Interest rates are at record lows, but you’ve got to put your money somewhere.
With most savings accounts paying a pathetic 0.10% APY CDs remain a better paying alternative.
Believe it or not, you can earn as much as 3% on some local deals and up to 2.30% on nationally available certificates of deposit.
There are also some special types of CDs that help savers get started, provide the flexibility to make additional deposits or even benefit from a higher rate during the term of the investment.
Let’s start with where to find the best nationally available deals on three of the most popular terms – 5 years, 2 years and 1 year.
To qualify for these lists, a bank must sell its CDs to savers in all 50 states either online or through the mail
Leading National 5-Year CD Rates
Leading National 2-Year CD Rates
|Salem Five Direct||1.25%||$10,000|
Leading National 1-Year CD Rates
Can you do better than that?
It depends on what kind of local deals the community banks and credit unions near you are offering.
The Greater Nevada Credit Union, for example, is paying up to 3.00% APY on 5-year CDs and 2.50% APY on 3-year CDs.
Members can buy those CDs over the phone or in person at one of the eight branches in Carson City, Dayton, Ely, Minden, Reno, Sparks and West Wendover.
San Antonio Credit Union has a Texas-sized deal for its members. Earn up to 2.90% APY on a 10-year CD.
Long Island savers can make up to 2.75% APY on a 7-year, or 2.50% on a 5-year CD, from Montauk Credit Union.
So, as you can see, local deals are out there. You’ve just got find them.
CDs with no or low minimum deposits
Now, some of those deals require some pretty heft minimum deposits.
To earn the full 2.90% on that 10-year CD from San Antonio Credit Union you’ve got to invest a whopping $90,000.
Synchrony Bank requires $25,000 to earn that 1.10% on its 1-year CDs.
Don’t have that much? (At least not yet.)
Here are five banks that offer some of the best nationally available returns with some of the lowest minimum deposit requirements:
- Ally Bank: No minimum
Barclays Bank: No minimum
Doral Direct: $500 minimum
GE Capital Bank: $500 minimum
AloStar Bank of Commerce: $1,000 minimum
CIT Bank: $1,000 minimum
CDs that encourage small, regular deposits
Another way to start saving with CDs if you don’t have much money is to open an account that lets you make small, regular contributions to a CD.
One such product is the Thrive account offered by Hanscom Federal Credit Union, which has six branches in suburban Boston.
You can contribute as little as $5 and as much as $500 per month to this 1-year CD paying 3.00% APY.
You’ll effectively earn 1.63% APY since you’ll be depositing the money gradually over the year, but it’s still one of the best rates out there.
Products like these help you establish the habit of regularly putting savings in CDs.
Rate-bump CDs are a good option for savers who are worried that interest rates might go up, leaving them locked-in to a less lucrative return.
Sometimes these CDs offer significantly lower interest rates in exchange for the rate-bump option, which means you’re better off investing in a regular CD and perhaps paying an early withdrawal penalty later if rates increase significantly.
But Ally’s 2-year Raise Your Rate CDs have a competitive 1.10% APY and no minimum deposit.
Low early withdrawal penalties
Low early withdrawal penalty CDs are great for savers who dislike the idea of not being able to access their money for an entire CD term.
These are a better option than liquid CDs, which allow you to withdraw your money any time but have inferior interest rates.
Here are a couple of CDs offering a good combination of low penalties and high interest rates:
- AloStar Bank of Commerce: 30 days’ interest on up to 1-year CDs, 3 months’ interest on up to 2-year CDs
Barclays: 3 months’ interest on up to 18-month CDs, 6 months’ interest on up to 5-year CDs