You can lose part of your original deposit if the penalty exceeds the interest you’ve earned. For example, if you withdraw after earning only 60 days of interest but owe a 90-day penalty, the bank will take the remaining 30 days from your principal. The catch is that if you need your money before the term ends, you’ll pay an early withdrawal penalty. This penalty is how banks make sure you stick to your end of the deal.

What drives CD rates?

Some institutions use a private insurance company instead of, or in addition to, the federally backed FDIC or NCUA deposit insurance. Institutions often stop using private supplemental insurance when they find that few customers have a high enough balance level to justify the additional cost. The penalty for early withdrawal deters depositors from taking advantage of subsequent better investment opportunities during the term of the CD. In rising interest rate environments, the penalty may be insufficient to discourage depositors from redeeming their deposit and reinvesting the proceeds after paying the applicable early withdrawal penalty. Added interest from the new higher-yielding CD may more than offset the cost of the early withdrawal penalty. Withdrawals before maturity are usually subject to a substantial penalty.

UK Mortgage Rates: Market overview

A CD ladder is a strategy that allows you to invest in CDs while maintaining periodic access to your funds and still getting high yields from multi-year CDs. Jumbo CDs (which require a minimum deposit of $50,000 or $100,000) can pay more, but not always. Whether now is a good time to lock in a CD depends on your financial goals. CNET staff — not advertisers, partners or business interests — determine how we review products and services. When you open your certificate of deposit CD, you may be able to decide how to receive interest. You may be able to receive payments at regular intervals, such as every year or quarter.

Find the right savings account for you

Marcus' CD penalties are generally on the lower end, compared with those at competing banks. When ranking the top CDs, we looked at APYs, term lengths, minimum deposit requirements, penalties for early withdrawals and ease of use. All of the CDs included on this list are FDIC- or NCUA-insured up to $250,000 per person. If you are opening a joint account CD with a spouse, the insurance limit is doubled. Quontic Bank offers traditional CDs with term lengths ranging from six months to five years, and you can earn up to 3.85% APY. Its CDs have a $500 minimum deposit requirement and no monthly maintenance fees.

Current LimelightBank CD Rates

Generally, longer-term CDs offer higher rates than shorter ones, rewarding you for locking in your funds for extended periods. Unlike fixed-rate CDs, these CDs have interest rates that can change over the term based on market conditions. While they offer the potential for higher returns, they come with the risk of lower rates during downturns. Once you reach the end of the term (called “maturity”), you get your original deposit back, plus any interest earned. The beauty of CDs is that they offer guaranteed returns, making them an appealing option for anyone looking to grow their money steadily. While CDs might seem more common in places like the US, UK investors can also benefit from similar products, such as fixed-term deposit accounts and UK savings certificates.

• Just be sure that you're working with an FDIC-insured bank or an NCUA-insured credit union; all of the institutions on our list of the best CD rates offer FDIC or NCUA insurance.
• Or you can use a CD to just earn a guaranteed return on cash you won't need for a while.
• A CD's APY is the amount of interest that an account earns in a year.
• You can open an account online or via the mobile app and interest compounds daily and credits monthly.
• Money market accounts also have competitive APYs, although most are lower than the best CD rates.

You generally only deposit funds into a CD once when you open the account. You won’t be able to deposit more funds as you go (there are exceptions to this, like an add-on CD that lets you deposit funds during the term). You can usually deposit money with a check or electronic transfer. Learn how a Discover Certificate of Deposit can help you reach your savings goals, with flexible terms from three months to 10 years.

Yes, you will usually face an early withdrawal penalty when you take your money out of a certificate of deposit before the term ends. However, some issuers offer CDs with no early withdrawal penalty, although these tend to have low rates. This means that you can determine, before agreeing to the CD, whether the EWP is acceptable to you.

Bask Bank is the online division of Texas Capital Bank and similarly to its parent bank, offers only short-term CD terms. These terms range from three months to two years and all offer competitive yields. Those looking for a longer-term CD will have to look elsewhere. You’ll also need to look at other banks if you're interested in specialty CDs, such as no-penalty CDs, because Bask doesn't offer any.Bask Bank has a penalty of 90 days of interest on its one-year CD. Morgan Stanley Private Bank offers pretty much any term of CD that most people need.

• But a bank will lower rates on its newly issued CDs over time.
• This means savers still have the opportunity to open a CD that's outpacing inflation and will likely outpace long-term inflation expectations.
• And it can be a negative when you’re looking at low rates that may rise soon.
• To find the best CD rates, we regularly survey CD offerings from the banks and credit unions that continually offer the most competitive CD rates.

The higher the federal funds rate, the higher the interest rate you can generally earn on a CD. CFG Bank offers money market, CD and savings accounts with competitive rates. Several checking accounts also are available with access to more than 2,000 ATMs. CFG charges a few fees that are higher than other banks, such as a $37 overdraft fee and a monthly maintenance fee between $2 and $10, depending on the account.

See more of what to expect in 2025 in our CD rates forecast. I’ve been a personal finance writer and editor for more than two decades specializing in money management, deposit accounts, investing, fintech and cryptocurrency. Throughout the years of crunching numbers and words, I’ve been passionate about helping readers make informed decisions on managing their money with uniquely helpful advice. I have an MBA from George Washington University, and am an active member of both the National Press Club and SABEW, where I’ve volunteered as a judge for their respective journalism awards programs.

In this way, the depositor claims the longest-term rates while retaining the option to re-invest or withdraw the money in shorter-term intervals. A real-world example of a certificate of deposit rates could be those offered by commercial banks such as the Bank of America, Fidelity or Discover Bank, etc. For example, one of Bank of America's products comes with a minimum balance of $10,000 with an option to choose terms between 7-35 months. This is an interest-bearing account available at both banks and credit unions which is similar to a savings account but also offers some checking account features.

The interest rate for a CD can vary by the amount of the deposit or the length of the term, typically between three months and five years. If you withdraw your funds before the maturity date, you may encounter a penalty. A long-term CD typically has a term length of 3 years or more. Because your money remains locked in for an extended period, these CDs might offer higher interest rates than short-term options, allowing you to earn more interest over time. A fixed rate would mean you'll earn the same return even if the market interest rates fluctuate during the term.

You deposit money for a set period, earn interest, and get your money back at maturity, along with the interest earned. These CDs allow let you withdraw your money early without paying fees, but they typically offer lower interest rates in exchange for this flexibility. No-penalty CDs are good if you think you might need access to your money but want better rates than a savings account. Bankrate.com is an independent, advertising-supported publisher and comparison service.