If you're looking for higher interest rates than your basic savings account can offer, then consider investing in a certificate of deposit (CD). Banks and credit unions can offer higher yields in exchange for keeping your money on hold for a period of time - penalties may apply for early withdrawal. Many can also be opened as IRA CDs to help meet retirement goals. However, not all CDs are created equal. Compare NerdWallet's top results to the national average CD rates to see just how much more you could be earning. Use the filters below to find the best CD rate for you!
The best CD rates will out-earn your typical checking or savings account by far. So when it comes to earning higher yields on your cash, certificates of deposit are a useful tool.
CDs are commonly offered by banks and credit unions as a way for savers to store extra cash and earn interest on their deposits. However, there are a few critical features that make CDs very different from a regular savings account.
CD terms - CDs have specific terms which specify that you are required to keep your money tied up in the account for a certain length of time. Common terms range from 3 months to 5 years, but you can find CDs available for all sorts of time frames. Generally, the higher the CD term, the higher the higher your yield.
Early withdrawal penalties - You could be charged to access your money early. Early withdrawal penalties typically apply if you need to pull out your cash before the CD reaches maturity. This fee is usually calculated as a portion of your interest earnings, for example 3 months of interest. Fees vary though and could be much more severe, so we don't recommend CDs to anyone who might need immediate access to their money.
Fixed interest rates - CD interest rates are fixed, which means that the APY offered at the time you open the account will apply throughout the term period, no matter if other rates rise or fall. This feature is great news if rates decline while you hold the account; your money will be earning more than you could find elsewhere. However it's pretty bad news if other rates shoot up while you're stuck earning a low yield.
Tips to find higher CD rates
For the most part, the trick to finding the highest CD rates is as simple as shopping around. NerdWallet's CD rates tool above can help you find a CD anywhere from online banks to a local credit union. However, there are a few things to look out for that could help boost your yield even further.
Bonus CD rates and promos - banks sometimes offer promotional yields for certain CD terms to attract new customers or nudge deposits toward longer or shorter-term accounts. Keep an eye out for these limited time deals at your local bank or credit union. They may be worth your while.
Special types of CDs - Some CDs have unique features such as the option to "bump-up" your interest rate once to twice over the term, or to withdraw penalty-free. CDs like these offer the advantage of entirely or partially negating the downsides associated with CDs, but make sure the rates are still competitive before you choose to open one.
CD strategies - Strategies like CD ladders or barbells are slightly more complex approaches, but they allow you to take partial advantage of the higher yields offered by long-term CDs while also maintaining some liquidity through short-term CDs.
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