What Is a Bank CD?

A certificate of deposit account is a deposit product available at banks, alongside savings, 澳洲幸运5官方开奖结果体彩网:money market, and checking accounts. But instead of depositing money that you can withdraw from or add to whenever you want, you can generally only make a single initial deposit to a CD. When you open one, you're making an agreement to keep your funds in the account without withdrawals for an established period of time, known as the CD term. In return, you're able to lock in 💃a fixed interest rateಌ for the entire duration of the term.

Compare the Best Bank CDs

Ranked below are the top 15 or more APYs on nationally available CDs from banks with minimum deposits of no more than $25,000. In the case of ties, we rank them first by the shortest available term, then by the lowest minimum deposit, and finally by the smallest early withdrawal penalty.❀

Pros and Cons of Bank CDs

Pros Explained

• Often pay higher APYs than liquid accounts: In exchange for you keeping your money on deposit for a specified period of time, banks generally pay higher 澳洲幸运5官方开奖结果体彩网:annual percentage yields (APYs) on CDs than on savings and money market accounts.
• Offer a fixed, guaranteed rate: The 澳洲幸运5官方开奖结果体彩网:annual percentage yield (APY) that you sign up for when opening the CD will be fixed for the full term. The bank cannot alter it.
• Are virtually risk-free: By opening a CD at an FDIC-insured bank, you are federally protected on up to $250,000 of your deposits, in the unlikely case that the bank fails.
• Can help deter spending: Funds committed to a CD cannot be withdrawn early without a penalty, making CDs a good vehicle for keeping, rather than spending, your savings.
  

Cons Explained

• Incur a penalty for early withdrawal: If you need to withdraw your money before the CD's 澳洲幸运5官方开奖结果体彩网:maturity date, the bank will impose an early withdrawal penalty that will reduce your earnings.
• If rates rise, you may regret being locked into your APY: If the interest rate environment improves after you buy a CD, you may wish you had committed later, when you could have earned a higher rate.
• Typically return less than other investments: The earnings on CDs are modest compared to what you can potentially earn by investing in the stock market, though stock investments are much riskier and not guaranteed to provide a return during your time horizon.
• Only allow one deposit: Unlike a savings account where you can continue to make deposits whenever you like, CDs allow just a single investment at the time when you open the account.

Alternatives to Bank CDs

High-Yield Savings and Money Market Accounts

Stashing your cash in a savings or money market account offers much more flexibility than a CD, letting you add and withdraw funds as you like. The trade-off is that interest rates on 澳洲幸运5官方开奖结果体彩网:liquid accounts can change at any time. So if rates are declining, the annual percentage yield on your 澳洲幸运5官方开奖结果体彩网:high-yield savings or 澳洲幸运5官方开奖结果体彩网:money market account will almost certainly go down, while any rate on a CD will hold.

Also, liquid accounts don't always offer as high of a return as CDs. So committing your funds to a CD can u🌠sually boost your earnings by a substantial margin.

Treasuries

Another possible investment for your cash is a bond offered by the U.S. Treasury. 澳洲幸运5官方开奖结果体彩网:Treasury notes are 🍬very similar to CDs in that the rate is typically predictable if you hold the bond until maturity. They are also backed by the federal government, so like CDs, they are exceptionally safe.

U.S. Treasury I bonds are another option. But their fixed rate is only known for six months at a time, with the rate being adjusted twice a year based on the current inflation rate (hence the name I bonds). Like CDs, I bonds have an early withdrawal penalty, but it's a relatively mild three months' worth of interest. But unlike a CD, you cannot for any reason cash in an I bond during its first 12 months.

Bonds & Bond Funds

Diversified 澳洲幸运5官方开奖结果体彩网:bond funds are another idea, as they can potentially return quite a bit more than a fixed-rate CD. Of course, there's always a risk that bond returns could be negative from one year to the next, so the longer your time horizon, the less risky an investment in bonds would be. If you're considering a relatively short CD term, like 1 to 2 years, or even less, then bonds represent a much riskier option than a CD, with no guarantee of delivering a return.

