Best CD Rates of June 2024: Up To 5.45%
Updated May 31, 2024 at 4:01 am
A variety of economic factors, including interest rate hikes from the Federal Reserve, have boosted CD rates and other savings rates into a highly favorable range for consumers. Today’s rates are even high enough to make certificates of deposit (CDs) an excellent choice when it comes to storing short-term and mid-term savings or for keeping emergency funds you might need to cover unexpected bills or live off of after a job loss or a loss in income.
Even so, you’ll want to find out which banks offer the best CD rates along with reasonable opening requirements and no fees (or minimal fees). We compared all financial institutions offering the best CD interest rates to come up with this ranking of the top options for 2024.
Our Methodology To compile our list of the best CD rates, we weighed factors such as interest rates, fees, deposit requirements and balance requirements. As part of our research, we looked at CD rates offered by traditional banks, online banks and credit unions.
Our Picks - Best for No Minimum Balance: Capital One
- Best for No Hidden Fees: Ally Bank
- Best for Competitive CD Rates: LendingClub
- Best Rates for 12-Month CDs: BMO Alto
- Best for No-Penalty CDs: CIT Bank
- Best Renewal Rates: Bread Savings
- Best for Shorter-Term CDs: Sallie Mae
- Best Credit Union CDs: Alliant Credit Union
11 Best CD Rates of 2024
Best for No Minimum Balance
Capital One
Vault Verified
Why We Chose It
Capital One made our ranking due to its lack of minimum balance requirements for CDs. This lets you earn the best CD rates on small amounts of money, while other banks might require a minimum deposit of at least $1,000 or $5,000.
Pros
- Open a CD with any amount of money
- Certificates of deposit (CDs) terms up to 60 months
- No monthly fees or overdraft fees
Cons
- Less competitive rates for longer-term CDs
- Limited number of U.S. branches
- Early withdrawal penalties on all CDs
Best for No Hidden Fees
Ally Bank
Vault Verified
Why We Chose It
Ally Bank offers competitive CD rates with no hidden fees. And just like Capital One, Ally Bank does not require a minimum balance for CDs.
Pros
- No fees or minimum balance requirement
- 0.05% interest-rate loyalty reward for CD renewal
- CD terms from three months to five years
Cons
- Early withdrawal penalties for most CDs
- No physical branches
- Lower rate for longer-term CDs
Best for Competitive CD Rates
LendingClub
Vault Verified
Why We Chose It
LendingClub typically offers some of the best CD interest rates of all of the institutions on our list. In addition, CD terms cover a range from six months to five years.
Pros
- Competitive CD rates
- No monthly fees
- Fixed rate for up to five years
Cons
- $2,500 requirement for minimum deposit
- No physical branches
- Minimum CD term of six months
Best Rates for 12-Month CDs
BMO Alto
Vault Verified
Why We Chose It
BMO Alto offers some of the best CD rates without a minimum deposit, including 5.05% APY for a 12-month CD.
Pros
- No minimum deposit
- No monthly fees
- Great rate for 12-month CD
Cons
- No CD terms shorter than six months
- No physical branches
- Less competitive rates for CDs over 12 months
Best for No-Penalty CDs
CIT Bank
Vault Verified
Why We Chose It
CIT Bank offers a combination of traditional CDs and no-penalty CDs that let you withdraw cash early without a penalty. Rates for no-penalty CDs are competitive, although only one term (11 months) is available.
Pros
- Fixed-rate 3.50% APY for 11 months with a no-penalty CD
- Competitive rates for some traditional CDs
- No monthly fees
Cons
- Minimum deposit of $1,000
- Low rates for some CDs
- No physical branches
Best Renewal Rates
Bread Savings
Vault Verified
Why We Chose It
Bread Savings offers highly competitive rates for its 12- to 24-month CDs, although you can get terms of up to five years. Its renewal rates are even higher, though—5.% APY for 1-year CDs, 4.70% for 2-year CDs and 4.30% for 3-year CDs. Also, Bread’s CDs don’t charge monthly fees.
Pros
- Competitive rates for 12- and 24-month CDs
- Even better rates for CD renewals
- No monthly fees
Cons
- No CD terms under 12 months
- Minimum balance requirement of $1,500
- Early withdrawal penalties for all CDs
Best for Shorter-Term CDs
Sallie Mae
Vault Verified
Why We Chose It
Sallie Mae offers competitive rates for all of its CDs, ranging from six months to five years. The 12-month rate, for instance, is an impressive 4.95% APY.
