Best CD Rates for January 2020


These are the best CD rates that are nationally available from our research on more than 200 banks and credit unions that offer CDs to customers nationwide. In cases where more than one institution has the same top rate, we’ve prioritized CDs by the shortest term, then the CD requiring a smaller minimum deposit, and if still a tie, by which CD has a milder penalty for early withdrawal.

Best Current CD Rates:

You can find our complete list of the highest CD rates in this spreadsheet which has the the top 10 rates for each major CD term. The spreadsheet also contains details about minimum deposits, early withdrawal penalties, and any notes about the requirements for joining the credit union, if applicable.

How Much Do CDs Pay?

While the national average is a good indicator of the direction of rates—and how much they’ve changed over a period of time—they are not what you should consider when shopping for CDs. Instead, look for the top nationally available rates, which stand far above industry averages.

Take one-year CDs, for instance. The current national average is just 0.48% Annual Percentage Yield (APY). Today’s top-paying institution, however, will pay you 2.15% APY on that same one-year commitment—more than four times as much. Similarly, for three-year CDs, you can currently earn 3.10% APY instead of the industry average of 0.74% APY.

If you have cash you can park for a period of time, but want to earn more than the best savings and money market accounts will net you, our research on the best nationally available rates in every major CD term can lead you to maximum returns.

How Does a CD Work?

Opening a CD is very similar to opening any standard bank deposit account. The difference is what you’re agreeing to when you sign on the dotted line (even if that signature is now digital). After you’ve shopped around and identified which CD(s) you’ll open, completing the process will lock you into a four things.

  1. The interest rate: Locked rates are a positive in that they provide a clear and predictable return on your deposit over a specific time period. The bank cannot later change the rate and therefore reduce your earnings. On the flip side, a fixed return may hurt you if rates later rise substantially and you’ve lost your opportunity to take advantage of higher-paying CDs.
  2. The term: This is the length of time you agree to leave your funds deposited to avoid any penalty (e.g., 6-month CD, 1-year CD, 18-month CD, etc.) The term ends on the “maturity date,” when your CD has fully matured and you can withdraw your funds penalty-free.
  3. The principal: With the exception of some specialty CDs that allow add-on deposits, this is the amount you agree to deposit into the CD, at the time of opening.
  4. The institution: The bank or credit union where you open your CD will determine aspects of the agreement, such as early withdrawal penalties (EWPs) and whether your CD will be automatically reinvested if you don’t provide other instructions at the time of maturity.

Once your CD is established and funded, the bank or credit union will administer it like most other deposit accounts, with either monthly or quarterly statement periods, paper or electronic statements, and usually monthly or quarterly interest payments deposited to your CD balance, where the interest will compound. 

Pros and Cons of CDs


  • Offers a higher rate than you can earn with a savings or money market account

  • Pays a guaranteed, predictable rate of return, avoiding the volatility and losses that are possible with stocks and bonds

  • Is federally insured if opened with an FDIC bank or NCUA credit union

  • Can help fend off spending temptations since withdrawing the funds early triggers a penalty


  • Cannot be liquidated before maturity without incurring an early withdrawal penalty

  • Typically earns less than stocks and bonds can over time

  • Earns a fixed rate of return regardless of whether interest rates rise during the term

What Is a CD Ladder and Why Should I Build One?

Smart CD investors have a specific tactic for hedging against rate changes over time and maximizing their return. It’s called a CD ladder and it enables you to access the higher rates offered by 5-year CD terms, but with the twist that a portion of your money becomes available every year, rather than every 5 years. Here’s how to do it.

At the outset, you take the amount of money you want to invest in CDs and divide it by five. You then put one-fifth of the funds into a top-earning 1-year CD, another fifth into a top 2-year CD, another into a 3-year CD, and so forth through a 5-year CD. Let’s say you have $25,000 available. That would give you five CDs of varying length, each with a value of $5,000. 

Then, when the first CD matures in a year, you take the resulting funds and open a top-rate 5-year CD. A year later, your initial 2-year CD will mature, and you’ll invest those funds into another 5-year CD. You continue doing this every year with whichever CD is maturing, until you end up with a portfolio of five CDs all earning 5-year APYs, but with one of them maturing every 12 months, keeping your money a bit more accessible than if all of it were locked up for a full five years.

What Is Considered a Good Rate For a CD

When interest rates are very low, it’s difficult to find a single CD offering a significantly higher rate of return than other CDs. There are a number of factors that affect CD-generated income, and CD investors can take steps to maximize their returns on investment.

What makes CDs attractive as an investment vehicle is not their rate of return but their risk-free nature. Depending on the financial institution offering them, CDs are insured by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), and there are few safer instruments available for the average investor.

Minimum amounts for CDs are typically $500, and minimum terms are 30 days, although the majority of CDs mature somewhere between six months and five years. Larger deposits and longer terms typically earn higher interest rates, though promotional certificates often break that general rule. The interest rates available on CDs are usually just a bit higher than the current inflation rate as determined by the consumer price index (CPI), so virtually any rate higher than that is a good deal. Online banks and credit unions often offer slightly higher interest rates than traditional brick-and-mortar firms.

Maximizing Your CD Rate of Return

Check the interest calculation and payment schedule carefully. The advantage of having interest calculated and compounded more frequently adds up over time, so look for a CD that offers more than just annual compounding.

While CDs are traditionally a fixed-rate investment, variable-rate CDs do exist. If you think interest rates are likely to rise significantly, you can benefit from a certificate whose interest rate is adjusted during the term of the CD.

Indexed or structured CDs offer you the chance to earn a percentage of the return on a stock index or commodity index. This can result in a much higher return than a traditional CD’s – and for more risk as well.

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