CD rates change daily, so the "best" rate depends on when you're looking and what term length you want
There is no single bank that always has the highest CD rates. Banks adjust their rates constantly—sometimes daily—based on what the Federal Reserve does and what other banks are offering. A bank offering the top rate for a one-year CD might not offer the top rate for a five-year CD. The bank with the best rate today may not have it tomorrow.
What matters is knowing where to look and understanding what you're comparing. Online banks almost always offer higher CD rates than brick-and-mortar banks because they have lower overhead costs. Credit unions sometimes offer competitive rates too, though you have to be a member to open an account. The highest rates right now are typically found at online banks and credit unions, but you need to check the specific term length you want.
The practical approach is to check a rate comparison site (like Bankrate, DepositAccounts, or your bank's own website) for the term you're interested in, then verify the rate directly with the bank before you deposit money. Rates can shift between the time you see them listed and the time you apply.
Key Takeaways
- Online banks generally offer higher CD rates than traditional banks because they spend less on physical branches and staff.
- The highest rate available changes daily and varies by CD term length, so comparing rates across multiple banks is necessary.
- Credit unions may offer competitive CD rates, but you must be a member to open an account with them.
- Always verify the current rate directly with the bank's website before depositing, since rates listed on comparison sites can lag behind actual rates.
- A slightly lower rate at a bank you already use may be worth it if it saves you the hassle of opening a new account elsewhere.
How to find the current highest rates
Start by visiting a rate comparison website. Bankrate, DepositAccounts, and NerdWallet all update their CD rate listings multiple times per day. Filter by the term length you want—three months, six months, one year, three years, five years—and the list will sort by rate from highest to lowest. Write down the top three to five banks for your term.
Then go directly to each bank's website and confirm the rate is still current. Some banks display their rates prominently on the homepage; others require you to click into the CD product page. The rate you see on the bank's own site is the one that matters, because that's what you'll actually get when you open the account.
Check whether the bank requires a minimum deposit. Most online banks require $500 to $2,500 to open a CD, though some have no minimum. If you're depositing a large amount, also confirm that the bank is FDIC-insured and that your deposit will be fully covered. The FDIC insures up to $250,000 per depositor per bank, so if you're depositing more than that, you may need to split it across multiple banks.
Why online banks usually win on rates
Online banks can offer higher CD rates because they don't pay for physical locations, tellers, or the staff to run branches. That savings gets passed to customers in the form of higher interest rates. A bank like Marcus, Ally, or American Express Personal Savings has no branches at all—everything happens online or by phone—so their cost per customer is much lower than a bank with hundreds of locations.
Traditional banks with physical branches still offer CDs, but their rates are typically lower because they're covering the cost of maintaining those locations. If you have a checking account at a local bank and want to keep everything in one place, you may accept a lower CD rate for the convenience. That's a reasonable choice, but you should know you're paying for it.
Credit unions can sometimes compete with online banks on rates because they're member-owned and don't have shareholders demanding profits. However, you can only open a CD at a credit union if you meet their membership requirements, which vary. Some credit unions are open to anyone in a certain geographic area; others require you to work for a specific employer or belong to a specific organization.
What to compare beyond just the rate
The interest rate is the main thing, but a few other details matter. Check the annual percentage yield (APY), which is the rate you'll actually earn including compounding. Banks must display this clearly, and it's always equal to or slightly higher than the stated interest rate.
Look at the term length options available. If you want a two-year CD, you need a bank that offers that term. Some banks only offer three-month, one-year, three-year, and five-year terms, so a two-year CD isn't an option.
Understand the early withdrawal penalty. If you need the money before the CD matures, you'll lose some of the interest you earned. The penalty varies widely—some banks charge three months of interest, others charge six months or more. A few banks offer no-penalty CDs with lower rates, which can be useful if you're not sure you can leave the money alone.
Check whether the bank allows automatic renewal. Most CDs automatically renew into a new CD at the current rate when they mature. Some banks let you turn this off so the money goes into a regular savings account instead. Know what will happen to your money when the CD matures so you're not surprised.
The difference between promotional and standard rates
Some banks advertise a very high rate that only applies to new customers or for a limited time. These are promotional rates, and they're real—you'll actually earn that rate—but they're temporary. After the promotional period ends, the rate drops to the bank's standard rate, which is usually lower.
If a bank is offering an unusually high rate compared to competitors, check whether it's a promotional offer. Read the fine print to see how long the rate lasts and what the standard rate will be after that. Promotional rates can still be worth it if the higher earnings during the promotional period outweigh the lower rate later, but you should understand what you're getting into.
Standard rates are the ones banks offer to all customers without any special conditions. These are the rates that change daily based on market conditions. A bank's standard rate today might be higher or lower than its standard rate next week.
When it makes sense to choose a lower rate
The highest rate isn't always the best choice for you. If you already have a checking account at a bank and that bank offers a competitive (though not the absolute highest) CD rate, opening the CD there might be worth it. You'll have everything in one place, you can manage it all online or at a branch, and the difference in earnings might be small enough that the convenience is worth it.
If you're opening a CD for a short term—three or six months—the difference between the highest rate and a slightly lower rate might only be a few dollars. In that case, choosing a bank you already know and trust could be the smarter move.
Also consider how much money you're depositing. If you're putting in $1,000, the difference between a 4.50% rate and a 4.75% rate is about $2.50 per year. If you're putting in $100,000, that same difference is $250 per year. The higher the deposit, the more the rate difference matters.
How to lock in a rate before it changes
Once you've found the rate you want, you can open the CD online immediately. Most online banks let you fund the CD with a transfer from another bank account, which usually takes one to three business days. The rate you see when you open the account is the rate you'll earn for the entire CD term, even if rates drop later.
If rates are rising and you're worried they'll go up further, opening a CD now locks in your current rate. If rates are falling and you think they'll drop more, you might wait. But in practice, trying to time the market is difficult. If you need to put money into a CD and you've found a reasonable rate, opening the account is usually the right move rather than waiting for a rate that might never come.
Some banks offer rate-matching guarantees, meaning they'll match a competitor's rate if you find a higher one within a certain window after opening. Check whether the bank you're considering offers this, though it's not common.
Frequently Asked Questions
Can I move money between CDs at the same bank if rates go up?
Not without a penalty. Once your money is locked into a CD, you can't move it to a higher-rate CD at the same bank without paying an early withdrawal penalty. You'd have to wait for the CD to mature, then open a new one at the new rate. Some banks offer no-penalty CDs specifically to avoid this problem, though the rates are lower.
What if I find a higher rate after I've already opened a CD?
You can't change the rate on an existing CD. You could withdraw the money early, pay the penalty, and open a new CD elsewhere at the higher rate—but the penalty usually makes this not worth it. It's better to just let the current CD mature and open a new one at the higher rate when it does.
Is it safe to open a CD at a bank I've never heard of?
As long as the bank is FDIC-insured, your deposit is protected up to $250,000. Check the bank's FDIC insurance status on the FDIC's website before you deposit. Many smaller online banks are FDIC-insured and perfectly safe, even if they're not household names.
Do I have to open a new bank account to get a CD?
Not necessarily. If you already have a checking or savings account at a bank, you can usually open a CD there without opening a new account. You just add the CD as another product under your existing customer profile. However, you may need to fund it with a transfer from another bank if you don't have enough in your existing account.
What happens to my CD when it matures?
Most banks automatically renew your CD into a new CD at the current rate unless you tell them not to. If you don't want it to renew, contact the bank before the maturity date and ask them to move the money to a savings account instead. Check your CD agreement to see how much notice the bank requires.