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You may associate CDs with dancing along to your favorite songs years ago, but in the financial world, CD stands for certificate of deposit. In this context, CDs are savings accounts with fixed interest rates and maturity dates. They provide a safe way to tuck away your savings for a set time and earn a modest return.
To help you find the best CD rates for March of 2020, we’ve researched offers nationwide and compared their terms, minimum deposit requirements and withdrawal penalties. An ideal CD will have a high-interest rate, a low minimum deposit and minimal early withdrawal penalty.
The 7 best CD rates for January of 2021
- America’s Credit Union: Best high-yield CD
- Quontic Bank: Best low-cost CD
- TAB Bank: Best for low withdrawal penalties
- State Department Federal Credit Union: Best low minimum deposits CD
- US Alliance Federal Credit Union: Best customer service
- Connexus Credit Union: Best large deposit CD
- Live Oak Bank: Best wealth-sharing CD
|Bank||1-Year CD Rate||Min. Deposit||Estimated Earnings*|
|America’s Credit Union||1.86%||$500||$11.90|
|State Department Federal Credit Union||2.22%||$500||$11.10|
|US Alliance Federal Credit Union||2.20%||$500||$11.00|
|Connexus Credit Union||2.01%||$5,000||$110.00|
|Live Oak Bank||2.15%||$2,500||$53.75|
*Estimated earnings based on minimum deposit and 1-year CD APY.
The 7 best CD rates for January of 2021
Americas’ Credit Union: Best high-yield CD
America’s Credit Union keeps your best interests in mind by paying more interest than the rest! This credit union’s 1-year CD comes with a 1.86% APY and requires a small minimum deposit of just $500.
If you withdraw your money early, the withdrawal penalty is only three months of interest which is better than most providers that charge between six and 12 months of interest. However, you can withdraw just your interest earnings before maturity without a penalty. Online banking is also available, which is helpful for tech-savvy savers.
Quontic Bank: Best low-cost CD
Quontic Bank realizes that the best things in life are free, so it doesn’t charge any fees to join the bank. As for the CDs, you’ll find one of the highest 1-year CD rates at 2.25% APY and a relatively low minimum deposit of $1,000.
Quontic’s early withdrawal penalty is pretty steep at 12 months of interest, so you need to be sure you can lock the money away and leave it alone. But the good news is, interest can be withdrawn before maturity without penalty. It also has online banking with digital statements so you can watch your savings grow from your sofa.
TAB Bank: Best for low withdrawal penalties
TAB Bank is the best CD for the saver that tends to spend as it has a low early withdrawal penalty of just three months’ interest. This bank’s 1-year CD comes with a 2.25% APY and requires a minimum deposit of $1,000, which would pay an estimated return of $22.50 for the year. Plus, paper and online statements are available but there is a $5 paper statement fee, so online is the way to go.
State Department Federal Credit Union: Best low minimum deposits CD
The State Department Federal Credit Union CD is best for those who are more conservative with their investments. It recognizes that going “all in” with your savings may be a bit uncomfortable for some, so it has a low minimum deposit requirement of $500. The credit union’s 1-year CD comes with a 2.20% APY, which would pay an estimated amount of $11 for the year with the $500 deposit. The early withdrawal penalty fee is six months of interest, but partial early withdrawals are allowed.
US Alliance Federal Credit Union: Best customer service
The US Alliance Federal Credit Union recognizes that we live in a busy world and that some people want to save on the go. It offers an easy-to-use mobile app and according to its website reviews, also offers great service over the phone. This credit union’s 1-year CD comes with a 2.25% APY and requires a minimum deposit of $1,000. If you need your money early, the early withdrawal fee is equal to six months of interest.
Connexus Credit Union: Best large deposit CD
The Connexus Credit Union wants you to save without strings attached so it allows you to have a CD without having to open a checking account. The credit union’s 1-year CD comes with a 2.01% APY and requires a minimum deposit of $5,000. If you need your money early, it’s not a total loss as the early withdrawal penalty is just 3 months of interest.
Live Oak Bank: Best wealth-sharing CD
Lastly, if you want to share your money with others, the Live Oak Bank allows beneficiaries to be added on to its CDs. Live Oak Bank’s 1-year CDs come with a 2.15% APY and require a minimum deposit of $2,500. Early withdrawals won’t be too painful as the penalty is only three months of interest.
What is a CD?
A CD or a certificate of deposit is a savings account that is federally insured. This means your money won’t vanish if a savings provider goes kaput because up to $250,000 of your funds are protected by the U.S. government. CDs typically offer higher rates than savings or money market accounts. They also pay a guaranteed rate of return as long as you don’t withdraw your money before the withdrawal date (also known as the maturity date).
CDs are a good option for those who are partial to giving into spending temptations, as they give you an incentive to leave your money in the account. Additionally, they can help you earn more than a savings or money market account can offer without exposing your money to more risk.
How should I choose the right CD account?
Choosing the right CD account will depend on how much you can save, how long you can save it, and whether you think you’ll need to access the funds before the withdrawal date.
Each CD account provider sets its own terms and rates, so they vary from one provider to the next. Often, CD providers offer a lineup of term lengths that can range from one month to 5 years. The longer the term, the higher the APY. CDs also have minimum and maximum limits for the amount you can to deposit into the account. Furthermore, they have different rules on early withdrawals. With some providers, you’ll lose your entire return if you need to withdraw your funds early, while with others it will just be a part of your earnings.
With so many differences, it’s important to find the right fit. If you don’t have much money to deposit and don’t want to lock it up for too long, you can start with a 3-month CD from a provider that only requires a $500 deposit. On the other hand, if you have thousands lying around that you don’t need now, you could opt for a 5-year CD with a $5,000 minimum deposit and a low early-withdrawal penalty.
Ultimately, the best strategy is to keep it simple: figure out how much you have and how long you can commit to leaving it, and then look for a provider that offers the best returns and lowest fees.
The bottom line
Overall, America’s Credit Union CD account is our favorite pick. It pays the highest interest for 1-year CDs, requires the smallest deposit amount, and has one of the lowest withdrawal penalty fees. However, the best CD account for you will depend on your unique situation and needs. The good news is, there is a solution for almost everyone.