The Best CD Accounts of 2023

CDs, also known as certificates of deposit, are a great way to capitalize on your savings potential. Like a traditional savings account, they are a safe investment established through a bank or credit union, but generally CDs have higher interest rates — currently more than 4% — allowing you to make more on your return. There are some things to consider, however, before opening up a CD, as the terms of the agreement are specific.

To determine the best CD accounts available in the market, GOBankingRates ranked nearly 65 banks based on a number of factors, including:

• Total assets
• Number of branch locations
• Minimum deposit amount needed to open a CD
• 12-month CD Annual Percentage Yield (APY)
• 60-month CD APY
• Mobile app ratings

GOBankingRates’ Best CD Accounts of 2023

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What To Know About CDs

When opening a CD, you’ll determine the length of the fixed “term” that will be established — from three months to a number of years — and the money will be locked for that period of time. In return, CDs offer a fixed, higher interest rate than a typical savings account, allowing a higher yield on your money.

What Is A CD Account?

A certificate of deposit, or CD, is one kind of savings account offered by banks and credit unions that offers a safe and easy way to invest and make a return on your money. Unlike traditional savings, however, it’s not a liquid account that you can easily withdraw money from when you might need it. In order to earn the higher interest rate you need to leave your CD account untouched for the entirety of the term length until it reaches maturity.

Who Should Open a CD Account?

Not only is a CD a low-risk savings tool and investment strategy, but it is also best for those who want to increase the amount they earn in interest while keeping their money stored away without touching it. It’s a good way to get a bit more bang for your buck if you are comfortable not having access to those funds until the CD has matured. 

How To Open A CD Account

Once you have decided on the right CD account for you based on the CD terms, you can open an account quite easily. Here is what you’ll need:

• Two forms of identification such driver’s license or passport
• Personal information such as name, address and birthday
• Social security number
• Decide if you want the interest disbursed at the end of the term or regularly
• Funds to make the opening and only deposit

How Is a CD Different From a Savings Account?

Unlike a typical savings account, CDs are typically fixed, locked investments. When you open a CD, you’ll determine the length of time you want to keep it active and the set amount to put in, and the interest rate will be fixed for that time as well — typically, the longer you choose, the more interest you’ll earn.

This means you won’t be able to make early withdrawals without incurring a penalty. Usually the penalty is a portion of the interest accrued, dependent on the financial institution’s terms. Savings accounts allow more flexibility, where you can keep contributing various dollar amounts, link accounts and take out withdrawals at any time.

How To Choose a CD Account

The Different Types of CDs

Under the umbrella of certificates of deposit, there are a number to choose from, all offering their own terms and advantages:

• Traditional: This is the standard CD method, where you contribute a particular dollar amount that stays locked in the account for a predetermined amount of time. It’s ideal if you know what you want to contribute ahead of time and won’t need to take early withdrawals. It also offers the highest interest rate of the various forms of CDs.
• No Penalty: Also known as a liquid CD, this option does have more flexibility, allowing for withdrawals before the maturation date of the savings plan without a penalty. However, the financial institution may still impose a waiting period before you take out money. Also, they might not let you take out a percentage but rather mandate you have to take out the full amount, which means you won’t be able to earn on the original deposit. The interest rate for a no-penalty CD will be a bit lower than a traditional CD.
• Bump-Up: The advantage of this type of CD is that you are allowed to ask the bank to raise your interest rate during the term. This can be useful if you think interest rates will rise during the months or years you have specified for the CD, such as during a period of high inflation. Choosing this option may provide the chance to get more interest over time, but it also means a lower interest rate at the start of the term.

The Terms of a CD

When you open a CD, you’ll choose the “term,” or length of time you are locking in the money before it’s vested. Typical CDs offer 3-month and 6-month terms as well as terms of one, three and five years.

Are CDs a Safe Investment?

Generally, yes. Like regular savings accounts that you open at a bank or credit union, CDs are protected under the provisions of the government-led Federal Deposit Insurance Corporation or National Credit Union Administration, as long as you don’t exceed the insured amount, which is $250,000 per person, per bank. And because the CD is a straightforward investment, rather than investing in stock market shares, there is less risk involved.

