Five-year CDs usually offer the best return in exchange for tying up your money for a longer period of time. And if you’re interested in locking in a five-year CD, experts recommend moving fast.
A few signs lead experts to believe there isn’t much time left to get the high CD rates you see today. The Federal Reserve just paused its run of rate hikes for the first time since March 2022 — and if banks raise long-term CD rates much higher, it could cost them money at this point, said Paul Miller, a certified public accountant and founder at Miller and Company, LLP. And though some experts predict some CD terms could rise to 5.60% APY, others expect any potential increases to be marginal.
Whether you’re inching closer to retirement and don’t want to risk stock market volatility, or if you want to earn interest on a future down payment for a home, you’ll want to lock in a five-year CD soon.
Here’s where five-year CD rates stand and what experts want you to know about locking in a long-term CD.
What is a 5-year CD?
A five-year CD is a traditional, high-yield CD, usually the longest term most banks offer. It’s a low-risk savings account that lets you earn a return with a fixed annual percentage yield or APY over five years. To compensate for tying your funds up for that stretch of time, the bank or credit union will often pay a higher rate than it does for shorter terms.
However, if you withdraw money before your CD term ends, you’ll pay an early withdrawal penalty, usually a few months of interest. But since five-year CDs are generally the longest terms offered, it’s important to make sure you won’t need the money before then. Otherwise, you may be on the hook for up to a year’s worth of interest earned.
But you’ll have a few choices if you don’t touch the money over five years and the CD matures, or the term ends. You can withdraw your funds and the accrued interest, penalty-free, to use toward savings or you may roll the money into a new CD to earn more interest. CDs typically have a seven- to 10-day grace period to give you time to decide before the CD automatically renews.
Bank | 5-year | Minimum deposit |
CFG Bank | 4.50% | $500 |
Barclays | 4.35% | $0 |
MYSB Direct | 4.55% | $500 |
Alliant Credit Union | 4.35% | $1,000 |
Quontic | 4.30% | $500 |
Ally Bank | 4.10% | $0 |
Bread Savings | 4.25% | $1,500 |
Capital One | 4.10% | $0 |
Synchrony | 4.00% | $0 |
Note: Annual percentage yields, or APYs, shown are as of June 19, 2023. CNET’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.
More details on the top 5-year CD rates
- Only high-yield CDs are available
- Terms range from one to five years
- Requires a $500 minimum deposit
- CDs cannot exceed $500,000
- Early withdrawal penalty of seven days of interest within six days of account opening
About the bank: CFG Bank offers CDs, money market and savings accounts with competitive rates. Several checking accounts are also available with access to over 2,000 ATMs. CFG also charges a few fees that are higher than other banks, such as a $37 overdraft fee and a monthly maintenance fee between $2 and $10 depending on the account.
Branches are only available in Maryland — which can be a downside if you need in-person help and you’re not close by. However, you can manage your account online, via the mobile app or by phone at 410-823-0500.
- Only high-yield CDs available
- Terms range from one to five years
- No monthly maintenance fees
- Early withdrawal penalties range from three to six months of interest — depending on the CD term
About the bank: Barclays Bank is a good choice for high-yield savings accounts and CDs, but you won’t find any other options — such as checking or money market accounts. However, you can manage your accounts online or via the mobile app. We also like that Barclays also offers a few helpful tools to help you manage your money and track savings goals, including the Savings Assistant and CD calculator.
The downside is while customer service is available seven days a week, the hours are 8 a.m. to 8 p.m. ET — not 24/7.
- Only high-yield CDs available
- Terms range from one month to five years
- Early withdrawal penalties apply, but the amount isn’t clear
About the bank: M.Y. Safra Bank Direct is a full-service bank that offers a range of checking, savings, money market and CD accounts depending on your needs. However, it’s not the best option for a money market account since the interest rates are lower than other banks. MYSB Direct is still a solid option for most CD accounts since you’ll earn a competitive rate and it only requires a $500 deposit. Another downside is that this bank charges a $5 monthly fee for select accounts.
You can visit the local branch if you live in New York City or call 212-652-7200 during business hours. Accounts can also be managed online.
- High-yield and jumbo CDs
- IRA CDs are also available for retirement
- Terms range from three months to five years
- Early withdrawal penalties range from seven days to three months of interest
About the bank: Alliant offers different types of checking and savings accounts — including options for teens and kids. We like that the credit union lets you open up to 19 savings accounts and track your financial goals online. And you’ll get up to $20 reimbursed for out-of-network ATM surcharges.
