Best CD accounts

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Last Updated: Saturday, 30 December 2023 16:30

Published: Tuesday, 01 September 2020 23:05

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Best CD accounts

CDs are fixed term investment. CD is "Certificate of Deposit". It has a fixed term, and you can withdraw your money only at maturity. For premature withdrawal, you have to pay a heavy penalty (usually 6 months of interest). CD aren't generally the best investment. You will lose money over long term as CD always pay you less than inflation.

Opening CD :

There are 3 places to open CD:

1. Banks: Traditional banks will advertise their CD rates everywhere. Bigger banks (Chase, Bank of America, Citi, etc) usually offer the lowest CD rates, while smaller banks (local banks, etc) offer the highest rates.
2. Credit Unions: Since Credit Unions are "Not for profit", they are able to offer higher rates than banks. However, you need to wualify to be a member. Generally the area you live in has multiple credit unions, and you may qualify to be a member of at least couple of those.
3. Brokerage firms: These are your regular brokerage firms (Charles Schwab, Ameritrade, etc) that you open your stock account with. Most of the brokerage firms allow you to buy or sell CD on their website.

Bank/CU CD:

Things to watch out for is that bank/CU should not have any membership requirement, should not require you to open any additional account (like a savings or checking account), and should not do a hard credit inquiry. Remember that CDs are little risky in the sense that if you forget to close your CD at maturity, and if the bank renews your CD at end of your maturity (usually 15 days grace period), then you are in trouble. If you try to close your CD after the grace period, they will deduct interest from your previous term of CD also (basically penalizing you on a CD that has already matured), effectively resulting in very low interest rate for the earlier matured CD. Many online banks will not even inform you, nor close the CD automatically. They want you to forget about CD maturity date. So, do not open too many CDs. Open few and remain under $250K limit per CD (after interest). Everytime you open/close a CD, you lose interest of about 15 days, since banks send you check on maturity, then you will cash it out and then deposit it in another bank. So, if your CD term is for < 1 year, you lose 5% of interest. So, try to shoot for a CD term between 1 yr and 3 yr. Ladder the CDs so that you have at least 1 CD maturing every 6 months.

Broker CD:

Best place to get CDs is thru your brokerage firm. I would just stay away from Bank and CU CDs, unless they are offering a much higher rate than CDs from brokerage firms. Brokerage firms offer CDs at least 0.5% higher than most of the banks/CU. Look in "Bonds, Money Market and CD" section for more details.

Conclusion: Tons of banks, Credit Union, Brokerage firms offer CDs that offer close to 0%. Whenever Fed rates are close to 0%, CDs will give you abysmal return. I always wondered who buys these 0.01%or 0.1% CDs. You should never chase CD returns. If you have to buy a CD, buy it via your brokerage firms (known as brokered CD). Apart from CD, also look at bonds and bond ETF being offered (look in the "Bonds, Money Market and CD"  section). They may offer you higher returns, though they carry little more risk than CDs (as CDs are FDIC insured). If CD don't give you over 3% in interest rate, just stick to savings/checking accounts and bank bonuses. Also never go for more than a year for a CD, no matter what the rate is, as stock markets will always give higher rate than CD when invested for a couple of years (guaranteed by the Fed).

Best CD rates:

I'll put some CD deals here on this page. However, as I said before, CDs are not your best investment, and only serve to protect your money short term. So, shop around before you commit to a particular CD.

