Best Bank CD Rates January 2020

If you’re looking for an investment that offers rewarding returns and zero risks, a CD just might be the option for you.

A certificate of deposit offers you a secure place to stash your money and earn interest, with FDIC insurance to back it up. CDs are accounts like online savings accounts or money markets or checking accounts. CD’s may earn higher rates than those other accounts, but your money is “locked up” for a period of time. This means you will pay a penalty if you need to withdraw the money from your CD before the term ends.

While CDs can be a good idea in general, not all of them are created equal. In this guide, we’ll tell you where to find the best CD rates, provide you with a few tips, and share some alternatives to CDs you might want to consider.

Compare the Best CD Rates Today

The first stop in CD investing is comparing rates. Very often your local bank doesn’t have the best rate. You can use the tool below to quickly compare today’s best cd rates, which are updated daily.

Top Banks for CD Rates

Discover

Synchrony

CIT Bank No-Penalty 11 Month CD – 1.80%

How to Invest in CDs

Which type of account you choose depends wholly on your goals.

If you choose to utilize a CD (or a few) in your investment or savings strategy, here are some tips to help you maximize your returns:

Know Your Terms

With a CD, you commit to leaving your funds untouched for a period of time. If not, you could be penalized and lose out on the interest you’ve accrued.

Fortunately, CD accounts come with a wide range of terms, giving you the flexibility to choose a timeframe that suits your situation.

Most CDs range from a few months to 5 years or more.

Interest rates climb as the length of your term does, but so does the penalty for early withdrawal. When you invest in a 5-year CD, the penalty for early withdrawal will be far higher than it will be for a 1-year CD.

If you know you’re likely to need access to your funds in the near future, opt for a shorter term.

If, however, you have enough money saved elsewhere to stay afloat if the unexpected occurs, take advantage of the high rewards a long-term CD has to offer.

Know the Penalties

Remember, every CD account is different, and not just in terms of CD lengths and interest rates.

Many short-term CDs, for instance, will dock you 2 months worth of interest if you withdraw early. But that standard doesn’t apply to every CD.

Some banks charge higher penalties for early withdrawal, and some impose less extreme penalties. 

Options like CIT Bank’s 11-month penalty-free CD, for example, don’t limit you at all. The key is to research the best CDs, looking at both their rates and penalties.

Try CD Laddering

If you want to be able to access your funds and still earn high interest, get strategic with CD laddering.

The concept of CD laddering entails setting up a series of CDs that reach maturity at different times. With CD laddering, you can open long-term CDs, still access funds frequently, and reinvest as interest rates climb.

CD laddering is a great way to play the investing game even if you’re averse to risk.

Alternatives to CDs

Whether you’re saving for a house, funding a college education, or padding your emergency fund, CDs, money markets, and online savings accounts are a rewarding route to reaching your goals.

Knowing which of these accounts to choose requires a little more thought into your goals and the time in which you want to meet them.

And if you’re looking to invest, there are a few peer-to-peer platforms that might be ideal for you,

CDs, Savings, and Money Market Accounts

Here are a few key factors you should consider as you choose an account for your savings:

• Interest: You’ll find the lowest interest with a traditional bank’s savings account. Those rates increase with online savings accounts and climb even higher with a long-term CD or money market.
• Liquidity: If you need to be able to access your funds at any given time, a savings account or money market are more suitable than a CD, with the exception of a penalty-free option.
• Minimum balance: If you’re looking for little to no minimum balance, a savings account is ideal. CDs, and especially money market accounts, are more likely to come with steeper minimums.
• Security: Each account is FDIC insured, so the funds you invest are guaranteed to be protected. What isn’t always guaranteed is interest. CD rates are locked in for the length of your term, but savings and money market account rates can fluctuate.

High Yield Online Savings Accounts

Lending Club

Fundrise

Like Lending Club, Fundrise allows you to invest your money into projects that interest you, namely real estate ventures.

And like Lending Club, it comes with risks. To curb them, Fundrise’s intuitive technology finds a balance between surefire large-scale investments and smaller, riskier ones. Fundrise puts your money to work for you, with a current annualized dividend yield of over 6%.

Invest Now

Bottom Line on CD’s

If you like the sound of no-risk, all-return investing, a CD is definitely worth your time.

By choosing one of the platforms above, you can ensure you’re getting some of the best CD rates available.

With a goal in mind for your savings, you can choose a CD with the perfect term length, policy, and rates to hit your target.

You may even find your CD account to be a rewarding vehicle for investing. It’s all up to you.