The banks offering the best CD rates change weekly, and online banks consistently beat brick-and-mortar branches
CD rates move constantly because they track the federal funds rate, which the Federal Reserve adjusts throughout the year. Right now, online banks and credit unions are paying more than traditional banks—often 4% to 5.35% on one-year CDs, compared to 0.5% to 1.5% at major national chains. The difference matters: a $10,000 CD earning 5% for one year grows to $10,500, while the same money at 1% grows to $10,100.
The highest rates appear on comparison sites like Bankrate, DepositAccounts, and the FDIC's own rate tracker, which update daily. You can also check individual bank websites directly, though they often bury CD rates behind savings account promotions. Credit unions sometimes pay higher rates than banks if you meet membership requirements—usually opening a savings account or paying a small fee.
Rate shopping takes 15 minutes and can add hundreds of dollars to your return. The catch: you lock your money away for a fixed term (three months to five years), and withdrawing early costs you interest. That trade-off is why comparing rates before you commit matters more than chasing the absolute highest number.
Key Takeaways
- Online banks and credit unions typically offer rates 3 to 4 percentage points higher than major national banks, so checking multiple institutions before opening a CD saves real money.
- CD rates change weekly based on Federal Reserve decisions, so the highest rate today may not be the highest rate next week—but locking in now protects you if rates fall.
- Bankrate, DepositAccounts, and the FDIC's National Information Center all publish updated rates daily and let you filter by term length and deposit amount.
- Early withdrawal penalties vary widely: some banks charge three months of interest, others charge six months or a flat fee, so read the terms before you deposit.
- Credit unions often pay more than banks but may require membership; check whether you already belong to one through your employer, school, or military service.
How to find current rates without calling every bank
The FDIC's National Information Center publishes CD rates from thousands of banks and credit unions, updated daily. You can search by state, term length, and minimum deposit. Bankrate and DepositAccounts do the same thing with a cleaner interface—both let you sort by rate, term, and institution type, and both show you the early withdrawal penalty upfront.
When you find a rate that interests you, visit the bank's website directly to confirm it is still current. Rates on comparison sites can lag by a few hours, and some banks change rates multiple times per day. Most banks let you open a CD online in 10 minutes if you have an existing account with them; if you do not, you will need to provide your Social Security number, address, and a routing number for the account you want to fund the CD from.
Do not rely on a bank's homepage—CD rates are often buried under "Products" or "Savings" because banks make more money when you do not notice how low their rates are. Search the site for "CD rates" or "certificate of deposit" to find the actual rate sheet.
Why online banks pay more than branches you can walk into
Online banks have no physical locations, so they spend nothing on real estate, tellers, or branch staff. They pass that savings to depositors by paying higher rates on CDs and savings accounts. A bank like Marcus or Ally can afford to pay 5% on a one-year CD because they do not have to maintain 5,000 branches.
The trade-off is that you cannot deposit cash in person or speak to someone face-to-face. Everything happens online or by phone. For a CD—which you fund once and then leave alone for months or years—that limitation rarely matters. You transfer money from your checking account once, and the CD sits there earning interest until it matures.
Major national banks like Chase, Bank of America, and Wells Fargo pay lower rates because they can afford to. They have brand recognition, physical branches, and millions of customers who do not shop around. If you have a checking account at one of these banks, moving your CD money to an online bank for a higher rate costs nothing except 10 minutes of setup time.
Credit unions and membership requirements
Credit unions are member-owned cooperatives that often pay higher CD rates than banks. Some of the highest rates come from credit unions like Connexus, Pentagon Federal, and Connexus Credit Union. The catch: you have to be a member to open a CD with them.
Membership requirements vary. Some credit unions are open to anyone in a geographic area (a county or city). Others require you to work for a specific employer, belong to a union, attend a particular school, or serve in the military. A few charge a small membership fee ($5 to $25) and require you to open a savings account with a minimum balance ($25 to $100).
Check whether you already may have access to for membership through your job, school, or military service. If you do, opening a credit union CD can pay 0.5% to 1% more than an online bank. If you do not, the membership requirement usually is not worth the hassle unless the rate difference is substantial.
