Best CD (Certificate Of Deposit) Rates
Published 8/22/09 (Modified 1/1/15)
Updated List Of The Best Nationally Available Bank CD Rates Below
Below, I've included a list of the best CD (certificate of deposit) rates presently found online - periodically updated by yours truly whenever I am alerted to major changes in the rates. All of the bank CD rates listed below are nationally available and not restricted to residents of any particular state(s). While national annual percentage yield (APY) rates for banks have fluctuated and dropped across the board due to the economic troubles we've been experiencing, the interest rates offered by CD's still remain consistently higher than that offered by other forms of FDIC insured deposits such as savings accounts and money markets.
For many years now, I've kept my short term cash and emergency fund money saved in a variety of online savings accounts and online CD's - jumping from one bank to another in pursuit of the highest interest rate yields. To maximize my money to its highest passive income potential, I never keep my short term cash idle for too long. At the very least I always ensure that they are properly invested in the best interest bearing accounts offering me the most competitive yields based on what I'm willing to give up in terms of account accessibility and liquidity. While I keep my most short term emergency funds stored in ultra accessible savings accounts, I store the bulk of my regular cash savings into certificate of deposits, neatly arranged into CD ladder setups for maximization of return and liquidity.
Contrary to some views, CDs are not all that difficult to use effectively. They are nothing more than time deposit products offered by banks that offer fixed rates for the life of the CD term. The biggest difference they have with savings accounts is that the funds deposited into CD's are held for pre-set terms that range in duration from as short as 1 month to 10 years or longer. In exchange for the customer's agreement not to withdraw the funds for the predetermined period of time (and consent to face an early withdrawal penalty fee if he or she does), the servicing bank pays the CD account holder a higher rate of interest on the deposited funds than it would otherwise pay for a readily accessible savings account. It's a trade-off consideration between the customer's preference for instant account accessibility versus interest rate of return. Typically, the longer the CD term the bank customer agrees to, the higher the CD rate offered in return. Obviously, one should not put funds into a CD that one would expect to absolutely need within a very short period of time.
Online CD Deposits Offer Much Better CD Rates Than Traditional Banks
While anyone can easily visit their local bank or neighborhood credit union and open a new certificate of deposit account, you'll find that the rates these brick and mortar sources provide are rather limited compared to the higher rates that online banks and Internet based lending institutions are able to offer. The top online banks can afford to provide their customers substantially higher rates on their CD deposits and investments due to the much lower overhead costs associated with running web-based services. Because they don't have to maintain as extensive of a network of branch offices and don't need to spend as much money hiring a large staff of employees and bank tellers to run their operations, online banks are better situated than traditional banks to pass on that extra savings to their depositors. As such, the high yield savings accounts, money market accounts, and CD rates you'll find with online only banks such as EverBank, Ally Bank, and HSBC Advance will almost always beat out the interest rate offerings of more well known financial institutions like Citibank, Bank of America, JP Morgan Chase Bank and Wells Fargo.
Even In The Event Of An Emergency, Online Bank CD Deposits Are Fully Protected
While these online banks perhaps don't have the same brand name recognition and years of extensive and proven reliability as many one of the too-big-to-fail U.S. banking giants, all of the various deposit accounts they offer all enjoy the same equal protections and solid depositor guarantees afforded to the bigger name banks and credit unions. In the United States, the vast majority of bank accounts and CD deposits are fully protected from loss in the event of any unforeseen system collapse, theft, or potential run on the bank - backed by the full faith and credit of the U.S. government up to the current maximum FDIC coverage limit of $250,000 per depositor, per bank. Unless the federal government suddenly collapsed, ceased to exist, thereby dissolving the entire nation into Armageddon and social anarchy - your money, whether deposited in a savings account or stored in a certificate of deposit account - is 100% safe.
List Of The Highest Yield Bank CD Rates For 12 Month Deposits (1 Year)
For consistency and comparison purposes, I have chosen to only list the best CD rates for 12 month certificate of deposits as opposed to listing every conceivable CD duration out there.
These rates and terms are subject to change at any time by the respective banks. Check the banks website for current rates, fees, terms and additional information before applying.
*EverBank APY shown for balances up to $1 million
Compare CD Alternatives For Offers That Exceed Even High Interest CD Rates
Of course, you should never commit to any agreement until you've conducted some research, properly compared offers, and first shopped around for the best CD rates and deals. You should never solely take my word for it without performing your own due diligence. I highly encourage you to check out the various rate disclosures to confirm for yourself.
Alternatively, if you're looking for a super competitive rate of return, you may wish to consider options beyond just high yield CD's. Those willing to forgo some of the ironclad protections afforded to CDs by FDIC insurance may want to check out P2P social lending networks, which may offer yields well above today’s deposit rates for those willing to lend money out to prospective to prospective good credit score borrowers. The rates offered by sites such as Lending Club and Prosper.com tout APY offers that greatly exceed anything offered by bank CD's. The impressive rates of return as reflected in this review of Lending Club are at the very least worth some consideration by prospective CD rate chasers.