Pros
- Competitive CD rates
- No monthly fees
- CD terms up to 60 months
Cons
- Minimum deposit and minimum balance requirements of $2,500
- Early withdrawal penalties for all CDs
- Less competitive rates for longer-term CDs
Best Credit Union CDs
Alliant Credit Union
Vault Verified
Why We Chose It
Alliant Credit Union offers competitive rates for CDs, and even provides jumbo CDs with better rates for deposits of at least $75,000. IRA CDs are also available.
Pros
- Competitive rates for CDs with various terms
- CD terms as short as 3 months
- Ranked among the best credit unions
Cons
- Less competitive for CD terms longer than 12 months
- Minimum deposit of $1,000
- Early withdrawal penalties for all CDs
Best CDs at Major Bank
Marcus by Sachs
Vault Verified
Why We Chose It
If you’re looking to park your money in a CD at a major bank, Marcus by Sachs—the online arm of banking giant Goldman Sachs—might be an ideal option.
Pros
- Stable bank with more than $500 billion in assets
- Competitive interest rates
- No monthly fees
Cons
- $500 minimum balance requirement
- No physical branches
- Early withdrawal penalties for all CDs
Best for Seniors
America First Credit Union
Vault Verified
Why We Chose It
Seniors who are near retirement or already retired may not want to commit to a longer-term CD. Fortunately, America First Credit Union offers attractive rates for several shorter-term CDs.
Pros
- 5.25% APY for CDs with three- to 17-month terms
- Variety of CD options
- No monthly fees
Cons
- $500 minimum opening deposit and minimum balance
- Early withdrawal penalties
- Only 120 physical branches, mostly in Utah
Best Brokered CDs
Vanguard
Vault Verified
Why We Chose It
When it comes to brokered CDs—bank-issued accounts typically purchased through an investment brokerage rather directly from a bank—Vanguard touts some appealing interest rates.
Pros
- APYs ranging from 4.50% to 5.45%
- Terms stretching from one month to 10+ months
- No early withdrawal penalties
Cons
- Investment account required for CD purchase
- $1,000 minimum balance requirement
- No automatic renewal when CD terms ends
Certificate of Deposit Overview
Certificates of deposit (CDs) offer a safe place to store excess cash for when you need it—and with fixed interest rates to boot. This makes CDs unique from savings accounts with interest rates that change over time and from investment accounts that base returns on highly variable market conditions.
If you’re in the market for a new bank and are wondering whether you should get a CD instead of opening a high-yield savings account or money market account, it’s crucial to understand the differences between these accounts and how they work.
What Is a CD?
A certificate of deposit (CD) is a specific type of savings account that’s offered by traditional banks, online banks and credit unions. CDs offer a fixed interest rate for a set period of time, during which the terms of the CD typically remain the same. Note that CDs feature FDIC insurance just like regular savings accounts do, so they’re considered an especially “safe” place to keep your money.
What makes CDs stand out is the fact you fully commit to, or “lock in,” the CD interest rate for the duration of the CD term. This means the interest rate won’t change based on market conditions, but it also means you cannot access your money early without (likely) paying a penalty.
How Do CDs Work?
When you open a certificate of deposit with a bank or a credit union, you give them a set amount of money upfront. This can be as little as $1 with some banks that don’t have a minimum opening balance requirement for CDs, yet it may also need to be $1,000, $2,500 or more with other firms.
In any case, you’ll hand over the set amount of cash to the bank in exchange for a fixed interest rate for a set term. As an example, you could purchase a $2,500 CD with a fixed rate for 18 months, or you could opt for a $25,000 CD with a 60-month term.
Because the majority of CDs require you to lock in your rate and commit to the full term, you’re typically charged a penalty if you need to access your money early. These penalties vary by bank, by account and by the amount of time left in the CD. If you keep the CD for the full term, however, you can cash out your initial deposit plus interest. Some CDs automatically renew if you don’t cash them out within a certain time period (known as a grace period).
Types of CDs
While certificates of deposit are different from other types of savings accounts, there are also some unique types of CDs to know about and understand.
Traditional CDs
Traditional CDs work in the manner described above. You invest a specific amount of money upfront in exchange for a fixed interest rate, and you have to pay a penalty if you need to access your money early.
When you shop around for traditional CDs, you’ll notice they’re offered in many different terms (usually 3 to 60 months) and rates and early withdrawal penalties can vary widely across providers.
