Brick-and-mortar traditional banks, as well as online institutions and credit unions, offer these kinds of CDs. ![]() Regular CDs: A regular CD is a CD with a fixed interest rate for a set period.And right now, CD rates are high-over 4% and 5% in many cases-so you can earn a decent amount on your deposit. CDs offer a fixed rate of return that guarantees you earnings when the term is over. If you're risk-averse and don't want to invest money in the stock market because there's no guarantee you'll see a return, then you should consider a CD. If you're looking to save money for a certain amount of time and you want to make sure you don't touch it until you need it, then you should get a CD. CD rates can change, so locking in a high interest rate today could guarantee you the maximum earnings, especially if CD rates drop by next year. If you invest $10,000 in a CD for one year, you could earn $556-that's based on the best 1-year CD rate offered right now (5.56% APY). How Much Does $10,000 Earn in a CD in One Year? Our best CD rates are based on careful research, and we update this article every day to give you the best CD rates available nationwide. In fact, some of the biggest banks pay interest rates very close to zero, but it depends and can change from month to month. Extremely large banks typically don't need to attract customers and deposits in the way that smaller institutions do, so they don't need to use rates as a way to win business. We do research their rates, but they don't make our list simply because they don't pay enough. You typically won't see big names like Chase, American Express, or Bank of America in our rankings of the best CD rates. The money you put into a CD is insured like other deposit accounts-up to $250,000 per customer, per institution. You'll get either monthly or quarterly statement periods, paper or electronic statements, and usually monthly or quarterly interest payments deposited to your CD balance, where the interest will compound. Once your CD is established and funded, the bank or credit union will set the terms and conditions like with most other deposit accounts. Credit unions may also require you to open a high-yield savings account or money market account before you open a CD. The institution: The bank or credit union where you open your CD will determine aspects of the agreement, such as early withdrawal penalties and whether your CD will be automatically reinvested if you don’t provide other instructions at the time of maturity.The principal: Except for some specialty CDs that allow add-on deposits, this is the amount you agree to deposit into the CD, at the time of opening. ![]() The term: This is the length of time you agree to leave your money deposited to avoid any penalty (such as six months or 1 year, etc.) The term ends on the "maturity date," when you can withdraw your money penalty.On the flip side, a fixed interest rate may hurt you if rates later rise and you've lost your opportunity to take advantage of higher-paying CDs. The bank cannot later change the rate and therefore reduce your earnings. The interest rate: Most CDs pay a fixed interest rate.A CD locks you into four specific things: When time is up, the CD pays you the set interest rate you agreed to when you opened it. The difference is what you're agreeing to when you sign on the dotted line (even if that signature is now digital).Ī CD works by locking your deposit up for a set time. How Does a CD Work?Ī certificate of deposit (CD) is similar to a bank deposit account. For example, if the rate is 5.50% for a 1-year CD, the bank or credit union will pay you 5.50% in interest on your money for keeping it in the account, untouched, for 12 months. ![]() Ranked by highest APY, then shortest term, then lowest minimumįor more options, see our in-depth 3-month CD rankingsįor more options, see our in-depth 6-month CD rankingsįor more options, see our in-depth 1-year CD rankingsįor more options, see our in-depth 18-month CD rankingsįor more options, see our in-depth 2-year CD rankingsįor more options, see our in-depth 3-year CD rankingsĭepartment of Commerce Federal Credit Unionįor more options, see our in-depth 4-year CD rankingsįor more options, see our in-depth 5-year CD rankingsĭepartment of Commerce Federal Credit Union*įor more options, see our in-depth 10-year CD rankingsĪ CD rate is an interest rate that shows what a bank or credit union will pay you for depositing your money with them for a certain period of time.
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