When it comes to building up your savings, where you put your funds is half the battle.
A certificate of deposit (CD) is one of many types of savings vehicles you can consider. Commonly offered by banks and credit unions, CDs typically pay a higher interest rate than traditional savings accounts.
But there is a catch: Once you deposit funds into a CD, you’re committing to keeping your hands off that money for a set amount of time. Withdrawing money from your account before that time is up could come with some hefty penalties—more on that later.
Choosing the right CD comes down to a few different factors. To help make your decision a little easier, the Fortune RecommendsTM editorial team ranked more than 40 CDs and came up with a list of our top 10 picks. We weighed minimum deposits to open an account, annual percentage yields (APYs) for one-, three-, and five-year terms, compounding frequency, and customer service options. (Read our full methodology here.) All rates listed are up to date as of Jan. 6, 2023, and are subject to change.
CFG Bank: 4.60% to 4.75% for 1- to 5-year CDs
Ally Bank High-Yield CD: 4.15% to 4.25% for 1- to 5-year CDs
Bread Savings CD: 4.50% for 1- to 5-year CDs
Synchrony Bank CD: 4.30% for 1- to 5-year CDs
Barclays Online CD: 4.25% to 4.30% for 1- to 5-year CDs
PenFed Credit Union: 3.90% to 4.25% for 1- to 5-year CDs
Bethpage Federal Credit Union: 4.00% to 4.40% for 1- to 5-year CDs
Discover Bank CD: 4.15% to 4.40% for 1- to 5-year CDs
Sallie Mae Bank CD: 4.25% to 4.40% for 1- to 5-year CDs
Marcus by Goldman Sachs: 3.80% to 4.30% for 1- to 5-year CDs
The top 10 CD rates overall
Here’s our rundown of the top 10 CDs, including the key figures you should know before you open an account.
1. CFG Bank: For the saver who is on the hunt for the highest APY
About: Founded in 2009, CFG Bank is a Maryland-based bank that offers one- to five-year CDs, as well as money market accounts, traditional checking accounts, and commercial banking products. They have a handful of brick-and-mortar locations across Maryland, although customers can also bank with CFG online or via the mobile application.
Key numbers Minimum opening deposit: $5001-year CD APY: 4.75%3-year CD APY: 4.60%5-year CD APY: 4.60%
Penalty: There is an early withdrawal penalty equal to 90 to 180 days’ interest depending on your CD term.
Why we picked it: Apart from a high APY, CFG scored the top spot on our list for its lower minimum opening deposit compared to other CD products available on the market. Another perk: Interest can be withdrawn when needed. Customers can request that their interest be mailed to them as a check each month or they can opt to transfer earned interest to another account. Customer service representatives can be reached by telephone, Monday through Friday, 8:30 a.m. to 5 p.m. ET and customers can also contact CFG 24/7 via email or the bank’s online and mobile banking platforms.
2. Ally Bank: For the saver who likes to have access to a customer service rep at all times
About: Ally Bank is an online-only bank offering checking, savings, mortgage, auto products, and more. Its CD terms range from three months to five years.
Key numbers Minimum opening deposit: $01-year CD APY: 4.15%3-year CD APY: 4.25%5-year CD APY: 4.25%
Penalty: There is an early withdrawal penalty between 60 to 150 days of interest, depending on your account terms.
Why we picked it: Ally’s CD offerings give savers a wide range of term options and let them decide how much they’re ready to save, with a $0 minimum deposit to open an account. Customers aren’t subject to any monthly maintenance fees and interest on these accounts is compounded daily. Bonus: Ally Bank offers customers 24/7 phone, chat, and email support.
3. Bread Savings: For the saver who isn’t new to the savings game
About: Bread savings, formerly Comenity Direct Bank, is an online-only bank that offers CDs ranging from one to five years, as well as a high-yield savings account.