However, you’ll need to meet certain account eligibility requirements to open an account, but it’s still available nationwide. You can open an account online or by calling 800-328-1935.
- Only high-yield CDs available
- Terms range from one to five years
- Early withdrawal penalties vary by term
About the bank: Quontic offers several checking accounts to let you earn cash rewards, interest or bitcoin on your balance. You can also open a high-yield savings, money market and CD account. We like that the deposit accounts don’t have any overdraft or monthly maintenance fees. And Quontic’s Pay Ring lets you make transactions using a wearable.
To reach Quontic, you can have live chat or share your phone number with the bank for a phone call. Quontic’s mobile app is also available for help and managing your accounts.
- No-penalty, bump-up and high-yield CDs
- Terms range from three months to five years — depending on the type of CD
- Early withdrawal penalties range from two to five months of interest
- Loyalty reward of 0.05% for CDs you renew
About the bank: Ally is one of our favorite banks and choices for opening a CD. It’s a full-service bank that offers several deposit accounts, including high-yield checking, savings and a money market account. Best of all, these accounts don’t require a minimum deposit or balance required. If you’re eyeing a CD with Ally, we like that it offers a loyalty reward that boosts your APY by 0.05% when you renew.
Keep in mind that Ally is an online-only bank so you’ll need to be comfortable managing your account online, but ATMs are available. However, cash deposits aren’t accepted.
- Only high-yield CDs available
- Terms range from one to five years
- Early withdrawal penalties range from three months to one year of interest
About the bank: Bread Savings offers CDs and high-yield savings accounts, but both require a minimum deposit — $1,500 and $100 respectively. CDs come with a few free services that are common amongst banks, but worth noting — including incoming wire transfers, monthly maintenance and ACH transfers. Bread Savings is an online bank but can be reached at 833-755-4354.
- Only high-yield CDs available
- Terms range from six months to five years
- CDs cannot exceed $1,000,000
- Early withdrawal penalties range from three to six months of interest
About the bank: Capital One offers several savings options that don’t require a minimum deposit or monthly maintenance fees — including high-yield and kids savings accounts. Checking accounts are also available. Compared to other interest-earning checking accounts, the APY is slightly lower for Capital One’s 360 checking account, but you won’t be charged for overdraft protection. And we like the convenience of depositing cash at CVS stores.
Aside from deposit accounts, Capital One offers CreditWise to manage your credit using the Capital One app. You can open an account at a Capital One branch near you or online.
- Bump-up, high-yield and no-penalty CDs available
- Terms range from three months to five years — depending on the type of CD
- No minimum balance or monthly maintenance fees
- Early withdrawal penalties range from three months to one year of interest
About the bank: Synchrony offers competitive rates for all of its savings options — including money market accounts, CDs and high-yield savings accounts. You’ll also get extended customer service hours by phone and live chat online.
However, Synchrony is an online-only bank, so even though it has a lot to offer, you’ll need to be comfortable managing your accounts online. And since it doesn’t allow cash deposits, you’ll need to fund your CD from another account. Synchrony also doesn’t offer a checking account, so it may not be the right fit if you want to keep all of your accounts under one bank.
- High-yield, bump-up and IntraFi® CDs available
- Terms range from three months to five years — depending on the type of CD
- No monthly account fee
- Minimum deposit for CD varies based on the type of CD
- Early withdrawal penalty is one-fourth of the CD term’s total interest
About the bank: We like that TIAA Bank offers an array of CD types to choose from and competitive rates for its deposit accounts. However, there’s a minimum deposit for most accounts and if you plan to open a checking account, the APY will depend on your daily minimum balance.
There is 24/7 customer support available online and by phone at 888-882-3837. You can also manage your accounts online or in person if there’s a branch nearby. However, there aren’t as many brick-and-mortar branches compared to major national banks.
- High-yield, no-penalty and bump-up CDs available
- Terms range from six months to six years — depending on the type of CD
- Early withdrawal penalties range from three to nine months of interest
- CD Maturity Center available 12 months before your CD matures to make changes to your CD beforehand — including withdrawing money or closing the account
About the bank: Marcus by Goldman Sachs offers a high-yield savings account and high-yield, no-penalty and bump-up CDs. It doesn’t offer a checking account, however. High-yield CDs require a minimum $500 deposit, while savings accounts don’t require an initial deposit. We like that you can make same-day transfers of $100,000 or less to and from other banks and that 24/7 customer support is available by calling 855-730-7283. An extensive list of frequently asked questions is also available online.
