Best 5-Year CD Rates for November 2023

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Farmers Insurance Federal Credit Union – 5.00% APY

Term (months): 60
Minimum deposit: $1,000
Early withdrawal penalty: Complex formula with a minimum of 6 months of interest
Membership: Anyone is eligible to join the credit union through membership in the American Consumer Council.

MYSB Direct – 4.90% APY

Term (months): 60
Minimum deposit: $500
Early withdrawal penalty: All interest (3 months minimum)
About: MYSB Direct is the online banking arm of M.Y. Safra Bank, which is headquartered in New York City and operates a single branch there.

First Harvest Credit Union – 4.89% APY

Term (months): 60
Minimum deposit: $1,000
Early withdrawal penalty: 6 months of interest
Membership: Anyone is eligible for membership by agreeing to join the CrossState Credit Union Foundation, and First Harvest will cover the membership fee.

Self-Help Federal Credit Union – 4.86% APY

Term (months): 60
Minimum deposit: $500
Early withdrawal penalty: 6 months of interest
Membership: Anyone who lives, works, or worships or attends school in any of the eligible counties (or who has a family or employer affiliation with the credit union) can join Self-Help FCU for free. Otherwise, there's a one-time $5 fee.

U.S. Senate Federal Credit Union – 4.86% APY

Term (months): 60
Minimum deposit: $1,000
Early withdrawal penalty: 12 months of interest
Membership: Anyone can join USSFCU by agreeing to a free one-year membership in the nonprofit American Consumer Council and keeping at least $5 in a savings account.

SouthEast Bank – 4.80% APY

Term (months): 60
Minimum deposit: $1,000
Early-withdrawal penalty: 6 months of interest
About: Established in 2002, SouthEast has 14 branches across Tennessee and serves customers nationwide through digital banking and the AllPoint network.

BMO – 4.75% APY*

Term (months): 59
Minimum deposit: $1,000
Early withdrawal penalty: 18 months of interest
About: BMO is a U.S. subsidiary of the Canadian multinational Bank of Montreal, and is one of the 25 largest U.S. banks. In addition to online products, BMO operates branches in eight states.

*This rate may differ for those residing in Arizona, Florida, Illinois, Indiana, Kansas, Minnesota, Missouri, or Wisconsin (i.e., the states where BMO operates physical branches).

Workers Credit Union – 4.75% APY

Term (months): 60
Minimum deposit: $500
Early withdrawal penalty: 50% of interest that would have been earned
Membership: Anyone can join Workers Credit Union through a complimentary 1-year membership through the Financial Fitness Association and by keeping $5 in a credit union savings account.

American 1 Credit Union – 4.75% APY

Term (months): 60
Minimum deposit: $500
Early withdrawal penalty: Complex formula; exercise caution
Membership: Anyone nationwide can join American 1 by keeping $5 in a savings account and becoming a member of Community 1 Cooperative for a one-time $3 fee.

First National Bank of America – 4.75% APY

Term (months): 60
Minimum deposit: $1,000
Early withdrawal penalty: 18 months of interest
About: First National Bank of America is a Michigan-based community bank established in 1955. In addition to three branches in the state, FNBA offers online banking products to customers nationwide.

Bread Savings – 4.75% APY

Term (months): 60
Minimum deposit: $1,500
Early withdrawal penalty: 12 months of interest
About: Bread Savings is the online consumer deposits bank operated by credit card issuer Comenity Capital Bank.

Merrick Bank – 4.70% APY

Term (months): 60
Minimum deposit: $25,000
Early withdrawal penalty: 9 months of interest
About: Primarily a credit card issuer and consumer finance provider, Merrick Bank offers online-only certificates of deposit.

Popular Direct – 4.65% APY

Term (months): 60
Minimum deposit: $10,000
Early withdrawal penalty: 24 months of interest
About: Popular Direct is the online-only arm of Popular Bank, the U.S. banking subsidiary of Popular, Inc., which serves banking customers in the U.S., Puerto Rico, and the Caribbean.

Heartland Credit Union – 4.62% APY

Term (months): 60
Minimum deposit: $25,000
Early withdrawal penalty: 6 months of interest
Membership: Anyone can join Heartland by keeping $25 in a member savings account.

Crescent Bank – 4.60% APY

Term (months): 60
Minimum deposit: $1,000
Early withdrawal penalty: 6 months of interest
About: Founded in 1991, Crescent Bank is primarily an auto loan provider that also offers banking services in the Greater New Orleans area as well as online to customers nationwide.

Department of Commerce Federal Credit Union – 4.60% APY*

Term (months): 60-84
Minimum deposit: $25,000
Early withdrawal penalty: 6 months of interest
Membership: Anyone can join the DCFCU by agreeing to a free membership in the nonprofit American Consumer Council.

