Certificates of deposit are a financial tool that investors can use to earn money on cash they’re willing to set aside for an agreed-upon period of time. When consumers purchase investment CDs, financial institutions get the green light to utilize that money to earn a profit. In return, you get paid interest. The best CD rates deliver returns higher than more flexible accounts like savings or checking accounts.
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The 8 best CD rates of 2021
| Lender | 12-Month APY | 3-Year APY | Minimum Deposit | SimpleScore |
|---|---|---|---|---|
| Ally | 0.65% | 0.75% | $0 | 4.6 |
| Barclay’s | 0.30% | 0.30% | $0 | 4.5 |
| Charles Schwab | 0.10% | Not Listed | $1,000 | 3 |
| Discover | 0.50% | 0.55% | $2,500 | 3.5 |
| Marcus | 0.55% | 0.55% | $500 | 4 |
| Synchrony | 0.60% | 0.70% | $2,000 | 4 |
| TIAA Bank | 0.40% | 0.60% | $5,000 | 3.5 |
| Capital One 360 | 0.20% | 0.30% | $0 | 3.8 |
Best customer satisfaction – Ally Bank
Ally has several different CD options to choose from, with rates from 0.35% up to 1.00% on select products.
It’s not surprising that Ally scored so highly in J.D. Power’s satisfaction study. The company’s CD products require no account minimum, have competitive APY rates and are supported by several high-quality customer service options. What’s unique is three and five-year CD rates are .95% and 1.00% respectively, the 18-month CD has an APY of .95% for any deposit amount. Ally’s CD rates are on par with the leaders in the online banking industry. If you’re looking for a longer-term CD, look into the 18-month option as it carries a higher rate than longer-term options.
Best for high yields – Barclay’s
Barclay’s CDs offer industry competitive 1.00% APY for all options 12 months and longer with no account minimum to open.
Barclay CD rates vary between 0.35% and 0.85% APY on term lengths from 3 months to 5 years. Compared to traditional brick and mortar banks, this rate is quite high. No account minimum to open is a welcomed perk from a large bank that’s not available with every CD provider. Investors looking to work with a brick and mortar bank while still getting online bank rates should consider Barclay’s high yield CDs as an option.
Best for investors – Charles Schwab
Charles Schwab has some of the longest and shortest term CDs available ranging from 1 month all the way out to 20 years.
You’d be hard-pressed to find another bank offering CDs for a single month, never mind for two decades. These flexible terms are great for investors with unique savings schedules. Additionally, if you’re an investor that expects rates to be lower in the extended future, Charles Schwab’s extended-length CD options let you lock in current rates. One drawback to the offerings is a higher-than-average minimum deposit to open an account. This may be a deterrent to savers just starting out with smaller pools of funds to invest.
While CD rates are lower than the industry average at Charles Schwab, the flexibility for short and long-term CDs is unparalleled. If you’re looking for a less-common length CD, take a peek at what Charles Schwab has to offer.
Best for short-term CDs – Discover, Member FDIC
Discover has some of the best rates around on shorter-term CDs, including .60% APY on 12-month CDs.
Discover high yield CDs have industry-leading rates on shorter-term CDs. There is a $2,500 minimum deposit, which may be a deterrent to some. But if you have that much to invest and don’t want to be locked into a multi-year CD, Discover is where you’ll want to be, because overall, the 12-month CD rates at Discover are incredible. Very few other providers can come close with this level of return on such a short-term investment product.
Best without penalty fees – Marcus by Goldman Sachs
Marcus by Goldman Sachs offers CDs from 6 months to 6 years with industry competitive rates and high levels of customer satisfaction.
Marcus CDs are available from six months to six years with APY rates from 0.15% to .60% APY. The Goldman Sachs’ products also come with a 10-day rate guarantee, which is not industry standard. If a higher rate becomes available during the first week and a half after you open your account, the company will bump your rate.
Additionally, Marcus offers no-penalty CDs great for investors who aren’t sure if they might need access to their funds during the investment period. The CDs are available for seven months with an APY of .60% and a minimum opening balance of $500. If for some reason during the seven months you need to access your money, you’ll be hit with $0 in early withdrawal penalties and will keep all the interest you’ve earned.
Marcus CDs offer industry competitive rates that include a rate guarantee if things should change early on in the process. If you’re worried about missing out due to market volatility, Marcus CDs could be the solution you’re looking for.
