Finding the best rate of interest for Certificate of Deposit used to be very easy. We could just compare the rates of CDs for a few banks for the required term and pick the best CD rate that yielded the highest. However, the rates of interest are historically low today and you just cannot select a CD based only on rate of interest. You need to apply strategic thinking before selecting a CD.
What you should look for getting the best CD rate
Three features of CD play an important role while choosing them.
- The first thing is obviously that the CD should come with high rate of interest. A CD with term of 5 years will yield significantly more than the CD with a term of 6 years.
- The second thing is that amount of penalty that you have to pay if you close your CD before maturity. You should choose a CD with lower penalty, which varies with different banks and CDs.
- The last thing is that CDs do not allow partial withdrawal like savings accounts. You can withdraw either the entire amount or nothing.
You may find it strange that the secondary features of CDs should be kept in mind, which may lead to a higher interest rate. However, your first priority should be to find the best CD rate
The best CD rate is available from credit unions and online banks. Procuring a CD from online banking is convenient in the sense that it can be easily opened, offer higher rate of interest than conventional financial institutions, and are available all over the nation.
Several credit unions offer aggressive rates. For instance, Navy Federal Credit Union offers a CD rate of 1.95% APY for 5- year term. If you have over $100,000 for investment, you can get a higher rate of 2.05% APY. However, the problem with the Navy Federal Credit Union is that it requires you to become its member.
The best CD rates of different banks
You can qualify for a CD easily in some cases, while you may have to wait in other cases. The best CD rate is based on the term of your CD. Different banks offer different rates for CDs based on its term. You would obviously like the higher rate of interest for your CD. However, you can also choose a long- term CD, which offers modest penalties for early withdrawal. Let us take a look at best CD rates of various banks of USA:
- Sallie Mae bank
The Sallie Mae bank offers 1.60% APY for a CD deposit term of 3 years and a minimum balance of $2,500 for APY
- BAC Florida bank
The BAC Florida bank offers 1.55 % APY for a CD deposit term of 3 years and a minimum balance of $1,500 for APY
- Ally Bank
The BAC Florida bank offers 1.55% APY for a CD deposit term of 3 years and a minimum balance of $5,000 for APY
- Ever bank
The Ever bank offers 1.52% APY for a CD deposit term of 2 years and a minimum balance of $1,500 for APY
- Barclays bank
The Barclays bank offers 1.50% APY for a CD deposit term of 2 years and a minimum balance of $1 for APY
- Synchrony bank
The Synchrony bank offers 1.50% APY for a CD deposit term of 3 years and a minimum balance of $2,000 for APY
- Discover Bank
The Discover bank offers 1.50% APY for a CD deposit term of 3 years and a minimum balance of $2,500 for APY
- Patelco Credit Union
The Patelco Credit Union offers 1.35% APY for a CD deposit term of 3 years and a minimum balance of $1,000 for APY