A certificate of deposit is a financial product that allows you to stash away some cash and earn a fixed rate of interest for a set period of time. In exchange for handing over your money for a specified and longer term, you usually earn a higher interest rate. For example, a five-year CD can earn a higher (and guaranteed) rate than a typical savings account while still offering safety.
The average five-year CD rate is 1.18 percent, but Bankrate’s team shopped around to find some of the best CD rates available nationwide. Compare these offers, then calculate how much interest you would earn when your CD matures.
What is a 5-year CD?
Think of a CD as a higher-paying savings account that’s stashed in a safe with a time lock. But unlike a savings account with a variable annual percentage yield (APY), the yield on a CD is fixed and won’t change during the term. At the end of the term, you can renew the CD or shop around for another one, potentially with a higher yield, if the interest rate environment has improved. After a CD’s maturity date, it likely will renew automatically after a grace period, typically within seven to 10 days.
Bankrate’s picks for the top 5-year CD rates
Popular Direct – 4.55% APY, $10,000 minimum deposit
Randolph-Brooks Federal Credit Union: 4.55% APY, $20,000 minimum to earn APY
BMO Harris – 4.50% APY, $1,000 minimum deposit
Bread Savings – 4.50% APY, $1,500 minimum deposit
Quontic Bank – 4.45% APY, $500 minimum deposit
Discover Bank: 4.40% APY; $2,500 minimum deposit
First Internet Bank of Indiana: 4.39% APY, $1,000 minimum deposit
Barclays – 4.30% APY, $0 minimum deposit
Synchrony Bank – 4.30% APY, $0 minimum deposit
Note: Annual percentage yields (APYs) shown are as of Feb. 1, 2023. Bankrate’s editorial team updates this information regularly, typically biweekly. APYs may have changed since they were last updated and may vary by region for some products.
A closer look at the top 5-year CD rates
Popular Direct: 4.55% APY, $10,000 minimum deposit
Popular Direct, an online bank, is a subsidiary of Popular Inc., a more than 120-year-old financial-services company. Popular Direct was previously known as Banco Popular North America.
Popular Direct offers CDs in eight terms, from three months to five years, that are geared toward serious savers, with a $10,000 minimum deposit to open. Interest compounds daily. Popular Direct doesn’t offer specialty CDs, such as bump-up or no-penalty CDs.
Popular Direct also offers a savings account with a competitive rate.
Randolph-Brooks Federal Credit Union: 4.55% APY; $20,000 minimum to earn APY
Randolph-Brooks Federal Credit Union is headquartered in Live Oak, Texas, and operates more than 60 branches serving four major markets in the state: Austin, Corpus Christi, Dallas-Fort Worth and San Antonio. It has more than 1 million members.
Randolph-Brooks Federal Credit Union has CDs with terms ranging from six months to seven years. It also offers a Really Free Checking account that requires no minimum balance and charges no monthly fee.
BMO Harris: 4.50%* APY, $1,000 minimum deposit
BMO Harris is a regional bank that also offers online accounts. It’s based in Chicago and has more than 500 branches in Arizona, Florida, Illinois, Indiana, Kansas, Minnesota, Missouri and Wisconsin.
BMO Harris offers CDs with terms ranging from one month to five years, each requiring a minimum $1,000 opening deposit.
*APY is unavailable in Arizona, Florida, Illinois, Indiana, Kansas, Minnesota, Missouri and Wisconsin.
Bread Savings: 4.50% APY, $1,500 minimum deposit
Bread Financial is an online-only bank that offers high-yield savings products and five CD terms.
Bread Savings is a product of Comenity Capital Bank, which has existed for more than 30 years. Comenity is a bank behind many branded credit cards.
Quontic Bank: 4.45% APY, $500 minimum deposit
Quontic Bank is an online bank that offers CDs as well as savings, money market and checking accounts.
A $500 minimum deposit is required to open a Quontic Bank CD and five terms are offered, ranging from six months to five years.
Discover Bank: 4.40% APY; $2,500 minimum deposit to open
Few well-known banks offer 10-year CDs. One exception is Discover Bank, which offers CDs across all standard terms. The bank’s yields for its five-, seven- and 10-year CDs are the same, and they’re higher than the rates tied to the rest of its accounts.
Discover is an online bank headquartered in Greenwood, Delaware. Until August 2000, it was known as the Greenwood Trust Co., which was incorporated in 1911.
First Internet Bank of Indiana: 4.39% APY, $1,000 minimum deposit
First Internet Bank of Indiana is an FDIC-insured financial institution that operates online and has no branches. It opened in 1999 and offers products in all 50 states.