*Rates listed in DCFCU's rate charts are 0.10% lower than what's listed here, for a minimum deposit amount of $500. But the fine print indicates that for deposits of $25,000, a 0.10% premium applies.

Pros and Cons of a 5-Year CD

Pros

Interest rate is locked for five years
Pays completely predictable earnings
Extremely safe
Potentially higher APY than other options
Discourages spending

Cons

Penalty imposed if you withdraw early
Only allows a single deposit
If rates rise, you're locked at a lower rate until maturity
Future interest rates are impossible to predict

Pros Explained

Interest rate is locked for five years: When you open a 5-year CD, you get to keep that rate for the entire duration of the CD. Even if interest rates tanks after you lock in your certificate, the bank cannot change the rate you agreed to until the five years are concluded.
Pays completely predictable earnings: Since you know the precise rate you'll earn for the full five years of your CD's term, you can determine exactly how much your CD balance will be when your term ends.
Extremely safe: All CDs held at FDIC banks or NCUA credit unions are insured by the federal government for up to $250,000 per person per institution. So even if the institution fails, your CD funds are protected.
Potentially higher APY than other options: Depending on the current interest rate environment, 5-year CDs may pay higher rates than savings and money market accounts or shorter CDs. It's not always true, but in times when rates are falling, 5-year CD rates are often the best-paying deposit account.
Discourages spending: Because your funds are committed in a CD with threat of a penalty if you withdraw the money early, you may be deterred from the temptation to spend your savings on something unplanned.

Cons Explained

Penalty is incurred if you withdraw early: When you open a CD, the bank or credit union will spell out in the agreement how it will calculate an early withdrawal penalty should you request to take your money out before maturity. Most typically, you'll have to forfeit a certain number of months of interest.
Only allows a single deposit: You fund CDs with a one-time deposit when you open the certificate. Only in "add-on" CDs, an uncommon niche product, can you make additional deposits to the same certificate.
If rates rise, you're locked at a lower rate until maturity: If interest rates go up while you are locked into a 5-year CD, you will be stuck with your rate until the end of your term, preventing you from capitalizing on the higher rates.
Future interest rates are impossible to predict: Over a five-year timeline, it is not possible to forecast if interest rates will rise or fall, or even hold steady for years. So it's difficult to predict whether a 5-year CD rate will be competitive or not several years down the road.

Alternatives to a 5-Year CD

Shorter-Term CDs

Though banks and credit unions often pay higher rates on 5-year CDs than on shorter terms, this isn't always the case. So it can be smart to consider a shorter CD if it allows you to earn a higher APY. This is especially true if national interest rates are already elevated or are expected to rise in the coming years.

In addition to possibly earning a higher rate, choosing a shorter-term CD lets you make another choice with your money sooner than if you have to wait for a five-year term to expire. Just be aware that when your shorter-term CD matures, the rates you're able to get then could be quite a bit less than the rate you were able to lock in for five years.

High-Yield Savings or Money Market Accounts

Another option for your funds is a high-yield savings or money market account. When rates are high, the best high-yield savings accounts and best money market accounts may offer rates competitive with a 5-year CD. But it's critical you understand that these are variable rates that can change at any time. If interest rates start going down, so too will savings and money market rates, while CD rates will be locked at your initial APY.

The advantage, however, is that you can withdraw your funds at any time from a savings or money market account, giving you more flexibility for funds you're not confident about locking up in a CD.

Bond Investments

Instead of CDs or bank accounts, you can also put your funds into bond instruments, which come in a wide spectrum of types. For instance, you can buy U.S. Treasury savings bonds, like I bonds or EE bonds. Also backed by the U.S. Treasury are Treasury bills and notes. T bills have durations of up to one year, while Treasury notes have terms of 2 to 10 years. U.S. savings bonds, treasury bills and treasury notes are among the safest investments you can buy.

You can also invest in municipal or corporate bonds, though the research and decision-making required to choose individual bonds may be more challenging than many savers are equipped or inclined to decipher. An easier option is to invest in a bond mutual fund or bond ETF (exchange traded fund), which bundles hundreds or thousands of bonds into one fund and enables you to enter and exit the fund anytime you like.

Stock Equities

For money you plan to hold as long as five years, a conservative investment in the stock market is an alternative option. And if the five years in which you're invested in the market are a period of growth, you can earn considerably more with stocks than a fixed-rate CD.

However, the significant downside is that preserving your principal is not guaranteed in the market. You can very easily lose some of your investment, unlike money held in a CD. So if keeping your savings reliably intact is important to you, a CD will serve you better than an equity investment.