Equities

If your time horizon for investing is several years long, you could instead consider investing in equities, or stocks. The upside is that you could potentially earn quite a bit more in the 澳洲幸运5官方开奖结果体彩网:stock market than with a fixed CD rate. But the significant downside is that you can always lose money on equities, including scenarios where you lose most of your investment. So while CDs won't return as much as stocks that are doing well, on the flip side, CDs are guaranteed to grow with no risk of you losing your initial principal.

How To Open a Bank CD

澳洲幸运5官方开奖结果体彩网:Opening a certificate of deposit generally follows the same steps as opening any new bank account, and the number of steps involved depends on w🍨hether you are a new customer of the b🐓ank or an established one.

You’ll first need to fill out an application. You can usually do this online, but you can do it in-branch if you’re opening the certificate at a bank that operates in your community. Some banks also allow you to send paper applications via U.S. mail. If you’re not alre෴ady a customer of the bank, you’ll need to prove your identity with photo identification. And you’ll be presented with variouಌs written account terms and disclosures that you’ll need to sign off on.

Just like with a savings or checking account, you’ll be offered various options for making your initial deposit, whether that’s at the time of account opening or slightly later. Most banks of💎fer transfers from another account at that bank, an external transfer from another bank, or a check that’s mailed in or submitted via mobile deposit. Just remember that you can only make one deposit to the CD, so choose your amount carefully.

As soon as you’ve completed the account opening process, it’s smart to put a reminder on your calendar a month or two before the CD will mature. That way you can think ahead about what you want to do with the money when it becomes available, and can also watch your mail for a notice from your bank about how to convey your CD maturity instructions.

Who Should Get a Bank CD?

A CD is a useful option for people who are looking to grow their money but may need to use the funds within the next few years. For example, if you plan on buying a home within three to five years, a CD could help you earn more interest than you would in a basic savings account without the risks of investing in the 澳洲幸运5官方开奖结果体彩网:stock market. 

For longer-term goals, such as retirement if you’re currently in your thirties, a CD may not be a wise choice. Your money may perform better if you invest in the stock market. Historically, the stock market has delivered annual returns of about 10% (or 6% to 7% when considering the effects of inflation).

CDs are not a good option for money you may need to access in the short-term. For example, stashing your emergency fund in a CD is probably a poor decision. If an unexpected expense pops up and you need to withdraw money before your CD matures, you'll have to pay an early withdrawal penalty. A 澳洲幸运5官方开奖结果体彩网:high-yield savings account might work better in such situations.

How to Choose the Best Bank CD For You

Many banks offer CDs. When shopping for o꧋ne, consider the following: 

• APY: APYs can vary significantly between banks and between CDs with different terms. Nationally, the average rate is under 2% for all terms, but many banks offer much higher rates.
• CD terms: CD terms generally range from 3 months to 10 years. A longer term allows you to lock in the APY for years to come, even if interest rates drop. 
• Penalties: If you need to withdraw money before your CD's maturity date, you typically have to pay a penalty. In most cases, the penalty consists of forfeiting some or all of the interest your CD accrued. The penalty varies by bank and CD term, so read the fine print before committing to a CD. For example, a CD with a term of 3 months may have an early withdrawal penalty of 30 days' interest, and a CD with a term of 24 months may have a penalty of 365 days’ interest.
• Minimum deposit: Minimum deposit requirements vary by bank. Depending on the bank you choose, you may need anywhere from $5 to $5,000 to open a CD. 
• Call features: Some bank CDs have a 澳洲幸运5官方开奖结果体彩网:call feature, meaning they reserve the right to end or "call" the CD early if interest rates drop. However, callable CDs don't give consumers the same early-termination rights.