Who should get a traditional CD: A traditional CD might be ideal if you’re putting away money to help achieve a financial goal—such as saving for retirement or stashing cash for a down payment on a home—and don’t need to touch the funds before the CD term expires.
No-Penalty CDs
A no-penalty CD is a type of CD that does not charge any fees if you access your money early. That said, no-penalty CDs may come with slightly less competitive terms than traditional CDs, and they are typically only available for 11 to 13 months at most.
No-penalty CD terms, fees and minimum opening balance requirements also vary widely by provider. Note that most banks don’t offer no-penalty CDs, so you’ll have to compare a broad range of financial institutions to find them.
Who should get a no-penalty CD: A no-penalty CD might be a great option if you want to avoid a financial penalty in case you need to withdraw money before the CD term ends.
Bump-Up CDs
A bump-up CD lets consumers lock in a fixed interest rate for a set period of time, but there’s a twist. These CDs let the owners request a higher interest rate when market conditions change during the CD term.
While terms for bump-up CDs vary, most allow for a one-time rate increase if rates for other CDs offered by the bank go up. There are also scenarios where a provider will allow multiple rate increase requests for longer-term CDs. Also be aware that CD interest rates for bump-up CDs tend to start lower than traditional CDs offer.
Who should get a bump-up CD: If you fear missing out on an interest rate increase (and potentially more interest), a bump-up CD may give you some peace of mind. A bump-up CD lets you boost the interest rate before the CD term expires, but usually just one time.
Who Should Get a CD?
Certificates of deposit are great for some types of savers and “buckets of money” consumers have, but not so much for others. For example, someone who needs quick access to their cash in the short term may be better off with a high-yield savings account or a money market account instead.
For the most part, CDs are best in the following scenarios:
- You want to earn a competitive fixed rate with no risk. If you want to earn a great rate on part of your savings without the risk of losing principal, certificates of deposit offer this benefit with FDIC insurance included.
- You’re saving for a home or another large expense. These accounts are also great for saving up for a large expense, particularly when you know you need to save up for a specific amount of time.
- Keeping some of your cash separate could benefit you. Maybe you want to “lock up” some cash so you don’t feel tempted to spend it. A CD can help in that respect—and with fixed interest rates for the length of the term.
How To Get a CD
The exact process required to get a CD depends on whether you bank in person or opt to open an account online. That said, here’s a rundown of the basic steps you’ll take either way.
- Step 1: Compare the best CD rates. Look at a variety of banks and credit unions to see which ones have the best CD rates for the term you need.
- Step 2: Look for minimum balance requirements and fees. Compare providers based on their opening balance requirements, and look for banks that don’t charge monthly fees or hidden fees.
- Step 3: Open an account. Open a CD online or in person by providing your full name and contact information, address, citizenship status, date of birth and Social Security number (SSN).
- Step 4: Transfer funds to the new CD. Set up a bank transfer to fund the new CD or present the new institution with the funds (cash or check) required in person.
- Step 5: Know when your CD matures. Make sure you know when your CD term ends so you can renew it or cash out before the grace period ends. Note that some banks will renew your CD automatically if you don’t take action within a relatively short amount of time (even as short as 10 days).
Pros and Cons of CDs
CDs can be ideal in a wide variety of circumstances, but several limitations take away from their appeal. Consider the advantages and disadvantages of these accounts before you choose a CD over a high-yield savings account or money market account.
Pros of CDs
- Know exactly how much interest you’ll earn. Because CDs offer fixed interest rates for a set period, you can run the numbers and know exactly how much interest you’ll earn during the CD’s term.
- Choose the CD term you want upfront. Select from CD terms that last however long you need them to, usually from 3 to 60 months.
- Enjoy the peace of mind that comes with FDIC insurance. Certificates of deposit come with the same FDIC insurance as savings accounts, which is good for up to $250,000 per depositor, per account type and per institution for each account ownership category.
Cons of CDs
- You’ll likely pay a penalty to access your money early. Most CDs require you to pay early withdrawal penalties if you need to cash them out before the agreed-upon maturity date.
- Longer-term CDs typically have less competitive rates. While CD interest rates vary and change over time, most banks offer their most competitive rates on shorter-term CDs.
- You can miss out on returns if rates rise during your CD’s term. If you lock in a fixed interest rate and rates rise across the board after the fact, you might regret getting a CD instead of a high-yield savings account or money market account.