Frequently Asked Questions (FAQs)

How Does a 5-Year CD Work?

Opening a certificate of deposit involves making an agreement with a financial institution that you will deposit a certain amount of money in an account that you won't touch, in exchange for earning a premium on the rate of return. You'll also be guaranteed that interest rate for the life of the certificate.

Five-year certificates are useful savings vehicles in a number of situations. For instance, if national interest rates are expected to fall over the coming few years (i.e., you're in a declining rate environment), it would be beneficial to lock in one of today's more favorable rates for the coming five years.

Socking money away in a 5-year CD can also be a helpful strategy if you're saving up for a large financial goal. Perhaps it's money for a down payment on a house. Or maybe you have money saved for your child's college education and you'll need it for tuition in five to six years. By putting it in a CD, you can ensure it earns interest and doesn't lose principal, while also putting a mechanism in place to discourage you from dipping into the funds for other purposes.

How Do CDs From Traditional Banks, Online Banks, and Credit Unions Differ?

Certificates of deposit are available from brick-and-mortar banks, online-only banks, internet banking divisions of traditional banks, and credit unions. For the most part, there is little difference between CDs from these different types of institutions.

The biggest difference is that opening a CD with a credit union requires you to be a member of that credit union. The credit union certificates we include in our rankings all allow a method for anyone nationwide to join. However, doing so sometimes requires a small donation or fee (though not always).

As for CDs from different bank types, there is little difference. You may be able to make an in-branch visit to physical banks that operate in your area, while you can only open an account at an internet banks online. But aside from the physical presence of a bank (or lack thereof), CDs from different banks will function generally the same way.

These different institution types can pay very different rates. Credit unions are not-for-profit institutions and sometimes offer their members better rates than banks do. As a result, you'll see credit unions ranking prominently for longer terms like 5-year certificates.

Online banks also tend to pay higher APYs than traditional banks, as their no-presence business model costs less to maintain than brick-and-mortar institutions. These overhead cost savings are often then passed to consumers via better interest rates.

Which CD Term Pays the Highest Rate?

In theory, the longer you're willing to deposit your funds, the higher the interest rate the bank or credit union will offer you. Unfortunately, this does not always hold true, as the rate institutions are willing to pay depends largely on the market's prediction about where future rates will go.

For instance, when rates have been rising for a while and are expected to soon reach a peak, shorter and mid-term CDs often pay the best rates because banks don't want to get stuck paying the current elevated rate for years after rates begin to subside.

In contrast, if rates have been low for a while and begin to rise, with expectations they will climb for a bit, banks are more interested in enticing customers with a high long-term rate because they expect rates will be much higher in the future.

The good news is that it's easy to see which CD term is paying the best rate at any given time by visiting our daily ranking of the best CD rates. Here you can always see which terms are currently paying the highest yields.

What If I Need to Withdraw My Money Early?

Keeping your certificate funds on deposit until maturity is the best way to maximize your earnings. But sometimes life gets in the way, with unexpected financial needs arising. For this reason, every bank or credit union offering CDs has a written policy on the penalty it will apply should you cash the CD out early.

Most typically, the penalty involves you forfeiting some number of months of interest. For example, the early withdrawal penalty on a 5-year CD might be 12 months of interest. That means an amount equal to what the CD would have earned in a year would be deducted from your balance before liquidating the proceeds.

Early withdrawal penalties are set individually by each bank or credit union, and they run a wide gamut from mild to exceptionally onerous. But even if you don't expect to need an early cash-out, it's smart to determine the early withdrawal penalty in advance of committing to any CD you're considering.

Beware of early withdrawal penalties that can eat into your CD's principal. Losing earned interest when incurring a penalty is to be expected, but avoid certificates where even your principal deposit could be at stake.

How Do You Build a CD Ladder?

A CD ladder is a strategy that enables you to earn 5-year rates while keeping a portion of your CD funds accessible every year. Here's how it works:

Determine how much money you want to invest in CDs.
Divide that amount by five.
Open a top-paying 1-year CD with one-fifth of the funds, a top 2-year CD with one-fifth, and so forth through a 5-year CD. This will result in five CDs with terms ranging from one to five years.
After 12 months, the 1-year CD will mature. Withdraw the funds and invest them in a new top-paying 5-year CD.
Every 12 months, withdraw funds from the maturing CD and reinvest it in a top-paying 5-year CD.
After four years, you'll have a portfolio of five 5-year CDs earning top long-term rates. But one of them will mature every 12 months, giving you periodic access to a portion of your funds.

Rate Collection Methodology Disclosure

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide, and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD's minimum initial deposit must not exceed $25,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.

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