CD rates change constantly, so the "best" rate depends on when you're looking and how long you want to lock your money away
There is no single bank that always has the highest CD rates. The bank offering the best one-year CD this week might not be competitive on five-year CDs next month. Online banks tend to offer higher rates than brick-and-mortar banks because they have lower overhead costs, but even among online banks the rates shift weekly based on what the Federal Reserve does and what each bank needs.
The practical approach is to check rates at several banks on the same day, for the exact term you want, then compare the numbers side by side. The difference between the highest and lowest rate on a one-year CD can be 0.5% or more, which adds up to real money if you're depositing $10,000 or $25,000.
Key Takeaways
- Online banks almost always offer higher CD rates than traditional banks because they spend less on branches and staff.
- The best rate for your situation depends on the CD term you want—one year, three years, five years—because rates vary by length.
- You should compare rates from at least three to five banks on the same day to see which one is actually highest for your term.
- FDIC insurance covers CDs up to $250,000 per depositor per bank, so a higher rate at a smaller bank is safe as long as it's FDIC-insured.
- Some banks offer promotional rates for new customers or for larger deposits, so asking about those can sometimes beat the standard posted rate.
Why online banks usually have the highest rates
Online banks have fewer physical locations, fewer employees, and lower rent and utilities. That cost savings gets passed to customers as higher interest rates. Banks like Marcus, Ally, and American Express Personal Savings have no branches at all—you do everything by phone, website, or app. Because they're not paying for a building on Main Street, they can afford to pay you more on your CD.
Traditional banks with physical branches—Chase, Bank of America, Wells Fargo—typically offer lower CD rates. You're paying for the convenience of walking in and talking to a person, and that convenience costs money. If you don't need that in-person service, an online bank will almost always give you a better rate.
How to find the actual highest rate for your term
Start by visiting a rate-comparison site that updates daily, such as Bankrate, DepositAccounts, or the FDIC's own National Information Center. These sites let you filter by CD term—one year, 18 months, three years, five years—and show you the top rates available that day. Write down the top five rates and the banks offering them.
Then visit each bank's website directly to confirm the rate is still current. Rates posted on comparison sites can lag by a few hours, and banks sometimes change rates between morning and afternoon. Once you've confirmed the current rate on the bank's own site, check whether there are any restrictions: some banks require a minimum deposit of $25,000 or $50,000 to get the advertised rate, while others have no minimum. Some also offer a slightly higher rate if you set up automatic transfers from a checking account.
Make note of the early withdrawal penalty too. If you need to take your money out before the CD matures, most banks will charge you a penalty measured in months of interest. A bank offering 5.00% with a 150-day penalty is different from one offering 4.95% with a 90-day penalty, especially if you think you might need the money sooner than you expect.
Banks that frequently appear at the top of rate lists
Online banks that regularly offer competitive rates include Marcus (owned by Goldman Sachs), Ally Bank, American Express Personal Savings, Discover Bank, and Synchrony Bank. These are all FDIC-insured, so your money is protected up to $250,000. None of them are new or risky—they're subsidiaries of large financial companies or have been operating online for over a decade.
Credit unions sometimes offer competitive CD rates too, especially if you're a member. You can search for credit unions in your area through the CO-OP Network or Alliant Credit Union, which allows membership from most states. Credit union CDs are insured by the NCUA (National Credit Union Administration) up to $250,000, which is the same protection as FDIC insurance.
If you want to work with a traditional bank you already use, check their website for current rates. You might find they're not the highest available, but the convenience of having everything in one place might be worth a slightly lower rate to you. That's a personal choice, not a wrong one.
What to watch for when comparing rates
The interest rate itself is only part of the picture. A CD that compounds interest daily will earn slightly more than one that compounds monthly, all else equal. The difference is small on shorter terms but adds up on five-year CDs. Most banks will tell you the APY (annual percentage yield), which already accounts for compounding, so comparing APYs is the fairest way to compare.
Also check whether the bank allows you to add money to the CD after you open it, or whether you have to deposit the full amount upfront. Some banks let you make additional deposits during the CD term at the same rate; others lock you in with whatever you deposit on day one. If you think you might have extra money to invest partway through the year, this matters.
Finally, confirm the bank is FDIC-insured or NCUA-insured. A bank offering 6.00% when everyone else is at 5.00% might be real, or it might be a sign the bank is in trouble and offering high rates to attract deposits. Check the FDIC's BankFind tool or the NCUA's Credit Union Locator to verify the bank is insured.
Promotional rates and new-customer offers
Some banks offer higher rates for a limited time to attract new customers, or they offer a bonus if you deposit above a certain amount. These are real money, not a trick. If a bank is offering 5.50% for new customers and the standard rate is 5.00%, you get the 5.50% for the full term of the CD.
Read the fine print to see whether you need to be a new customer to the bank entirely, or just new to CDs at that bank. Some banks also require you to have a checking account with them to get the promotional rate. These requirements are usually worth meeting if the rate difference is significant, but factor in the time it takes to open a checking account and move money around.
When to lock in a rate versus waiting
You cannot predict whether rates will go up or down, and financial experts disagree about what will happen next. What you can do is compare what you'd earn at today's rates versus what you'd earn if rates rose or fell. If a five-year CD is paying 4.50% and a one-year CD is paying 4.75%, you're giving up 0.25% per year to lock in for five years. That's a real trade-off to think about.
One strategy some people use is a "CD ladder"—opening multiple CDs with different maturity dates so that some money comes due each year. This way you're not betting everything on rates going up or down; you're spreading your bets. If you have $25,000, you might open five $5,000 CDs maturing in one, two, three, four, and five years. Each year, one matures and you can decide whether to renew it or move the money elsewhere.
Frequently Asked Questions
Is my money safe in an online bank CD?
Yes, as long as the bank is FDIC-insured. Online banks like Marcus, Ally, and Discover are all FDIC-insured, which means your money is protected up to $250,000 even if the bank fails. The FDIC insurance is the same whether the bank has branches or not. You can verify a bank's FDIC status on the FDIC's BankFind website.
Can I withdraw money from a CD early?
Yes, but you'll pay an early withdrawal penalty. The penalty is usually measured in months of interest—a 150-day penalty means you lose 150 days' worth of the interest you would have earned. On a $10,000 CD at 5.00% with a 150-day penalty, that's roughly $200. Check the penalty before you open the CD if you think you might need the money sooner.
What's the difference between a CD and a savings account?
A CD locks your money in for a set time (the term) in exchange for a higher interest rate. A savings account lets you withdraw money anytime, but pays a lower rate. If you know you won't need the money for a year or more, a CD pays more. If you might need it sooner, a savings account is more flexible.
Do I need a minimum deposit to open a CD?
Most banks require a minimum deposit, but it varies. Some online banks have no minimum at all, while others require $500, $1,000, or $25,000 depending on the CD term. Check the bank's website for the specific minimum before you open an account.
Should I open multiple CDs at different banks?
You can, and many people do to spread their money across multiple FDIC-insured banks. Each bank insures up to $250,000 per depositor, so if you have $500,000 to invest, opening CDs at two different banks keeps all your money insured. This also lets you compare rates and take advantage of the best offer at each bank.