Best Bank CD Rates for November 2023

Frequently Asked Questions

• What Is a Bank CD?

  A certificate of deposit account is simply another deposit product available at banks, alongside savings, money market, and checking accounts. But instead of depositing money that you can withdraw from or add to whenever you want, you can generally only make a single initial deposit to a CD. When you open one, you're making an agreement to keep your funds in the account without withdrawals for an established period of time, known as the CD term.

  The trade-off to committing your funds is that you are able to lock in your interest rate. While a savings account rate can change whenever the bank sees fit, opening a CD involves the bank making a written promise on the interest rate it’ll pay you for the duration of the term.

  CDs are typically offered in standard maturity terms from 1 month to 10 years, with the most common terms ranging from 6 months to 5 years. But note that a bank can offer a CD in any term it wants. In fact, sometimes the top national rate is for an odd-term certificate—say, 5 months or 19 months—that is being offered as a limited-time promotion.

  
  

• How Much Do CDs Pay?

  CDs generally pay more than more-liquid savings and money market accounts. That is, in exchange for your commitment to keep the funds in place, the bank will pay you more than it pays savings account holders.

  Banks also typically pay a higher rate for longer commitments, because they mean the bank can count on that money being in place for a longer period of time. So typically, 5-year CDs pay a higher rate than 1-year CDs.

  A higher initial deposit can also sometimes earn a more lucrative return, such as with jumbo CDs requiring $50,000, $100,000, or even $250,000. But many banks don’t offer jumbo tiers, and even when they do, the incremental rate improvement is often fairly small.

  The FDIC calculates a weekly national average for various CD terms across all 4,000-plus FDIC banks. Though the average represents a fairly low yield, it’s fortunately easy to earn many times that by simply doing your homework to find the best current rates.

  
  

• Are Online Bank CDs Safe?

  Traditional banks have been offering CDs for decades. But the banking environment has changed with the advent of the internet. Online banks now pepper the banking landscape, as do internet-only divisions of brick-and-mortar institutions.

  The good news for CD shoppers is that the type of bank offering the CD is of little importance, so long as you verify that it’s FDIC-insured. That’s because internet banks are approved, regulated, and insured in just the same way that physical banks are. So whether you deposit $25,000 in a CD at a local branch of a bank in your community, or in a bank that operates only online with no branches at all, your money is equally protected.

  This is especially fortunate when you learn that online banks are often among the top-paying CD banks. Given their lack of physical branches, internet banks operate with lower overhead and are therefore generally able to pay higher rates to their customers.

  
  

• What If I Need My Money Early?

  You can withdraw your money early, but it will cost you. While it’s true that locking your funds into a CD is the reason you can earn a higher return than with other savings accounts, it’s not impossible to withdraw your money early should you need to. Of course, doing so carries financial consequences, but the option is available if the need arises.

  Every bank is required to have an established early withdrawal penalty policy, and as a potential CD depositor, you should review the policy before you commit to a CD. The most common way banks penalize you is by deducting a certain number of months of interest payments from your balance at the time of early withdrawal. Often, the longer the CD term the more months' worth of interest you'll lose.

  Each bank can set its own policy, and the penalties vary widely. Though some are mild, others are quite onerous, with some policies even potentially reducing your principal. For this reason, it’s critically important to investigate the early withdrawal penalty policy for any bank CD you’re considering, and when comparing two otherwise similar certificates, choose the one with the milder penalty.

  
  

• Why Do Shorter CDs Sometimes Pay More Than Longer Ones?

  The longer you’ve agreed to hold your CD funds on deposit without touching them, the more cost-effective it is for the bank. That’s why, in theory, banks are willing to pay you more for longer commitments than short ones.

  However, many other factors come into play regarding a particular bank’s deposit strategy. The bank must take into account several things: what it expects to happen to national rates in coming months and years, how much in deposit assets it needs to fund the lending side of its business, and how much in certificate balances it already has on hand for different maturities.

  If rates are expected to decline in the future, banks may again offer a better APY on shorter terms, and lower yields on long CDs. That's because they don't want to be stuck paying a higher rate for a lengthy period if the current interest rates are much shorter.

• Why Don't I See My Bank in Your List?

  You typically won't see big names like Chase, Bank of America, or Wells Fargo in our list of the best high-yield savings accounts. While we do monitor their rates, they usually aren't high enough to make our ranking. That's because large banks typically don't need to attract deposits in the way that smaller institutions do, so their rates tend to be lower. You will sometimes see one of the top 25 U.S. banks in our rankings, such as Citi, BMO, or Ally Bank, as these institutions do occasionally offer competitive high-yield rates.

  Some banks you may be looking for that we track, but that don't make our list, are Marcus by Goldman Sachs, SoFi, Synchrony Bank, CIBC Bank USA, LendingClub, Bread Savings, FNBO Direct, and Citizens Access.

  Still other institutions may not appear in our ranking because they don't meet our qualification criteria, such as by not being available to customers in at least 40 states, significantly limiting the balance on which you can earn the high-yield APY, or not offering what qualifies as a high yield rate. These include U.S. Bank, PNC, Varo, American Airlines Federal Credit Union, Delta Community Credit Union, Boeing Employees' Credit Union, Bethpage Federal Credit Union, and Western Alliance Bank.