However, there are some shortcomings. Marcus by Goldman Sachs doesn’t offer an ATM network, checking or money market accounts. Lastly, you won’t be able to deposit cash or mobile check deposits.
Are 5-year CD rates still going up?
Five-year CD rates have remained the same each week for most banks — with the most competitive rates hovering around 4%. On the other hand, short-term CDs remain high, with six-month and one-year CD rates around 5% — a big advantage if you don’t want to lock in a rate for a long time.
“We are beginning to see some lower rates on longer-term CDs due to the inverted yield curve,” said Howie Wu, executive vice president and head of product at Seattle Bank. History tells us that when this happens, longer-term economic outlook is more questionable, so locking in a long-term CD with a high APY is best, he added.
Wu’s advice indicates that the time may be approaching when you’ll want to lock in a long-term CD rate, before rates begin dipping. And with the Fed’s rate hike pause, some experts don’t predict that long-term rates will go much higher — even though more rate hikes are likely this year.
And he isn’t alone. Other experts echo Wu’s sentiments. “We believe we have largely hit the peak in interest rates,” said Adam Coons, certified financial analyst and portfolio manager at Winthrop Capital Management. “While we may see fluctuations in near-term rates, ultimately we see the path of rates skewed to the downside rather than the upside.”
But not all experts agree. Some predict there’s still a chance savings rates could climb a bit higher.
“While there is no guarantee, it is possible for CD rates to surpass the projected inflation rate of 5.60% by the end of the year,” said Miller. For example, if the Fed responds to high inflation by announcing another rate hike, CD rates could also go up. Even if the Fed doesn’t raise rates, some banks may also continue to raise five-year CD rates over time as a promotional offer to remain competitive or if they need deposits.
Rather than trying to time the savings market, if you’re comparing long-term CD rates, now is a good time to lock in a five-year CD. Savings rates are high, with top banks offering five-year CDs from 4.00% to 4.50% APY, which can still bring you a solid return.
Here’s a closer look at how much you can earn if you open a five-year CD with a $1,000 deposit now with a 4.02% APY based on Bankrate’s CD calculator. Even if you wait to open the CD with the same amount of money and the APY goes up to 4.50%, there’s not a big difference in the return.
APY | Interest earned | Balance |
4.02% | $217.82 | $1,217.82 |
4.50% | $246.18 | $1,246.18 |
How to choose a 5-year CD
Most banks and credit unions offer five-year CDs, but neobanks, or online-only banks, usually offer the best rates. When shopping around, you’ll see a range of requirements to open a CD across banks. Some require a minimum deposit, while others have a higher APY. Others may also have hefty withdrawal penalties that can cost a lot if you need to take the money out unexpectedly. Here are a few things to consider when choosing a CD:
Look for:
- A fixed interest rate over five years — regardless of the rate environment
- The highest APY in a normal rate environment
- A CD that is FDIC or NCUA insurance up to $250,000 per person, per account
Other considerations to weigh:
- Some banks have a hefty withdrawal penalty if you withdraw money before the CD matures or the term ends. Consider a five-year CD with lower penalties.
- The minimum deposit required to set up an account
- Whether you can fund the account in-branch or online
- Customer service availability
- You’re locking in the CD rate for a few years — even if rates rise
- You won’t have access to the money without paying a penalty if you need it
Other savings options compared to a 5-year CD
“The big advantage to CDs in our current economic climate is that they have fixed rates — which you can lock in if interest rates fall,” said Terry Turner, a financial wellness facilitator and writer for Annuity.org. “A lot of other savings options feature variable rates that fluctuate with the market.”
But savings options with variable rates also tend to offer more flexibility — you can deposit and withdraw money regularly without paying an early withdrawal penalty as you would with CDs.
