If you want to lock in the highest rate possible on a certificate of deposit (CD), now is the time. The Federal Reserve is expected to cut interest rates later this year. If that happens, CD rates will fall -- the only question is how much.
Luckily, there are currently lots of banks and credit unions offering excellent CD rates. The list below has some of the highest-paying CDs I've found for terms ranging from one to five years. These rates are accurate as of April 15, 2024.
1. Apple Federal Credit Union 12-month Starter CD: 5.40%
- Minimum deposit: $50
- Maximum deposit: $5,000
- Early withdrawal penalty: All interest earned (up to a maximum of six months of interest)
Apple Federal Credit Union has the highest rate I've found for 1-year CDs. This is the credit union's Starter CD product. You can only get one Starter CD per membership to Apple Federal Credit Union, and the minimum deposit is just $50. You can deposit more money at any time up to the maximum deposit amount of $5,000.
You'll also need to join Apple Federal Credit Union. There are several ways to qualify, including living in its service area or joining an association that partners with it.
If you want a CD that's easier to open or without a deposit maximum, try First Internet Bank of Indiana. Its 12-month CDs have a 5.31% APY.
- Minimum deposit: $500
- Early withdrawal penalty: 40% of interest paid
As you can see, credit unions often have the best CD rates. For 2-year CDs, Pelican State Credit Union has a high rate and a low deposit requirement.
Since this is a credit union, you need to be a member to open one of its CDs. There are several ways to qualify, including living in an eligible part of Louisiana. You can also simply join one of Pelican State Credit Union's partner associations. For example, you could pay a $5 membership fee to join ACR Baton Rouge. This would make you eligible for a CD with this credit union.
Another good option is Edward Jones. It's currently offering an APY of 4.90% on 2-year CDs.
3. Edward Jones 3-year CD: 4.80%
- Minimum deposit: $1,000
- Early withdrawal penalty: N/A
Edward Jones offers brokered CDs. These work a little differently from CDs issued by banks, although they have the same FDIC insurance. Most importantly, brokered CDs can be bought and sold on a secondary market. This means there's no early withdrawal option. If you don't want your CD anymore, you need to sell it.
You could end up making or losing money if you sell a brokered CD, depending on whether rates have increased or decreased since you bought it. The advantage with this type of CD is that there's no early withdrawal penalty.
4. Fidelity 4-year CD: 4.55%
- Minimum deposit: $1,000
- Early withdrawal penalty: N/A
Fidelity is one of the most popular stock brokers, and it offers brokered CDs with FDIC insurance. While the minimum deposit on its new-issue CDs is $1,000, Fidelity also offers Fractional CDs with minimums of just $100. Since this is a brokered CD, you'll need to sell it if you want to get your money back before the maturity date.
5. First Internet Bank of Indiana 5-year CD: 4.55%
- Minimum deposit: $1,000
- Early withdrawal penalty: 360 days interest
First Internet Bank of Indiana has competitive rates on CDs ranging from three months to five years. On 5-year CDs, in particular, it has some of the highest rates I've seen. And because it's not a credit union, you don't have to jump through any hoops or meet membership requirements to open an account.
Making the most of your savings
Money that you may need at any time is best kept in a savings account -- a high-yield savings account. But CDs are great for earning stable interest on money you don't need in the near future. If you have any savings you want to set aside for up to five years, a CD could be your best option.
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