2023: Best CD rate is 5%(Jan), 5.35%(Mar) for 2023:

• All year round: Brokered CDs at Brokerage firms as Fidelity, Schwab, etc offering close to 5% interest rates (as of Jan 2023) on CD of 1 year or more. No bank or CU can offer more than what these Brokered CDs offer.
  • 03/20/2023 => Schwab CD for > 5% interest rate for maturities from 1 month to 18 months => https://www.doctorofcredit.com/charles-schwab-up-to-5-35-apy-1-18-month-cds/
• 01/10/2023 => Navy FCU: 5% for 15 month CD. Becoming a member at Navy FCU is harder (joining NASA FCU is lot easier)
  
  • Link: https://slickdeals.net/f/16375606-special-15-month-certificate1-15-months-4-88-5-00

2022: Best CD rate is 4% (Oct), 5%(Nov) for 2022:

• All year round: Brokered CDs at Brokerage firms as Fidelity, Schwab, etc offering over 4% interest rates (as of Oct 2022) on CD of 1 year or more. As of Nov 2022, the highest 1 year rates were just under 5% (4.8% or so). No bank or CU can offer more than what these Brokered CDs offer.
• 11/05/2022" Andrews FCU: 5% for a 7 month CD. Available nationwide and anyone can join the CU thru American Consumer Council.
  • Link: https://www.doctorofcredit.com/andrews-fcu-5-00-apy-7-month-cd-available-nationwide/
• 09/25/2022 => NASA FCU: 3.75% for 15 month CD, 3.55% for 9 month CD. Anyone can become a member by joining National Space Society (complimentary membership provided)
  • Link: https://slickdeals.net/f/16029430-high-yield-certificates-nasa-federal-credit-union
• 09/25/2022 => Langley FCU: 4% for 16 month CD. Opening a savings account and depositing $5 in it makes you a member of the FCU.
  
  • Link: https://www.langleyfcu.org/deposits-certificate

2021: All CD rates were abysmal. Better to stick to Savings/Kasasa Checking accounts and bank bonuses.

2020: All CD rates were abysmal. Better to stick to Savings/Kasasa Checking accounts and bank bonuses.

2019: Best CD rate was 3.5% for 2019.

• 3.5% - hyperian bank 19 month CD (nationwide). 1% over treasury rate as of Mar 1st, 2019. Best CD rate offered so far since 2018. Can open an IRA CD too. website: https://www.hyperionbank.com/home/personal/savings/cds. Expired March, 2019.
• 3% - 19 month CD (requires membership, cost about $35). https://www.hfcu.org/rates.html. expired July, 2019
  
• 3.21% - 30 month step jumbo CD (min $100K). requires membership (join cancer society for $10 to become a member), but is available to anyone nationwide. It's the best CD as of now. (updated Aug 15, 2019, still going Nov 1, 2019): This may last for a while when I talked to the rep. It does have a hard pull for credit. https://www.kfcu.org/rates/
• 3.25% - 36 month CD. requires membership ($10 to join for anyone), and is open to anyone nationwide. 24 month CD is at 3%. This CD has been going on for a long time. https://www.psecu.com/banking/certificates
• 3% - 36 month CD - an OK rate - https://www.macfcu.org/become-a-member/rates/
• 3.75% - Navy Federal IRA 40 month CD. This is only for IRA a/c, and comes with $100 bonus. However, you will need to become a member, which is not easy as it requires someone from Navy to give their details to you. website: https://www.navyfederal.org/savings-season-2019/save-money.php. Reason I included IRA CD is because bonds are very expensive right now. Any good rating bond mutual funds are struggling to give you a yield of even 2.5% (which is federal funds rate or 1 month Treasury Bill). Bond funds also charge a lot higher fees, basically wiping out any interest. Stocks are in uncharted territory(at more than 100% of GDP for 5 years in a row), so this CD might be the best option, if you qualify.
• 3.15% - united bank 19 month Flex CD. (nationwide) - 0.4% over treasury rate
• 3.0% - 13 month CD for residents of Texas only. Requires checking a/c too. website: www.acutx.org . Might want to wait for a better option.
• 3.25% - 19 month truwest credit union (only for residents of Texas and Arizona). https://truwest.org. Will need to open a savings a/c in addition to CD. Best option so far.
• 3.15% - Home loan bank 19 month e-CD (nationwide). Expired August, 2018.
  
• Misc banks - Main street bank, tons of other banks with regional availability only. offer keeps on coming and going. Not consistent.