Key numbers Minimum opening deposit: $1,5001-year CD APY: 4.50%3-year CD APY: 4.50%5-year CD APY: 4.50%
Penalty: Early withdrawal penalties do apply for Bread’s CD accounts. For terms shorter than one year, the penalty is 90 days simple interest. For one to three-year terms, the penalty is 180 days simple interest. For terms greater than four years, the penalty is 365 days simple interest.
Why we picked it: While its opening deposit is above $1,000, Bread Savings offers its customers competitive APYs (well above 4%) on its one-, three-, and five-year CDs, plus—accrued interest is compounded daily. Account holders are not charged for certain CD services like ACH transfers, monthly maintenance, and incoming wire transfers, but will be charged $25 for outgoing wire transfers, $15 for official check requests, and $5 paper statement fees. Customers can bank with Bread online or via its mobile app. For assistance, they can connect with a Bread Savings customer service representative via telephone on weekdays between 7 a.m. and 9 p.m. CT, and weekends and most holidays from 9 a.m. to 5 p.m. CT.
4. Synchrony Bank: For the saver who is just getting started, but wants to take advantage of higher APYs
About: Synchrony Bank is an online bank that offers a wide range of savings and credit products. Customers can bank online or via mobile app. Its CD terms range from three months to five years.
Key numbers Minimum opening deposit: $01-year CD APY: 4.30%3-year CD APY: 4.30%5-year CD APY: 4.30%
Penalty: There is an early withdrawal penalty applied to the amount of principal withdrawn between 90 and 365 days’ simple interest depending on your account terms.
Why we picked it: Synchrony’s CD accounts don’t require a minimum deposit, meaning that savers who are just starting out can put whatever amount they feel comfortable with in an account and start letting the magic of compound interest work for them. Interest is compounded daily and you can withdraw interest paid during your CD’s current term anytime without penalty. You can reach Synchrony Bank via phone, chat, or email or download its mobile app for 24/7 banking.
5. Barclays Bank: For the saver who doesn’t need a brick-and-mortar location
About: Barclays is a London-based bank that offers online services to customers in the U.S. While it doesn’t have any physical locations in the U.S., it does offer a handful of CD terms, ranging from 12 months to 60 months.
Key numbers Minimum opening deposit: $01-year CD APY: 4.25%3-year CD APY: 4.30%5-year CD APY: 4.30%
Penalty: There is an early withdrawal penalty associated with these accounts equal to 90 to 180 days simple interest, depending on the terms of your account. Barclays also offers a mobile app for 24/7 banking.
Why we picked it: Barclays’ CDs boast competitive APYs with no hidden monthly fees, or minimum balances to open an account. You can choose to keep earned interest in your CD account or have it transferred to a separate Barclays account or a verified external bank account. U.S. customers can reach a Barclays representative by calling their toll-free number between 8:00 am–8:00 pm ET seven days a week. They can also access their online account 24/7.
6. PenFed Credit Union: For the saver who prefers a credit union over a major bank
About: Pentagon Federal Credit Union (PenFed) is a Virginia-based credit union that offers online banking options in addition to a few brick-and-mortar locations across the U.S. Customers can benefit from their wide range of financial products including checking and savings accounts, credit cards, auto loans, home loans, and more.
Key numbers Minimum opening deposit: $1,0001-year CD APY: 4.25%3-year CD APY: 4.05%5-year CD APY: 3.90%
Penalty: For CDs redeemed within the first year, all dividends will be forfeited. For certificates redeemed after the first year but before maturity, the penalty is equal to 30% of what would’ve been earned if the certificate had been held to maturity, not to exceed total dividends earned.
Why we picked it: PenFed scored a spot on our list for their stellar APYs and higher-than-average customer service score. While their early withdrawal penalty is more severe than others, this account can provide customers with all of the perks of a credit union while still offering a lucrative APY on par with major banks, plus—interest on these accounts compounds daily. For assistance, customers can reach PenFed by email, chat, or phone Monday to Friday, 7:00 a.m. to 11:00 p.m. EST, 8:00 a.m. to 11:00 p.m. on Saturday, and 9:00 a.m. to 5:30 p.m. EST on Sunday.
