Certificates of deposit lock your money for a set term in exchange for guaranteed returns—typically higher than savings accounts. This guide compares the best CD rates across different terms and features.

Best CD Rates by Term

Short-Term CDs (3-6 Months)

Best for money needed soon:

  • Lower rates than longer terms
  • Quick access to funds at maturity
  • Good for specific near-term goals

Medium-Term CDs (1-2 Years)

Balance of rate and accessibility:

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  • Often the rate "sweet spot"
  • Reasonable commitment period
  • Popular for CD laddering

Long-Term CDs (3-5 Years)

Maximum rates for committed savers:

  • Highest rates typically
  • Lock in rates before potential decreases
  • Significant early withdrawal penalties

Top CD Providers

Ally Bank CDs

Ally offers flexible options:

  • High Yield CDs: 3-month to 5-year terms
  • No Penalty CD: Withdraw anytime after 6 days
  • Raise Your Rate CD: Increase rate if rates rise
  • No minimum deposit

Marcus by Goldman Sachs CDs

Marcus provides:

  • Competitive rates across terms
  • No-Penalty CD options
  • $500 minimum deposit
  • 10-day rate guarantee

Capital One CDs

Capital One 360 CDs offer:

  • No minimum deposit
  • Terms from 6 months to 5 years
  • 10-day grace period at maturity

Discover CDs

Discover stands out with:

  • Terms up to 10 years (unusual)
  • $2,500 minimum for best rates
  • Rate guarantee at opening

No-Penalty CDs Explained

No-penalty CDs let you withdraw without fees after an initial period (typically 6-7 days). Trade-offs:

  • Pros: Flexibility, higher rate than savings, no withdrawal penalty
  • Cons: Slightly lower rates than regular CDs

Consider no-penalty CDs when you want CD rates but aren't certain about the timeline.

CD Laddering Strategy

CD laddering spreads deposits across multiple maturity dates:

  1. Divide savings into equal portions (e.g., 5 parts)
  2. Open CDs with staggered maturities (1, 2, 3, 4, 5 years)
  3. As each CD matures, renew for the longest term
  4. Eventually, you have a CD maturing annually with long-term rates

Example with $10,000:

  • $2,000 in 1-year CD
  • $2,000 in 2-year CD
  • $2,000 in 3-year CD
  • $2,000 in 4-year CD
  • $2,000 in 5-year CD

After year one, renew the maturing CD for 5 years. Repeat annually.

Early Withdrawal Penalties

Withdrawing before maturity incurs penalties, typically:

  • Short-term CDs: 60-90 days interest
  • Medium-term CDs: 90-150 days interest
  • Long-term CDs: 150-180 days interest

Penalties vary by bank—check before opening. Some penalties can exceed earned interest on recent CDs.

CDs vs. High-Yield Savings

When to choose CDs:

  • You won't need the money before maturity
  • CD rates are higher than savings
  • You want guaranteed returns locked in
  • You're worried rates will decrease

When to choose savings:

  • You might need funds for emergencies
  • Savings rates are competitive with CDs
  • You expect rates to increase
  • You want maximum flexibility

Tax Considerations

CD interest is taxable as ordinary income in the year it's earned—even if you don't withdraw it. Consider:

  • Tax impact on large CD holdings
  • IRA CDs for tax-advantaged growth
  • Municipal bond alternatives for high earners

Compare after-tax returns when evaluating CD value.