5-year CDs of 2020 at a glance

    Provider5-Year APYMin. DepositEarly Withdrawal Penalty
    Ally Bank1.10%$0150 days of interest
    TIAA Bank1.35%$5,000270 days of interest
    Synchrony1.00%$2,000365 days of interest
    Marcus.60%$500270 days of interest
    Barclay’s0.85%$0180 days of interest
    Capital One1.00%$0180 days of interest

    Rates accurate as of July 23, 2020.

    Best for customer satisfaction – Ally Bank

    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.

    1Y APY
    0.65%
    3Y APY
    0.75%
    Min. Deposit
    $0
    SimpleScore
    4.6 / 5.0
    close
    SimpleScore Ally Bank 4.6
    1Y APY 5
    3Y APY 4
    Customer Satisfaction 5
    Support 4
    Minimum Deposit 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.

    Best for yield pledge promise – TIAA Bank

    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.

    1Y APY
    0.40%
    3Y APY
    0.60%
    Min. Deposit
    $5,000
    SimpleScore
    3 / 5.0
    close
    SimpleScore TIAA Bank 3
    1Y APY 3
    3Y APY 4
    Customer Satisfaction N/A
    Support 4
    Minimum Deposit 1

    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.

    Best customer perks – Synchrony

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

    1Y APY
    0.60%
    3Y APY
    0.70%
    Min. Deposit
    $2,000
    SimpleScore
    4 / 5.0
    close
    SimpleScore Synchrony 4
    1Y APY 5
    3Y APY 4
    Customer Satisfaction N/A
    Support 5
    Minimum Deposit 2

    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. Additionally, the 1-year CDs through Synchrony return a .75% 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.

    Best rate guarantee – Marcus by Goldman Sachs

    Investors looking for industry-leading rates need not look any further as Marcus delivers an impressive .90% APY on 5-year CDs with a low minimum deposit to get started.

    1Y APY
    0.55%
    3Y APY
    0.55%
    Min. Deposit
    $500
    SimpleScore
    4 / 5.0
    close
    SimpleScore Marcus by Goldman Sachs 4
    1Y APY 5
    3Y APY 4
    Customer Satisfaction N/A
    Support 4
    Minimum Deposit 3

    It’s hard not to be attracted to an APY rate of .60%, 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.

    Best online tools – Barclay’s

    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.

    1Y APY
    0.30%
    3Y APY
    0.30%
    Min. Deposit
    $0
    SimpleScore
    3.3 / 5.0
    close
    SimpleScore Barclay’s 3.3
    1Y APY 2
    3Y APY 2
    Customer Satisfaction N/A
    Support 4
    Minimum Deposit 5

    Barclay’s 5-year CD rates are on par with the highest offered in the industry. What’s more attractive is that the 0.85% 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.

    Best mobile app – Capital One

    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.

    1Y APY
    0.20%
    3Y APY
    0.30%
    Min. Deposit
    $0
    SimpleScore
    3.6 / 5.0
    close
    SimpleScore Capital One 3.6
    1Y APY 2
    3Y APY 3
    Customer Satisfaction 3
    Support 5
    Minimum Deposit 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.

    Methodology

    SimpleScore

    The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.

    For every review, our editorial team:

    • Identifies five measurable aspects to compare across each brand
    • Determines the rating criteria for each aspect score
    • Averages the five aspect scores to produce a single SimpleScore

    Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best CDs of 2020.

    Why do some brands have different SimpleScores on different pages?

    To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.

    However, it’s possible for brands to have multiple SimpleScores. For instance, if we compare CDs offered by Discover, it scores a 3.75 out of 5 SimpleScore according to our metrics and rating system. But if we review Discover’s savings account according to our SimpleScore, it scores a 4.5 out of 5. We adjust our rating system to account for different products and industry standards.

    Questions about our methodology?

    Email Hayley Armstrong at hayley@thesimpledollar.com.

    12-month APY

    We awarded brands that offered higher APYs on 12-month certificates of deposit — the higher the APY, the higher the score.

    3-year APY

    We awarded brands that offered higher APYs on 3-year CDs — the higher the APY, the higher the score.

    Customer satisfaction

    We leveraged J.D. Power’s 2020 U.S. Retail Banking Satisfaction Study and 2020 U.S. Direct Banking Satisfaction Study to rate each brand for customer satisfaction. The higher the satisfaction score, the higher the SimpleScore.

    Minimum deposit

    Some providers require a minimum deposit to open a CD. We rated and rewarded brands that required low minimum deposits with higher scores.

    Customer support

    Providers with multiple channels of customer support were rewarded with higher scores in this aspect. We considered social media, mobile app support, in-branch support, phone and email as channels of support for customers.

    Jason Lee

    Contributing Writer

    Jason Lee is a U.S.-based freelance writer with a passion for writing about dating, banking, tech, personal growth, food and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skill sets with the rest of the world. Follow Jason on Facebook here