Best 5-Year CD Rates for January 2023
A certificate of deposit, or CD, is a time deposit you can buy at a bank. You deposit a sum of money and agree to leave it there for a set term, like five years. In return, the bank pays you a guaranteed rate of interest. You know just how much your investment will earn, plus it’s FDIC-insured — as long as the bank is.
What Are the Highest 5-Year CD Rates?
|Financial Institution||Minimum Deposit||Annual Percentage Yield|
|Lafayette Federal Credit Union||$500|
|Randolph-Brooks Federal Credit Union||$1,000||–|
|First Internet Bank of Indiana||$1,000|
|Sallie Mae Bank||$2,500|
Best Banks for 5-Year CD Rates
Here are 13 of the best 5-year CD rates.
Lafayette Federal Credit Union
What is the highest interest rate on a 5-year CD? For a minimum deposit of just $500, Lafayette Federal Credit Union pays APY on its 5-year CD. However, the interest is compounded quarterly, so you’ll make less than a similar APY with interest that compounds monthly or weekly. You also have to meet the membership requirements to join and open an account.
Popular Direct will pay you APY on a 5-year CD if you deposit at least $10,000. This CD has one of the best interest rates available, but it also has one of the steepest early withdrawal penalties. You’ll pay up two years’ worth of interest if you take your money out early.
BMO Harris offers a 59-month CD Special — one month shy of five years — that pays APY. You’ll need to have a at least $5,000 to invest, however, and its regular CD rates are much lower.
Bread Savings pays APY on its 5-year CD. You’ll need a $1,500 minimum deposit, and if you take your money out early, you’ll lose a year’s worth of interest.
Quontic Bank offers a 5-year CD that pays APY, with a minimum deposit of just $500. Make sure you won’t need the money before the five years are up, though — you’ll give up two years’ worth of interest if you withdraw early.
Discover Bank’s 5-year CD pays APY for a minimum deposit of $2,500. But make sure you can keep the money in there — if you withdraw it early, you’ll incur a penalty equal to 18 months of interest.
Capital One has a 5-year CD that pays APY. There is no minimum balance required to open this CD, and you can decide if you want the interest paid monthly, annually or at the end of the term.
Randolph-Brooks Federal Credit Union
Randolph-Brooks Federal Credit Union pays a tiered rate of interest on its 5-year CDs, depending on the amount of your deposit, which has to be at least $1,000. The APY will range from to, but you won’t get the highest rate unless your balance is over $75,000.
First Internet Bank of Indiana
First Internet Bank of Indiana pays APY on a 5-year CD, with a minimum deposit of $1,000. You’ll lose a year’s worth of interest if you take the money out early, though, so be sure you can leave it in for the full five years.
Barclays Bank pays APY on a 5-year CD, with no minimum deposit required. However, to earn interest, you must maintain a balance that would earn a minimum of $0.01.
Synchrony Bank offers a 5-year CD that pays APY. There is no minimum deposit required. The early withdrawal penalty is one year’s worth of interest.
Sallie Mae Bank
Sallie Mae pays APY on a 5-year CD. You’ll need to deposit a minimum of $2,500. It offers an automatic renewal option at the end of your term.
Ally Bank pays APY on a 5-year CD. You’ll be charged 150 days’ worth of interest if you withdraw the funds early.
Things To Consider When Comparing CDs
There are a couple of potential drawbacks to buying a 5-year CD. First, interest rates could continue to rise. If this happens, you could be stuck earning 4% or so, while new CDs are being sold at rates of 5% or 6%.
Bump Up CDs
There are a couple of ways to reduce your interest rate risk. One is to look for a “bump up” CD, which lets you “bump up” the interest rate if it rises during your term. Make sure you understand the conditions, though — sometimes you only get one rate bump during the term, and in other cases, the rate increase needs to be within a certain number of months of purchasing the CD.
The other way to minimize interest rate risk is with a CD ladder. This refers to the practice of buying multiple CDs with various terms. When each comes due, you can reinvest the money into a longer-term CD, so you have one CD coming due each year and get the advantage of the current interest rate. Here’s an example of how a CD ladder works.
Say you have $50,000 to invest. You buy 5 CDs for $10,000 each. You buy one each of a 1-year CD, a 2-year CD, a 3-year CD, a 4-year CD and a 5-year CD. In a year, the 1-year CD matures, so you re-invest that money in a 5-year CD. Another year later, the 2-year CD matures, and you re-invest that money in a 5-year CD. You continue to do this, and after four years, you now have five 5-year CDs, each maturing a year apart.
You can continue to do this for as long as you want, and you’ll always have the advantage of having a CD come due each year, which you can then reinvest at the current interest rate or, if you’re ready to use the money, withdraw.
Early Withdrawal Penalties
Another feature to be aware of is the early withdrawal penalty. If you withdraw your funds from a CD before the end of the term, you will be charged a penalty. The standard penalty used to be three months’ worth of interest, but banks are now increasing this, particularly for longer-term CDs.
So, if you take your money out of a 5-year CD before the end of the five years, you could be forfeiting six, nine or even twelve months’ worth of interest — or more. Make sure you won’t need the money before the term is up.
Another option is to invest in a no-penalty CD, which typically allow you to withdraw some or all of your balance before the end of the term without a penalty, but they often offer lower interest rates and shorter terms.
If you’re looking for a solid, guaranteed return on some money that you know you won’t need to touch for at least five years, a CD can be a smart choice.
Compare CD Rates
GOBankingRates’ Best Banks 2023
- Who has the highest paying CD right now?
- The best APY on a 5- year CD as of Jan. 25, 2023, is from Lafayette Federal Credit Union. However, the interest compounds only quarterly, so you might be better off with one of the next-highest: Popular Direct or BMO Harris.
- What is the current interest rate for a 5-year CD?
- Interest rates for 5-year CDs range widely, depending on your balance and financial institution. Some banks offer as little as 0.01%, while others offer over 4.50%.
- Can you get 6% on a CD?
- No, there currently are not any CDs offering 6.00% APY in the U.S.
- What will 5-year CD rates be in 2023?
- Forbes reports that in 2023, the highest 5-year CD rates will likely range from 4.00% to 5.00%, depending on the Fed and whether or not they increase the federal funds rate.
- In January, 5-year CD rates range from very little to over 4.50%.
Amber Barkley contributed to the reporting for this article.
Rates are subject to change; unless otherwise noted, rates are updated periodically. All other information on accounts is accurate as of Jan. 25, 2023.
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- Forbes Advisor. 2023. "CD Interest Rates Forecast: How Good Will They Get In 2023?"