First Internet Bank offers eight terms of CDs, a money market savings account with a competitive yield, a savings account and two checking accounts.
Barclays: 4.30% APY, $0 minimum deposit
Barclays was founded in London more than 300 years ago. Barclays has no minimum balance requirements to open an online CD. It offers nine CD terms ranging from three months to five years. A savings account is also available.
Synchrony Bank: 4.30% APY, $0 minimum deposit
Synchrony Bank offers competitive yields across 14 CD terms. Synchrony promises that CDs funded within 15 days of opening will pay a higher yield if rates increase during that period.
The bank also offers a money market account and a savings account. Both offer a competitive APY and have no minimum balance requirement.
How to find the best 5-year CD rates
Savers looking for the best CD rates probably want to venture online. Even if a bank is relatively small or not well known, as long as it’s a member of the FDIC, you can rest easy knowing each depositor (that’s you) is protected up to at least $250,000 per insured bank. At a National Credit Union Administration (NCUA) institution, the standard insurance amount is up to $250,000 per share owner (depositor), per insured credit union, for each ownership category (account type).
One thing to look for, though: ease of use. Banks that make it difficult or time-consuming to deposit and withdraw funds may waste so much of your time that the benefit of a few extra basis points of interest on your savings is lost. (A basis point is 0.01 percent, so 1 percent has 100 basis points.)
What to consider when choosing a CD
Consider these things to help you choose the right CD:
Early withdrawal penalties: Know what penalties may be incurred should you withdraw your money before the CD matures.
Minimum required deposit: Many CDs require a minimum amount of money to open.
APY: Annual percentage yield is the yearly interest earned if you keep your money in the CD for the full term. Compare APYs, instead of interest rates, to make an apples-to-apples comparison of CDs.
Term: The length of time required to earn interest on your money. Generally, it’s a good idea to choose a CD with a shorter term than when you expect to need your money. For example, if you need access to the funds in about two years, an 18-month CD may be a good choice.
Insurance: Make sure the CD is offered by an FDIC-insured bank or at an NCUA credit union.
5-year CD FAQs
Pros and cons of 5-year CDs
Before getting a five-year CD, consider the pros and cons to see if it’s a right fit for you.
Limited liquidity. CDs don’t provide immediate access to your funds (unlike savings accounts), which could benefit those who may be tempted to otherwise spend their money. A CD can help keep your savings intact. Just be sure you won’t need the money before the CD matures. It’s also important to understand the early withdrawal penalty that you’d incur if you needed to withdraw your funds sooner.
Safety. CDs from FDIC-insured banks and credit unions are backed by the full faith and credit of the U.S. government up to $250,000.
High returns. Banks generally provide a higher APY with a five-year CD than you could find in a traditional savings account or in a CD with a shorter maturity.
Wide selection. You can choose from thousands of banks and credit unions to find a CD with the interest rate, maturity date (term) and minimum deposit amount that fit your needs.
Fixed, predictable returns. Once you put your money in a CD, you’re guaranteed a set return at a specified date, which can help you plan your financial goals.
Limited liquidity. The inability to instantly access funds is a drawback for those who may need their money before the CD’s term is up. You’ll typically pay a penalty for making early withdrawals. If you think it’s likely you’ll need this money in less than five years, consider a shorter-term CD or a savings account.
Inflation risk. The money in your CD may lose its purchasing power over time if inflation overtakes your interest gains.
Low relative returns. Other investment options may offer a higher rate of return. But these investments generally involve higher risk, including the chance of losing the principal. If you leave your money in the CD for the full term at an FDIC-insured bank and are within FDIC guidelines, your fixed-rate CD will earn that yield. The same is true for NCUSIF-backed credit unions.
Reinvestment risk. When you park your money in a five-year CD, it’s a long wait before you can tap those funds. If interest rates rise in the meantime, you’ll miss out on investing in a higher-rate CD.
Alternatives to 5-year CDs
CDs with a shorter maturity: Shorter-term CDs allow you to earn interest and potentially take advantage of rising rates once they mature. One-year and 18-month CDs allow access to your money sooner; the trade-off typically is lower APYs.
Savings accounts: The key benefit of a savings account is liquidity, providing immediate access to your funds with no penalty. Saving accounts usually have lower APYs that vary.
Money market accounts: These accounts allow you to access your money (with no penalties) while still providing a higher return than most savings accounts. Many institutions require a relatively high minimum opening balance, but that can also mean getting a higher interest rate. Some accounts may charge a fee if the account is closed within 90 to 180 days.