Comparing rates across different CD terms
A one-year CD and a five-year CD rarely pay the same rate. Usually, longer terms pay more because the bank keeps your money longer and can lend it out for longer periods. Right now, one-year CDs might pay 5%, while five-year CDs pay 5.35%. The extra 0.35% does not sound like much, but on $50,000 it adds up to $175 over five years.
The risk of locking in for five years is that if rates rise, you cannot access your money without paying a penalty. If rates fall, you win—your CD keeps earning the higher rate. Most people split the difference by opening a mix of terms: some money in a one-year CD, some in a three-year, some in a five-year. That way, part of your money matures each year, and you can reinvest it at whatever the new rate is.
Three-month and six-month CDs exist but usually pay less than one-year CDs, so they make sense only if you know you will need the money soon. Anything longer than five years rarely pays enough extra to justify the commitment.
Early withdrawal penalties and what they actually cost
Every CD has an early withdrawal penalty—the price you pay if you take your money out before the term ends. The penalty is usually stated as a number of months of interest. A CD that pays 5% annually with a six-month penalty means if you withdraw after three months, you lose six months of interest (2.5% of your deposit).
Some banks charge a flat fee instead ($25 to $100) or a percentage of the deposit. A few online banks like Ally charge no early withdrawal penalty, though their rates are usually slightly lower to make up for it. Before you open a CD, read the terms and calculate what the penalty would cost in dollars, not just percentages.
Example: You deposit $10,000 in a five-year CD paying 5% with a six-month penalty. If you withdraw after one year, you lose $250 in interest (six months of 5% annual interest). You get back $10,000, but you gave up $250 in earnings. If you needed the money and could not wait, that penalty is the cost of access.
When to lock in a rate versus waiting for rates to rise
You cannot predict whether rates will rise or fall, so do not try. If you have money sitting in a savings account earning 0.01%, moving it to a CD earning 5% is a clear win, even if rates rise to 6% next month. You gain five percentage points immediately. If rates fall to 4%, you still win because you locked in 5%.
The only time waiting makes sense is if you know rates are about to drop—which you do not. The Federal Reserve publishes its meeting schedule, and you can read the minutes to see what officials are thinking, but even they do not know what will happen six months from now. Locking in a good rate today beats hoping for a better one later.
If you are nervous about rates rising, open a CD ladder: divide your money into several CDs with different maturity dates. A one-year CD matures in 12 months, a two-year in 24 months, and a three-year in 36 months. As each one matures, you can reinvest at whatever the new rate is. This spreads your risk and lets you take advantage of rising rates without leaving all your money in a low-rate savings account.
Frequently Asked Questions
Do I need to have an existing account to open a CD?
Not always. Most online banks let you open a CD without an existing account, though you will need to provide your Social Security number and set up a way to fund it (usually a transfer from another bank). Some credit unions and regional banks require you to open a savings account first, which takes an extra 10 minutes.
What happens when my CD matures?
The bank notifies you (usually by email) that your CD is maturing. You then have a grace period—typically 7 to 10 days—to decide what to do. You can withdraw the money, open a new CD at the current rate, or let it automatically renew at the new rate. If you do nothing, most banks auto-renew at whatever their current rate is, which may be lower than what you earned before.
Are CDs safe if the bank fails?
Yes. The FDIC insures CDs up to $250,000 per depositor per bank. If the bank fails, the FDIC pays you back in full. Credit union CDs are insured by the NCUA up to the same limit. This protection applies even if the bank goes out of business tomorrow.
Can I add money to a CD after I open it?
No. A CD is a fixed contract: you deposit a lump sum, it earns interest for a set term, and you cannot add or withdraw money without a penalty. If you want to invest more, you open a separate CD. Some people open multiple CDs at different times to build a ladder of maturity dates.
Should I open a CD if I might need the money?
Only if you can afford the early withdrawal penalty. If there is any chance you will need the money within the term, keep it in a high-yield savings account instead. Savings accounts pay almost as much as CDs right now (4% to 5%) and let you withdraw anytime without penalty. The rate difference is usually less than 0.5%, which is not worth the risk of being locked in.