Are CDs Taxed at the End of a Term?

Yes, the interest you earn with a CD is considered taxable interest as defined by the IRS. If you earn any amount over $10 during the term of your CD, you’ll receive a Copy B of Form 1099-INT or Form 1099-OID that you’ll need to report when you file your tax return.

CD Rates and the Federal Reserve

Though a savings account typically has a variable rate, a CD account has a fixed interest rate, which means the rate won’t fluctuate with the Fed rate of the Federal Reserve. Though if you have not opened a CD account yet, be aware that the already rising rates are predicted to increase in 2023.

What Is CD Laddering?

This is one strategy advised by financial experts, to open multiple CDs at once and stagger the terms and deposits so that you can have access to some of the money sooner and avoid getting stuck in one long-term CD if interest rates begin to rise. So, rather than investing $3,000 in one long-term CD, you might choose to put $1,000 in a 6-month CD, $1,000 in a 1-year CD and $1,000 in a 3-year CD to capitalize on investments while also having access to vested money sooner.

Pros and Cons of CDs

Pros

• Higher interest rates: One of the big benefits is that a CD allows a higher interest rate than a traditional savings account, as a payoff for locking your money in for the specific term. Depending on the length of CD you choose, this APY could be 4% or higher.
• Better saving capability: Because the money initially deposited into a CD cannot be touched during the remainder of its term, it prevents you from being able to make withdrawals, which would otherwise cut into your ability to save the money. When you don’t have access to the funds, they can continue to grow. This is also a great option when you have a specific financial goal or a future expense you want to prepare for where you can accrue interest over that time period.

Guaranteed rates: Timing is everything with CDs. If you choose to open this type of account during times of inflation, when interest rates are high, you’ll be able to lock that same rate in over the course of the term, even if inflation subsides and interest rates come down.

Cons

• No access to the funds: Though CDs have their perks, one of the big drawbacks is that you cannot touch the money until the term is complete, or you’ll incur a penalty for an early withdrawal. When you open a CD, you lock the money in the account, and this could be for a substantial amount of time, up to several years. There are some options like liquid CDs that do have flexibility where you can access the money originally deposited, but these accounts don’t have the high-interest rates of the traditional options.
• Rates are locked in: As mentioned, timing is everything with CDs. If you are savvy and open an account during times of inflation when interest rates are high, you’ll be able to secure an ideal APY. But, if you open a CD when rates have leveled out, you won’t be able to take advantage of higher interest if those rates jump up over the course of the term.
• Earning potential: While CDs earn interest at a higher rate than a regular savings account, there are other investment options that have even greater yields such as securities and stocks. Though, CDs are generally a safer, less volatile investment.

Alternatives to CD Accounts

There are several factors to compare when choosing whether a CD or another bank account is best suited for you.

CDs vs. Traditional Savings Accounts

The main difference between savings accounts and certificates of deposit, or CDs, is the amount of access you have to the funds in the account. Where standard savings accounts allow you immediate access to your account balance, when you put your money in a CD, you agree to the CD term, which is the period of time your CD will take to mature. Withdrawing funds from a CD prior to maturity can result in early withdrawal penalties. CDs do tend to earn more interest so these accounts are better for those who can leave their money in the account for an extended time period without touching it.

CDs vs. High-yield Savings Accounts

High-yield savings accounts allow account holders to earn significant interest on their balance and are good to grow an emergency fund. CDs, though they operate similarly, are better to possibly save for a large purchase down the line as you can’t access the funds until the CD has matured.

CDs vs. Money Market Accounts

A CD differs from a money market account in that the money market account has checking account features such as the ability to write check or link a debit card. A CD is a time-deposit account, and a money market account isn’t, so it generally pays less than a CD. This is because a CD requires you to keep your balance in the account for a set period of time. This is known as the CD term.