How the Federal Reserve Affects CD Rates
While the Federal Reserve doesn’t set CD rates directly, its control over the federal funds rate (the rate banks pay each other when they borrow money) does play a role in CD rates. Essentially, the Fed uses the federal funds rate to conduct monetary policy and influence market conditions. When the Fed anticipates a recession or aims to slow inflation, increasing the federal funds rate and slowing the demand for goods and services can help in that respect. Meanwhile, lowering the federal funds rate can increase economic activity since it floods the market with cheaper credit that makes it easier for consumers and companies to borrow and spend money.
This is why we’ve seen CD rates rise along with mortgage rates and credit card interest rates over the last few years; the Fed hiked the federal funds rate over 10 times in 2022 and 2023 to deal with inflation and other economic concerns. Where the federal funds rate was at 0.05% in April 2020, the rate was at 5.33% in January 2024.
What Is a CD Ladder, and How Do You Build One?
A CD ladder is a series of CDs bought by a consumer to accomplish a specific savings goal while keeping some money accessible over time. Someone creating a CD ladder might take their savings and split it up into five or six different savings “buckets,” in which case they would use each bucket to purchase a CD with a different term length.
Let’s say a consumer has $100,000 saved, and they want to earn a fixed return while keeping some of their cash accessible along the way. In that case, they might purchase five different $20,000 CDs with varying lengths—12 months, 24 months, 36 months, 48 months and 60 months. In this scenario, they would earn a fixed interest rate for each CD term. They would also know they have a CD reaching maturity every 12 months during the ladder, in which case they could spend the money as needed or use it to purchase another CD.
Alternatives to CDs
CDs vs. High-Yield Savings Accounts
CDs normally pay higher interest rates than high-yield savings accounts, and the interest rates are usually fixed. But unlike high-yield savings accounts, CDs generally require you to park your money for a certain period and typically charge a penalty for early withdrawals. On the downside, interest rates for high-yield savings accounts vary.
CDs vs. Money Market Accounts
The big benefit of CDs is that they offer higher interest rates than money market accounts. However, as opposed to money market accounts, you might be hit with a financial penalty if you take out money before your CD term ends. Further, interest rates for money market accounts are variable, while interest rates for CDs are generally fixed.
CDs vs. Dividend Stocks
When you purchase a dividend stock, you’re in line to receive a share of the company’s profits (often quarterly). These dividends might even exceed the interest you accumulate from a CD. However, dividends aren’t guaranteed. By contrast, CD returns are generally guaranteed if you don’t pull out money before the CD term ends. Plus, CDs pose less risk than dividend stocks do.
CDs vs. Bonds
While bonds may provide better returns than CDs, they carry more risk. However, you can sell bonds whenever you like, whereas you typically must hang onto a CD until the term expires. Otherwise, you might lose some of the CD interest you earned. Another drawback of CDs: You can’t tap into the interest until the CD term ends. On the other hand, bond interest payouts are made quarterly or monthly.
Recent CD News and Trends
CD interest rates have climbed steadily since 2021, making CDs a more attractive investment option. But after peaking at an average of 1.86% in December 2023 and January 2024, the average rate for a 12-month CD dipped to 1.81% in March and April 2024, according to the Federal Reserve Bank of St. Louis.
With the Federal Reserve’s benchmark interest rate remaining at 5.25% to 5.5% as of April 2024, savers may see little to no movement in CD rates for the time being. The Fed rate influences interest rates for CDs, but CD interest rates could decline if, as predicted, the Fed starts cutting its benchmark interest rate.
Frequently Asked Questions
What Is a CD Grace Period?
A CD grace period is the amount of time you have after a CD matures to take some sort of action. You typically have around 10 days to cash out your CD and access your money or move it into another account. Otherwise, the CD can renew automatically with the same duration you agreed to before.
Are Savings Accounts Better Than CDs?
A high-yield savings account can be better than a CD when someone feels they’ll probably need access to their money at any time. Meanwhile, CDs can be better for people who are willing to have their money less accessible in exchange for a fixed interest rate.
What Is the Highest-Paying CD Right Now?
With an APY of 5.45%, one of the highest-paying CDs right now is a 10- to 12-month CD from Vanguard.
Related Articles
Best 6-month CD Rates of June 2024: Up to 5.55%
Best Jumbo CD Rates of June 2024
What Is a Certificate of Deposit (CD)? And How Does it Work?
What Is a High-Yield Savings Account (HYSA)?
Average Savings Account Rates for the Week of May 27, 2024
Average Money Market Account Rates for the Week of May 27, 2024
Editorial Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post. We may earn a commission from partner links on Newsweek, but commissions do not affect our editors’ opinions or evaluations.
