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MoneyWatch: Managing Your Money


By Kelly Ernst

/ CBS News

In today’s high rate environment, long-term CDs can be especially lucrative. Getty Images/iStockphoto

Are you looking for a low-risk investment that will yield steady returns over an extended period? Look no further than certificates of deposit (CDs). CDs are reliable investment accounts that allow you to earn higher interest rates than traditional savings or checking accounts (and, often, higher than even high-yield savings accounts).

These higher rates come in exchange for agreeing to keep your funds in the CD for a set period, known as the term. CD terms typically range from three months to five years, with the highest rates commonly found on longer-term CDs. And, in today’s rate environment, long-term CDs can be especially lucrative as they allow you to lock in current high rates for years, even if overall interest rates go down.

That said, as with any financial product, you have plenty of options to choose from when it comes to long-term CDs. Start your CD search by comparing current rates here.

Best long-term CDs to open now

The following long-term CDs offer some of the highest rates you’ll find right now. They all have FDIC insurance for your deposits, up to $250,000 per account per bank. They also don’t have any fees.

3-year CDs

If you’re able to leave your funds untouched for three years (36 months), you can enjoy interest rates like the following:

  • Popular Direct (4.53% APY): Popular Direct’s three-year CD has the highest rates on our list at 4.53%. There are no monthly maintenance fees, but you must deposit at least $10,000 when you open the account, so it’s best suited for established savers. If you need to withdraw funds before the term expires, you’ll incur an early withdrawal penalty of 365 days’ interest.
  • Bread Financial (4.50% APY): With a much lower minimum deposit of $1,500, Bread Financial’s three-year CD provides 4.50% APY and one of the lowest withdrawal penalties on this list, at 180 days’ interest 
  • BMO Harris (4.30% APY): BMO Harris’ three-year CD requires a minimum deposit of $1,000 and offers an APY of 4.30%. Its early withdrawal penalty is 365 days’ interest.
  • Synchrony Bank (4.30% APY): Synchrony Bank is one of the only banks on the list that requires no minimum deposit for its three-year CD, making it a great choice for beginning savers who don’t have a large amount to put away but still want to earn a competitive interest rate. The early withdrawal penalty for this CD is 365 days’ interest.

Secure the best interest rate you can — compare your long-term CD options today!

5-year CDs

If you can afford to keep your funds in a CD for five years (60 months), these CDs are worth considering:

  • Popular Direct (4.53% APY): As with its three-year CD, Popular Direct’s five-year CD requires a minimum deposit of $10,000. It also has the heftiest early withdrawal penalty on this list, at 730 days’ interest. That said, if you have a large amount to deposit, you stand to earn considerable interest with its 4.53% APY.
  • First Internet Bank of Indiana (4.49% APY): For a minimum deposit of only $1,000, you can enjoy the second-highest rate on the list at 4.49% APY with First Internet Bank of Indiana’s five-year CD. The early withdrawal penalty is square in the middle of the ranges on this list, at 360 days’ interest.
  • Alliant Credit Union (4.35% APY): Alliant Credit Union’s five-year CD has a minimum deposit requirement of $1,000 and an early withdrawal penalty equal to the number of days the CD is open (up to 180 days’ interest). It’s unique on this list in that it offers a dividend withdrawal option. You can choose to receive interest payments each month instead of earning compound interest, with no fees for doing so.
  • Barclays (4.35% APY): Barclays’ five-year CD strikes a nice balance between a competitive yield and a lower early withdrawal penalty. It has no minimum deposit and charges 180 days’ interest if you withdraw funds early — the lowest penalty of the five-year CDs listed here.
  • BMO Harris (4.30% APY): You can earn 4.30% APY with BMO Harris’ five-year CD, which has a minimum deposit requirement of $1,000. Its early withdrawal penalty is high, however, at 545 days’ interest, so make sure you’re comfortable keeping your funds in the account for the full term.

Find the best CD for you by reviewing current offerings online now.

The bottom line

Long-term CDs are a great investment option for savers looking for a higher interest rate who can afford to lock their funds away for the entirety of the CD’s term. The above accounts are a great place to start, but be sure to take the time to compare your options, review all terms and conditions and weigh the APYs and features against any fees and penalties.

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