Best for customer perks – Synchrony
Synchrony’s APY rates are also some of the highest in the industry, as well as great customer perks.
Synchrony has certificates of deposit available from 3 months out to 60 months. Rates span from 0.25% up to 1.00% depending on the term length. Those people looking to get a short three-month CD will enjoy some of the highest short-term rates on the market. However, the longer you stay a customer with Synchrony, the easier customer support becomes, with customers of five years or more receiving a dedicated customer service line . However, customers of all tiers still receive great support and no monthly fees. If you’re someone looking for a CD for 12 months or less, Synchrony may provide the strongest rates out there. You will need at least $2,000 to get started, though.
Best perks – TIAA Bank
TIAA Bank has the steepest minimum opening account balance at $5,000. However, the account comes with perks you won’t get elsewhere.
TIAA Bank’s accounts are reserved for those with at least $5,000 to get started. But if you have the funds to invest, the CD will guarantee a competitive rate for the entire length of the CD.
Best mobile app – Capital One
Capital one has competitive rates on one-year CDS, but the rates you’ll earn decline as you get into longer terms.
For tech-savvy investors, the Capital One mobile banking app provides great account transparency and the ability to manage your investments easily. For your CDs, you’ll be able to see your accounts organized in a well-laid-out dashboard.
In case you want to conduct other banking activities on the same platform, the Capital One mobile app lets you pay bills, monitor your credit score, lock your associated accounts, and get instant purchase notifications. Investors looking for a complete banking solution and not just CDs may be interested in checking this out. Capital One CDs should be considered as an option if you’re looking for a year or shorter length. Additionally, if you’re looking for a company that has a lot of different account types you can get under one roof, it might be the right fit.
What CD term should I get?
Ultimately, the CD term that you decide on will depend largely on your liquidity. If you find that you have a lot of financial wiggle room and can afford to go without some of your spare cash for an extended period of time, you should look into a longer term fixed CD. Generally, the longer you agree to leave your money with a bank, the better the rates will be that they offer you, meaning more money for you in the long-run.
If you anticipate needing that money in the near future, though, a short-term CD is probably a better option. The APR that banks offer likely won’t be as lucrative, but you’ll have access to your money sooner and won’t have to pay a fee for taking your deposit out before it matures.
What if I need to withdraw a CD before it matures?
Though the CD interest rates might be what initially catches your eye, there’s something else that you should consider before making a decision to invest in a CD: early withdrawal fees. Most financial institutions will charge you a fee if you withdraw your money before your CD matures.
It doesn’t have to be all bad though. If the interest that you collect outweighs the fee, you can still make a respectable profit from your CD.
Too long, didn’t read?
Including certificates of deposit in your investment strategy brings a risk-averse product with guaranteed returns to round out your portfolio. If you’ve got cash you’re willing to avoid touching for at least one month, you can see a nice return. Typically, the longer you can part with the money, the higher the CD rates you’ll see.
We welcome your feedback on this article and would love to hear about your experience with the CDs we recommend. Contact us at [email protected] with comments or questions.
Methodology
The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.
For every review, our editorial team:
- Identifies five measurable aspects to compare across each brand
- Determines the rating criteria for each aspect score
- Averages the five aspect scores to produce a single SimpleScore
Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best CDs of 2020.
Why do some brands have different SimpleScores on different pages?
To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.
However, it’s possible for brands to have multiple SimpleScores. For instance, if we compare CDs offered by Discover, it scores a 3.75 out of 5 SimpleScore according to our metrics and rating system. But if we review Discover’s savings account according to our SimpleScore, it scores a 4.5 out of 5. We adjust our rating system to account for different products and industry standards.
Questions about our methodology?
Email Hayley Armstrong at [email protected].
12-month APY
We awarded brands that offered higher APYs on 12-month certificates of deposit — the higher the APY, the higher the score.
3-year APY
We awarded brands that offered higher APYs on 3-year CDs — the higher the APY, the higher the score.
Customer satisfaction
Minimum deposit
Some providers require a minimum deposit to open a CD. We rated and rewarded brands that required low minimum deposits with higher scores.
Customer support
Providers with multiple channels of customer support were rewarded with higher scores in this aspect. We considered social media, mobile app support, in-branch support, phone and email as channels of support for customers.
Source: thesimpledollar.com