Types of Bank CDs

CDsꦬ come in a wide variety of flavors. In addition to traditional CD♍s, you can find: 

• Add-on CDs: Typically, CDs are limited to one upfront deposit; you cannot deposit additional funds. However, add-on CDs allow you to make additional deposits to the CD during the term. 
• Jumbo CDs: Some banks offer 澳洲幸运5官方开奖结果体彩网:jumbo CDs for those with large sums to deposit, such as $100,000 or more. These CDs may offer higher APYs than other CDs. 
• No-penalty CDs: With a 澳洲幸运5官方开奖结果体彩网:no-penalty CD, you can withdraw cash from your CD without worrying about penalties. However, these CDs tend to pay lower APYs. 
• Variable-rate CDs: Most CDs have fixed rates that stay the same for the entirety of the term. But some banks offer variable-rate CDs, whose rates fluctuate along with economic conditions. That feature can benefit you if rates go up, but it can negatively affect you if rates decrease.
• Brokered CDs: In most cases, you open a CD directly through a bank. However, you also have the option of opening a 澳洲幸运5官方开奖结果体彩网:brokered CD with an investment firm or financial services company. These companies negotiate with CD providers to offer higher rates in exchange for a certain amount in deposits. Brokered CDs can have higher rates than other CDs, but there are more risks associated with them.
  

Rate Collection Methodology Disclosure

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide, and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, banks must be federally insured by the FDIC, the CD's minimum initial deposit must not exceed $25,000, and any specified maximum deposit cannot be under $5,000.The banks must also be available in at least 40 states. For more about how we choose the best rates, 澳洲幸运5官方开奖结果体彩网:read our full methodology.

Your Guide to CDs

• 澳洲幸运5官方开奖结果体彩网:What Is a Certificate of Depos✨it (CD)?
• 澳洲幸运5官方开奖结果体彩网:What Is a Brokered CD?
• 澳洲幸运5官方开奖结果体彩网:What Is a CD Ladder?
• 澳洲幸运5官方开奖结果体彩网:Pros and Cons of CDs
• 澳洲幸运5官方开奖结果体彩网:How to Invest With CDs
• 澳洲幸运5官方开奖结果体彩网:How to Open a CD
• 澳洲幸运5官方开奖结果体彩网:How to Close a CD
• 澳洲幸运5官方开奖结果体彩网:CDs vs. Annuities
• 澳洲幸运5官方开奖结果体彩网:CDs vs. Stocks
• 澳洲幸运5官方开奖结果体彩网:CDs vs. Mutual Funds
• 澳洲幸运5官方开奖结果体彩网:CDs for ETFs
• 澳洲幸运5官方开奖结果体彩网:CDs vs. Savings Accounts
• 澳洲幸运5官方开奖结果体彩网:Short-Term vs. Long-Term CDs
• 澳洲幸运5官方开奖结果体彩网:CD Rates News
• 澳洲幸运5官方开奖结果体彩网:Best CD Rates
• 澳洲幸运5官方开奖结果体彩网:Best 3-Month CD Rates
• 澳洲幸运5官方开奖结果体彩网:Best 6-Month CD Rates
• 澳洲幸运5官方开奖结果体彩网:Best 1-Year CD Rates
• 澳洲幸运5官方开奖结果体彩网:Best 18-Month CD Rates
• 澳洲幸运5官方开奖结果体彩网:Best 2-Year CD Rates
• 澳洲幸运5官方开奖结果体彩网:Best 3-Year CD Rates
• 澳洲幸运5官方开奖结果体彩网:Best 4-Year CD Rates
• 澳洲幸运5官方开奖结果体彩网:Best 5-Year CD Rates
• 澳洲幸运5官方开奖结果体彩网:Best Jumbo CD Rates
  

*Disclosure: Annuity rates are subject to change at any time and the rate mentioned may no longer be current. Please visit  for current rates, full product disclosures, and disclaimer. Withdrawals above the 10 percent free withdrawal amount subject to a withdrawal charge and market value adjustment. FastBreak™ is issued by Gainbridge Life Insurance Company in Zionsville, Indiana. FastBreak™ is not a tax-deferred annuity, instead, it is taxed annually.