Bonds: If you’re comfortable with more risk, you may consider investing in bonds. There are many types available, including municipal, corporate and agency bonds.
Who should open a 5-year CD?
Long-term investment vehicles like five-year CDs generally offer a higher yield than those with shorter terms. But due to the flat yield curve, you won’t be earning much extra interest by opting for a long-term CD over a midterm CD.
A five-year CD is best for retirees and savers who don’t need the invested funds for at least half a decade. The decision to purchase a five-year CD depends on your time horizon and financial goals.
Why should I get a 5-year CD?
A five-year CD can earn some of the best CD yields available, as CDs with longer time horizons tend to earn higher rates. A five-year CD may be a good option for you if the APY is higher than can be found elsewhere and you’re able to leave your funds parked for the full term.
A five-year CD could also be a part of a CD ladder that contains shorter-term CDs, such as one-, two-, three- and four-year terms, for example. A CD ladder staggers maturities and APYs, giving you the opportunity to earn a higher yield and still have access to some cash at set intervals.
Is a 5-year CD versatile?
With a five-year CD, savers earn a premium in addition to the normal rate on a conventional savings account. The catch, of course, is that you’ll pay a penalty if you withdraw your money early.
But assuming you can find a CD with a low penalty of just a few months’ interest, higher interest rates offered on five-year CDs may make them a good pick over shorter maturities, even if you think you might need to cash in the CD early.
Is a 5-year CD worth it?
There are two factors that determine whether a five-year CD makes sense for you: how soon you need your money and whether you’re earning a competitive APY.
The length of time is important because you want to make sure that you don’t incur an early withdrawal penalty. You also want to be aware of inflation and purchase a CD that is earning a yield that can keep up.
Can a 5-year CD lose value?
A five-year CD could lose value if you incur an early withdrawal penalty, which could eat into your principal amount. But if you keep the five-year CD for the full term, you will earn the stated interest — assuming the product you’re in is a fixed-rate CD.
Each depositor is insured to at least $250,000 per FDIC-insured bank. The standard share insurance amount is $250,000 per share owner, per insured credit union, for each account type at NCUA institutions.
Methodology for Bankrate’s Best CD Rates
At Bankrate, we strive to help you make smarter financial decisions. We follow strict guidelines to ensure that our editorial content is unbiased and not influenced by advertisers. Our editorial team receives no direct compensation from advertisers and our content is thoroughly fact-checked to ensure accuracy.
Bankrate regularly surveys around 70 widely available financial institutions, made up of the biggest banks and credit unions, as well as a number of popular online banks.
To find the best CDs, our editorial team analyzes various factors, such as: APY, the minimum deposit needed to earn that APY (or to open the CD) and whether or not it is broadly available. All of the accounts on this page are insured by Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Share Insurance Fund (NCUSIF).
When selecting the best CD for you, consider what you need the money for and when you’ll need it to help you avoid early withdrawal penalties.
Banks we monitor
These financial institutions are featured in our CD rate research: Alliant Credit Union, Ally Bank, Amerant Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank5 Connect, Bank of America, Bank of the West, Barclays, Bask Bank, BB&T, BECU (Boeing Employees Credit Union), Bethpage Federal Credit Union, BMO Harris Bank, Bread Financial (formerly Comenity Direct), BrioDirect, Capital One Bank, Chase Bank, CIBC USA, CIT Bank, Citibank, Citizens, Citizens Bank (Rhode Island), Comerica Bank, Customers Bank, Delta Community Credit Union, Discover Bank, Emigrant Direct, Fifth Third Bank, First Citizens Bank, First Internet Bank, First Technology Federal Credit Union, FNBO Direct, Golden 1 Credit Union, Marcus by Goldman Sachs, Morgan Stanley Private Bank, Huntington National Bank, Investors Bank, Investors eAccess, KeyBank, Limelight Bank, Live Oak Bank, M&T Bank, MySavingsDirect, Navy Federal Credit Union, NBKC Bank, PenFed Credit Union, PNC Bank, Popular Direct, PurePoint Financial, Quontic Bank, Randolph-Brooks Federal Credit Union, Regions Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, SchoolsFirst Federal Credit Union, Security Service Federal Credit Union, State Employees’ Credit Union, Suncoast Credit Union, Suntrust Bank, Synchrony Bank, TD Bank, TIAA Bank, UFB Direct, Union Bank (California), U.S. Bank, USAA Bank, Vio Bank, VyStar Credit Union, Wells Fargo and Zions Bank.