And though a five-year CD can help you take advantage of high rates, you don’t want to lock all your savings into a CD. It’s best to consider other options and spread your money across multiple accounts to ensure flexibility if an unexpected expense pops up. Here are a few options:
High-yield savings accounts
A high-yield savings account or a money market account are both good options for storing emergency savings or money you need quick access to. You’ll still earn interest but won’t lock in a fixed rate. That means when rates drop, your savings APY likely will, too. The average high-yield savings account rate is 4.55%, while a five-year CD is 4.02%. But the savings rate is variable and may not stay that high for long. In five years, the CD could yield a better return with its guaranteed, fixed rate.
Here’s a side-by-side look at the average one- and five-year CDs and high-yield savings accounts for banks CNET tracks for the week of April 19, 2023. Right now one-year CDs are outpacing five-year terms, which are more in line with high-yield savings account rates.
1-year CD APY | 5-year APY | Average high-yield savings APY |
4.96% | 4.02% | 4.55% |
Bump-up CDs
Another option that some banks offer are bump-up CDs. These CDs let you adjust your APY one (or sometimes multiple) times so you can lock in a higher rate if rates rise during your CD term. This may come in handy if you want to lock in a CD now but you’re worried about missing out on better rates in the coming weeks. However, bump-up CDs generally have lower rates compared with traditional CDs. So even though you’ll have a chance at a better rate, you may start with one lower than average. And you’ll still pay an early withdrawal penalty if you take the money out before the term ends.
CD ladder
If you want a guaranteed fixed rate but want to get your money back sooner, consider building a CD ladder. With a traditional CD ladder, you’d invest in one-, two-, three-, four- and five-year CD terms, with money coming due annually — in case you need funds each year — while still taking advantage of current higher rates. You can also apply this strategy to shorter-term CDs, particularly those we’re seeing with higher rates.
Series I bonds
Lastly, Series I bonds are another safe investment option and are government-backed. I bonds are currently outpacing inflation, and if you apply for one before the end of April, you can lock in this rate for the next six months. But after that, the new rate may drop significantly. An I bond requires you to lock up your money for at least one year, but you should try not to touch your funds before five years, or like a CD, you’ll forfeit some of the interest you earned.
How to open a 5-year CD
When you’re ready to open a CD, most banks let you open your account online. Or, if a physical branch is available, you can apply in person. The application will call for your personal information, such as your full name, Social Security or Tax Identification number, physical address and contact information.
You’ll also need your one-time deposit. CDs only allow you to add money in one lump sum when you open your account, and you won’t be able to make any additional contributions later. Before opening your account, do the math to determine the return you want. You can use a CD calculator to include the CD’s APY to know how much you’ll need to deposit.
Lastly, check with the bank to see how you can make the deposit — most require an electronic transfer and don’t accept cash.
FAQs
You’ll pay an early withdrawal penalty if you withdraw money before your CD matures. You can forfeit between 180 and 365 days’ worth of interest on a five-year CD. The exact amount depends on your bank.
Yes. If you choose a traditional CD, you’ll have a fixed interest rate for your CD term. When your CD matures, you can roll the money into a new one with a better interest rate.
Unless you’re buying a CD offered by a brokerage account, CDs bought through a bank or credit union are insured by the Federal Deposit Insurance Corporation or National Credit Union Administration for up to $250,000 per person. Insurance also covers any interest compounded, making it a low-risk investment.
CD terms typically vary from three months to five years. Generally, CDs with longer terms of maturity pay higher interest rates. There are other safe savings accounts to consider, such as high-yield savings accounts or I bonds.
Methodology
CNET reviews CD rates based on the latest APY information from issuer websites. We evaluated CD rates from more than 50 banks, credit unions and financial companies. We selected the CDs with the highest APY for five-year terms from among the organizations we surveyed, and considered rates for shorter terms if five-year terms were identical or unavailable.
Banks surveyed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Barclays, BMO Harris, Bread Savings, BrioDirect, Capital One, CFG Community Bank, Citizens Access, Colorado Federal Savings Bank, Connexus Credit Union, Consumers Credit Union, Discover Bank, First Internet Bank of Indiana, First Tech Federal Credit Union, FNBO Direct, GO2bank, Golden 1 Credit Union, HSBC Bank, Huntington Bank, Lake Michigan Credit Union, LendingClub Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Merrick Bank, Nationwide (by Axos), Navy Federal Credit Union, NBKC, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Vio Bank and Wells Fargo.
This article includes some material that was previously published on NextAdvisor, a CNET Money sister site that was also owned by Red Ventures and which has merged with CNET Money. It has been edited and updated by CNET Money editors.