7. Bethpage Federal Credit Union: For the saver who wants a lower opening deposit
About: Bethpage Federal Credit Union is a New York–based credit union that offers checking accounts, money market accounts, credit cards, and more. There are more than 30 branch locations around the New York-area.
Key numbers Minimum opening deposit: $501-year CD APY: 4.40%3-year CD APY: 3.75%5-year CD APY: 4.00%
Penalty: The penalty for an early withdrawal will equal 90 to 180 days worth of dividends on the principal amount withdrawn.
Why we picked it: This credit union made our list for its high APY and low opening deposit. At $50, it’s significantly lower than other CDs on our list that require a minimum deposit of $1,000 or more. Interest on this account compounds daily and customers can reach a representative by calling Bethpage on weekdays between 7:30 a.m. and 7 p.m. ET, and on Saturdays between 8 a.m. and 2 p.m.
8. Discover Bank: For the tech-savvy saver who still wants big bank perks
About: Discover is an online-only bank whose history stretches almost four decades. This bank offers all the perks of a traditional big bank, but with a digital-first approach. Consumers can benefit from Discover’s wide range of financial products, including credit cards, personal loans, student loans, home loans, money market accounts, CDs, and more.
Key numbers Minimum opening deposit: $2,5001-year CD APY: 4.15%3-year CD APY: 4.35%5-year CD APY: 4.40%
Penalty: For one- to five-year terms, the early withdrawal penalty is equal to 18 months’ simple interest.
Why we picked it: Discover’s CD accounts had one of the highest minimum deposits on our list, but for consumers who may already be using Discover for its other banking services and want to keep all of their accounts in one place, this could be a viable banking option. Bonus: interest on these accounts is compounded daily. The downside—Discover doesn’t have physical branches, but customers can contact a representative via phone or chat 24/7.
9. Sallie Mae Bank: For the saver who thinks you have to spend money to make money
About: Sallie Mae is an online bank that offers a wide range of savings, credit, and student loan products. Its CD terms range from six months to five years and consumers can do all of its banking online or via Sallie Mae’s mobile app.
Key numbers Minimum opening deposit: $2,5001-year CD APY: 4.25%3-year CD APY: 4.40%5-year CD APY: 4.25%
Penalty: There is an early withdrawal penalty for withdrawing your funds before the CD reaches its maturity date. This can range from 90 to 180 days’ simple interest.
Why we picked it: Sallie Mae requires one of the highest minimum deposits on our list, but it rewards savers for the hefty deposit by offering competitive APYs and ditching monthly fees. Interest is also compounded daily—which can quickly add up at the high rates Sallie Mae offers—and can be left in your CD to automatically renew or it can be withdrawn penalty free. Customers can reach out to Sallie Mae via telephone Monday through Friday, 9 a.m. to 6 p.m. ET, or through its online chat function.
10. Marcus by Goldman Sachs: For the saver who doesn’t care for face-to-face
About: Marcus is an online bank with no physical locations that offers a wide range of savings, investment, credit, and lending products. Its CD terms range from six months to six years.
Key numbers Minimum opening deposit: $5001-year CD APY: 4.30%3-year CD APY: 4.00%5-year CD APY: 3.80%
Penalty: If you withdraw funds from your CD before it reaches maturity, the penalty ranges from 90 days’ to 270 days’ worth of simple interest, depending on the terms of your account.
Why we picked it: Marcus’ CDs offer a competitive rate with a wide range of terms to help savers hit every kind of investment goal. Interest on these accounts is compounded daily and account holders have the option to keep that interest in their CD or withdraw earned interest, penalty-free. Marcus offers a mobile banking app, and you can reach a customer service representative via telephone or online chat 24/7.
What is a certificate of deposit?
A CD is a type of savings account that offers a fixed interest rate on a lump-sum deposit for a set period of time. This type of deposit account can be especially helpful for savers who have a difficult time not dipping into their traditional savings accounts.
