CD rates vary by bank and change weekly, so the "best" rate depends on the term length you want and whether you bank online or in person
No single bank always offers the highest CD rates. The bank paying 5.00% this week might drop to 4.75% next week, while a competitor moves up. Online banks tend to post higher rates than brick-and-mortar branches because they have lower overhead costs. Credit unions sometimes beat both, especially for members. The rate you actually get also depends on how long you lock your money away—a one-year CD will pay less than a five-year CD at the same bank.
The practical approach is to check rates at three to five places that match how you want to bank, then compare the specific term you need. This takes 15 minutes and saves you real money over the CD's life.
Key Takeaways
- Online banks typically offer higher CD rates than traditional banks because they spend less on physical branches and staff.
- Credit unions may offer competitive or better rates than banks, especially if you are already a member or can join through your employer or community.
- The rate you see today will likely change within days, so compare rates on the day you plan to open the CD, not days before.
- Longer CD terms (three to five years) pay more than shorter ones (three to six months), but lock your money away for that full period.
- The FDIC insures CDs up to $250,000 per bank per depositor, so splitting large amounts across multiple banks protects your full balance.
Online banks usually pay more than traditional banks
Online banks—banks with no physical branches or very few—consistently post higher CD rates than banks with hundreds of locations. Examples include Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank. These banks save money by not maintaining branch buildings, hiring tellers, or running call centers, and they pass some of that savings to depositors through higher rates.
The trade-off is that you manage everything by phone, website, or mobile app. You cannot walk into a branch to deposit cash or speak to someone in person. For most people opening a CD, this does not matter—you fund it once with a transfer from another bank account and then leave it alone until it matures. If you need to access your money before the term ends, you will pay an early withdrawal penalty anyway, so the lack of a branch does not change your options.
Online banks are FDIC-insured the same way traditional banks are, so your money is protected up to $250,000 per bank.
Credit unions can match or beat bank rates
Credit unions are member-owned financial institutions that sometimes offer CD rates as high as or higher than online banks. They operate on a non-profit model, meaning they return earnings to members rather than shareholders. This structure can allow them to pay more on savings products.
The catch is membership. You can only open an account at a credit union if you meet their membership requirements, which vary widely. Some credit unions are open to anyone in a geographic area. Others require you to work for a specific employer, belong to a certain organization, or live in a particular county. A few allow you to join by making a small donation to a partner charity.
Start by checking whether you already may have access to for membership through your employer, school, military service, or a professional association. If not, search the CO-OP Network or Alliant Credit Union's public membership option. Credit union deposits are insured by the National Credit Union Administration (NCUA) up to $250,000 per member per institution, which is the same protection as FDIC insurance.
How to compare rates across different banks
Rate comparison sites like Bankrate, DepositAccounts, and DepositRates pull CD rates from many banks and update them daily. You can filter by term length (three months, one year, three years, five years, and so on) and see which banks are paying the most for that specific term. These sites do not charge you anything and do not require you to enter personal information to browse rates.
The rates you see on these sites are accurate as of the time they were pulled, but they can change within hours. When you find a rate you want, go directly to that bank's website to confirm the rate is still available and to start the funding process. Do not rely on a screenshot or a rate from yesterday.
Compare at least three to five options. A difference of 0.25% or 0.50% per year might seem small, but on a $10,000 CD over five years, it adds up to $125 to $250 in extra interest. The time to compare is worth it.
Term length affects both the rate and your access to money
Banks pay higher rates for longer commitments because they can lend out your money for a longer period. A five-year CD will pay more than a one-year CD at the same bank. A three-month CD will pay the least. The exact difference changes based on market conditions and what the bank expects interest rates to do.
The downside of a longer term is that your money is locked away. If you need to withdraw before the maturity date, you will owe an early withdrawal penalty. Penalties vary by bank and term—some charge three months of interest, others charge six months or a flat fee. Read the CD's terms before you open it so you know what the penalty is.
If you are unsure how long you can leave money untouched, a shorter term is safer. You can always open another CD when the first one matures and lock in a new rate at that time. This approach gives you flexibility, even if the rate is slightly lower.
FDIC and NCUA insurance protects your money up to $250,000
Banks are required to carry FDIC insurance, which protects your deposits up to $250,000 per depositor per bank. Credit unions carry NCUA insurance with the same $250,000 limit. This means if the bank or credit union fails, the government will return your money up to that amount.
If you have more than $250,000 to invest in CDs, you can split it across multiple banks to keep the full amount insured. For example, $500,000 split between two different banks ($250,000 at each) is fully protected. The banks must be separate institutions—two branches of the same bank count as one bank for insurance purposes.
CDs themselves are very safe because the rate is locked in and the term is fixed. The only risk is that you will not earn as much interest as you could have if rates rise after you open the CD. This is not a safety risk; it is an opportunity cost.
Rates change frequently, so timing matters
CD rates move in response to the Federal Reserve's interest rate decisions and broader economic conditions. When the Fed raises its benchmark rate, banks typically raise CD rates within days or weeks. When the Fed cuts rates, CD rates fall. This means the best rate available today may not be the best rate next week.
You do not need to time the market perfectly. If you see a rate you are comfortable with and you have the money ready to fund the CD, opening it is reasonable. Waiting for a slightly higher rate that may or may not come is usually not worth the risk of rates dropping instead.
Check rates on the day you plan to open the CD, not days or weeks before. Rates can shift that quickly, and you want to see the current landscape before you commit.
Frequently Asked Questions
Can I move money out of a CD early if I need it?
Yes, but you will pay an early withdrawal penalty. The penalty is set by the bank and is usually three to six months of interest, or sometimes a flat fee. The penalty amount is disclosed in the CD's terms before you open it. After you pay the penalty, you get the rest of your principal back.
What is the difference between a CD and a savings account?
A CD locks your money for a set term and pays a fixed rate. A savings account lets you withdraw anytime but pays a lower rate that can change. CDs pay more because you are giving the bank the certainty that your money will stay there. If you might need the money within a year, a savings account is more flexible.
Do I have to open a CD in person at a bank branch?
No. Most banks, including online banks and credit unions, let you open a CD entirely online or by phone. You fund it by transferring money from another bank account. You will need to verify your identity, usually by answering security questions or uploading a photo ID, but you never have to visit a branch.
What happens when my CD matures?
The bank will notify you before the maturity date, usually 10 to 30 days before. At maturity, the bank will either automatically renew the CD at the current rate or move the money to a linked savings account. Check your CD's terms to see which happens by default, and contact the bank if you want to do something different.
Is there a minimum amount I have to deposit to open a CD?
Most banks require a minimum deposit, which ranges from $500 to $2,500. Some online banks have no minimum. Check the specific bank's requirements before you start the process. If you do not have the minimum, you can look for a bank with a lower requirement or wait until you have saved enough.