Which Banks Offer the Highest CD Interest Rates?

If you’re comparing certificate of deposit rates, you’re probably asking “Which banks offer the highest CD rates?” Comparing CD rates may involve a simple comparison of your bank’s available CD interest rates and terms or, if you’re in search of the very highest CD rates, you’re probably evaluating online CD rates.
If you’re a relatively new CD investor, you might guess that the highest CD rates are offered by the largest U.S. banks and financial institutions such as Bank of America, Wells Fargo, or Citibank. Interestingly enough, you’ll find some of the highest CD rates offered by banks that aren’t household names.

What Banks Offer the Highest CD Rates?

Before you begin your search for the highest CD rates, keep in mind that the amazing rate you find today might have a short shelf life. The borrowing bank might be a virtual bank or a small bank in another part of the country.

  • For instance, you learn that the top two lenders for a three-month CD are California First National Bank and EverBank. Both banks’ APY are the same. If you have just USD 1,000 to invest in a CD, you can’t choose either of these. The minimum deposit amounts are higher than the amount you have available.
  • You can invest the money at First Internet Bank of Indiana, but you’ll earn 10 basis points less than the top two banks. In comparison to the top two highest CD rates for your maturity range, First Internet Bank of Indiana is a virtual bank.
  • Check that all banks you’re considering are identified by the Federal Reserve System and that your deposit is FDIC insured.
    Let’s start with the basic information you’ll need to compare any bank’s CD rate. As long as the certificate of deposit is FDIC-insured, you won’t lose principal.

What Banks Offer the Highest CD Rates? CD Yields

Certificate of deposit owners want the best CD yields. The federal funds rate is considered one of the best ways to predict the direction of CD rates. Although CDs don’t track the U.S. Treasury 2-year Note in lockstep pattern, it’s considered a market indicator by fixed income professionals.

You’re unlikely to find a direct correlation between your bank’s lending and CD rates. The bank’s loan rates aren’t an indicator that their CD yields are going to increase. Because you’re loaning money to the bank when you buy a CD, it’s in the bank’s interest to keep CD rates lower than the rates they charge borrowers on loan products.
However, if you’re interested in shopping for the highest CD rates, consider small community banks and credit unions’ promotions. If the bank is located in an area where loans are increasing and the bank wants to increase deposits, you’re likely to get higher CD rates and yields as a result.

What Banks Offer the Highest CD Rates? Yield Analysis

Review the current CD yield analysis, including average CD yields over the previous three to six months if you’re considering rates in this maturity range now. Consider the CD rate forecast along with your personal perspective. For instance, if you want to invest some cash in CDs for the next five years, consider the rates at which five-year CDs are trending. Consider:

  • The direction of CD yields. Are CD yields going up or down? The loss of a single basis point, 0.01 percent, can be meaningful in a low interest rate environment.
  • Expert opinions about CD yields. If your advisor believes that short-term CD yields will increase by 50 percent within 12 months and you agree, invest in three to six-month CDs and reinvest in longer term CDs when rates rise.

Here are some additional strategies to use when buying a CD in a rising interest rate environment.

What Banks Offer the Highest CD Rates? Interest Rates

It’s practically impossible to time changes in interest rates in order to capture the best returns, and you shouldn’t try. If you’re expecting rates to rise, they might or might not change direction. The U.S. Federal Reserve’s decision to raise the fed fuds rate might be followed by the decision to decrease it once more.
If your crystal ball is cloudy about where interest rates are headed, don’t keep all of your CD funds in short maturities if you’re investing over an indefinite period:

  • Consider building a CD ladder so that, as your funds come due in three or six months, you must reinvest it at then current rates.
  • Invest a portion of safe money funds earmarked for CDs in longer five or even 10-year maturities.
  • Break down the amount of money per CD within a specific maturity range, such as five certificates of deposit at USD 20,000/CD instead of a single USD 100,000 CD.
  • Buying a CD with a one-year term and higher interest rate than shorter three, six, or nine month maturities with lesser CD yields can seem like a good idea, but a ladder of shorter maturities can provide you with opportunity to reinvest at higher rates over in the future will increasing your optionality.
  • These strategies increase your flexibility if rates rise.

Naturally, more borrowers are available to compete for your money if you have more capital to invest over a longer time horizon.

What Banks Offer the Highest CD Rates? Jumbo CDs

If you’ve got more money to invest and a longer time horizon, you’ve got more choices. For instance, if you want to buy jumbo CDs (with minimum deposit size of USD 100,000) with five-year maturities, government agencies, credit unions, and banks will compete for your money.
The answer to “Which banks offer the highest CD rates?” is fluid. If you find a great rate today from a regional bank you’ve never heard of, that bank’s rate might not be the highest when your CD matures.

  • You must compare and contrast borrowing financial institutions when you have money to invest in CDs.
  • Remember, even if you have money to invest in jumbo CDs, if there’s a chance you might need access to some of your capital before the funds mature, consider liquid certificates of deposit. You’ll receive lower CD rates of 0.2 to 0.55 percent over the maturity term but, if you need flexibility, you won’t pay hefty early withdrawal fees.