Because the bank or credit union is hanging onto your funds for a set amount of time, CDs usually carry higher APYs than other savings vehicles.The average national rate for a traditional savings account is currently 0.30%, while the average rate for a one-year CD is about 1.07%, according to the most recent figures from the Federal Deposit Insurance Corporation (FDIC).
Once you’ve reached the end of your term, your CD has officially matured and you can withdraw the money you originally deposited, plus any earned interest, without penalty. Some CDs are penalty-free and allow you to withdraw your funds before your term ends, but others will charge you a penalty equal to a certain number of days worth of interest, this can vary depending on the interest rate your specific CD offers.
CD accounts are a great option for savers who want to play the long game. It forces you to keep your savings in one place and can help you earn interest at a faster rate if you’re willing to wait it out.
How to choose the best CD
Every CD is a little different, so you’ll want to pay close attention to the account features and fine print before deciding where you want to put your savings. A few factors you’ll want to consider when comparing your options:
Term length: Your CD’s term length will tell you how long you have to wait before your CD matures and you can withdraw your money. Some CD accounts offer terms as short as one week, or as long as 10 years. Choose a term length that meets your needs and aligns with your financial goals.
APY: The annual percentage yield on your account will play a big role in how much your money will grow before your account matures. The higher the rate, the more you can expect to earn in interest. You’ll also want to ask about your account’s compounding frequency, that’s the rate at which your account is adding interest to the principal. Some CD accounts compound interest daily, others compound interest weekly, monthly, or quarterly.
Minimum deposit: Most, but not all, accounts will require some sort of deposit to open your account. This can range from a few dollars to thousands of dollars. Most CDs require you to deposit your funds in one lump sum and will not allow you to make any additional contributions. Make sure you meet the minimum and have your money ready to deposit upfront.
Penalties: Not all CDs penalize you for making an early withdrawal, but if yours does, you could lose out on your earned interest and even some of your principal balance. You may not be able to anticipate if you’ll need to withdraw your funds, but knowing what the penalty is if that happens can help you determine if your account is a good fit or if you want to opt for an account with fewer restrictions.
Deposit insurance: FDIC and NCUA insurance provides depositors with insurance coverage if their bank or credit union fails—up to $250,000 per depositor or share owner. Double-check that your account is insured so that your money is protected if the worst case scenario happens.
Best CD rates for other terms
The Fortune RecommendsTM team compared certificates of deposit (CDs) from more than 40 major banks, credit unions, and online-only banks that offered one-, three-, and five-year CD terms. Our top picks are available to customers across the U.S. no matter where you’re located, subject to the terms of each CD.
For our best overall CD rates, we ranked the best overall CDs on the following categories and weighted each category as set forth in the percentages below:
Annual percentage yield (APY) on a one-year term (20%): This number represents the real rate of return on your balance; the higher the APY, the better. We weighted the APY for each CD term the same amount.
APY on a three-year term (20%)
APY on a five-year term (20%)
Minimum deposit requirement (20%): In order to open a CD at any financial institution, the institution will require that you deposit a minimum dollar amount. We thought that a lower minimum was preferable and so rated banks with lower minimum deposit requirements higher.
Compound frequency (15%): Interest on deposit accounts like CDs can compound daily or monthly. The more frequently interest compounds on your CD, the better.
Customer service (5%): Top picks offer customers three ways to get in contact: chat support, by phone, or even email. Among the three options, we gave phone support the most weight.
We think that the best CDs offer APYs twice the national average for one-year, three-year, and five-year terms. We didn’t include brokered CDs on our list, which are sold on the secondary market through brokerages instead of banks and can be riskier because of this.
The rates, fees, and minimum deposit requirements for CDs are available for limited time periods, and APYs are subject to fluctuation, which could impact how much interest you earn. All the banks and credit unions on this list are insured by the FDIC and NCUA respectively. Should you choose to terminate your CD before it matures, you may likely be subject to a penalty, which varies by bank and credit union.
This story was originally featured on Fortune.com
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