CDs vs. Bonds

CDs and Bonds are both considered safe-haven investments that yield higher returns than a standard savings account. However, when interest rates are high, as they currently are, CDs may be a better option, which also works in the reverse as bonds are preferable when interest rates are low. Interest rates impact which of these will be the higher-paying investment.

Recap of Best CD Accounts of 2023

• First Internet Bank: Best for Online Access
• Ally Bank: Best for Rate Guarantee
• American Express National Bank: Best for Above-Average Rates
• Barclays Bank: Best for No Minimum Deposit
• Capital One: Best for High Rates
• Discover Bank: Best for 24/7 Customer Service
• Marcus by Goldman Sachs, Member FDIC: Best for Great Rates
• Raymond James Bank: Best for Dedicated Advisor
• TAB Bank: Best for Mobile App
• TIAA Bank: Best for Great APY

Best Banks 2023

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Best Online Bank and Neobank Savings Accounts of 2023

Best Neobanks of 2023

Research Methodology

To determine the Best CD Accounts of 2023, GOBankingRates looked at the following factors from all banks: 

1. Total assets
2. Number of branch locations
3. Minimum deposit to open an account
4. 12-month CD APY
5. 60-month CD APY
6. Mobile app ratings

Banks Monitored by GOBankingRates

SoFi, Capital One, NBKC, Bank of America, Chime, Charles Schwab Bank, Axos Bank, Current, First National Bank of Pennsylvania, Citibank, New York Community Bank, First Internet Bank, TIAA, Ally Bank, Truist Bank, Wells Fargo, JPMorgan Chase Bank, Quontic Bank, LendingClub Bank, One Finance, First-Citizens Bank, BMO Harris Bank, FirstBank, Bank 5 Connect, BankUnited, The Huntington National Bank, iGOBanking.com, Arvest Bank, First Interstate Bank, Manufacturers and Traders Trust Company, TD Bank, Zions Bancorporation, USAA Federal Savings Bank, Citizens Bank, Fifth Third Bank, PNC Bank, Pinnacle Bank, Keybank, IncredibleBank, Simmons Bank, Santander Bank, Southstate Bank, Bank of Hawaii, First National Bank of Omaha, Bank of the West, First Hawaiian Bank, Texas Capital Bank, Salem 5 Direct, Umpqua Bank, Synovus Bank, Fulton Bank, Flagstar Bank, Associated Bank, UMB Bank, Valley National Bank, United Community Bank, Washington Federal Bank, Centennial Bank, Prosperity Bank, Ameris Bank, United Bank, Pacific Premier Bank, BOKF, City National Bank of Florida, Midfirst Bank, Frost Bank, TAB Bank, Eastern Bank, FNBO Direct, Cadence Bnak, Webster Bank, Old National Bank, Regions Bank, Wilmington Savings Fund Society, MUFG, Union Bank, Bank OZK, First Horizon Bank, CIBC Bank USA, Glacier Bank, Comerica Bank, East West Bank, First Republic Bank, Columbia State Bank, City National Bank, State Farm Bank, Goldman Sachs Bank USA, Marcus by Goldman Sachs, The Bank of New York Mellon, State Street Bank and Trust Company, Citizens Access, Silicon Valley Bank, U.S. Bank National Association, Morgan Stanley Private Bank, Morgan Stanley Bank, Capital One Bank USA, Charles Schwab Premier Bank, TD Bank USA, BNY Mellon, Bank of America California, HSBC Bank USA, The Northern Trust Company, American Express National Bank, UBS Bank USA, Signature Bank, Discover Bank, VirtualBank, Western Alliance Bank, Bank of China, Raymond James Bank, Deutsche Bank Trust Company Americas, BankDirect Capital, Comenity Bank, EmigrantDirect, My Savings Direct, Amboy Direct, Bask Bank, Synchrony Bank, Pacific Western Bank, Barclays Bank Delaware, Commerce Bank, Salle Mae Bank, Stifel Bank and Trust, Cathay Bank, Customers Bank, Green Dot, VioBank, Hancock Whitney Bank