Best 5-year CD rates - September 2023

A certificate of deposit is a financial product that allows you to set aside money and earn a fixed rate of interest for a set period of time. In exchange for returning the money for a longer fixed period, you usually get a higher interest rate. For example, a five-year CD may pay a higher (and guaranteed) rate than a traditional savings account while offering some degree of security.

The average rate for a five-year CD is 0.74 percent, but the Finwower team researched the best rates available across the country. Compare these offers and calculate the interest you will get when the CD matures.

What is a 5-year CD?

A CD is a high-yield savings account in a term deposit box. Unlike a savings account where the annual percentage yield (APY) is variable, the yield on a CD is fixed and does not change during the term of the contract. At maturity, one month later, you can renew the CD or look for another one with a potentially higher yield if the interest rate environment has improved. After the expiration date, the CD will likely be automatically renewed after a grace period, usually within seven to ten days.

Finwower's choices for the best 5-year CD rates.

• Bread Savings - 3.65% per annum, minimum deposit $1,500.
• Synchrony Bank - 3.50% per annum, $0 minimum deposit.
• Popular Direct - 3.40% per annum, minimum deposit $10,000.
• Barclays - 3.25% annual, $0 minimum deposit.
• Capital One - 3.25% per annum, $0 minimum deposit.
• Bethpage Federal Credit Union - 3.25% per annum, $50 minimum deposit.
• Marcus by Goldman Sachs - 3.25% per annum, minimum deposit $500.
• Alliant Credit Union - 3.25% annually, minimum deposit $1,000.
• BMO Harris - 3.25% annually, minimum deposit $1,000.
• First Internet Bank of Indiana - 3.25% annual, minimum deposit $1,000.
• TAB Bank - 3.25% annually, minimum deposit $1,000.
• TIAA Bank - 3.25% annual, minimum deposit $1,000.
• Discover Bank - 3.25% per year, minimum deposit $2,500.
• LendingClub Bank - 3.25% annually, minimum deposit $10,000.
• Sallie Mae Bank - 3.25% annually, minimum deposit $2,500.
• Citizens Access - 3.25% per year, minimum deposit $5,000.

Note: The annual percentage rates (APRs) shown are valid until September 13, 2023. The Finwower editorial staff updates this information regularly, usually every two weeks, andAPRsmay have changed since the last update and, for some products, may vary by region.

Focus on the best 5-year CD rates

Bread Savings - 3.65 percent annual yield, minimum deposit of $1,500.

Bread Financial is an online bank that offers high-yielding five-year CD savings products.

Bread Savings is a product of Comenity Capital Bank, which has been in business for over 30 years. Comenity is a bank that has produced many branded credit cards.

Synchrony Bank - 3.50 percent annual yield, $0 minimum deposit.

Synchrony Bank offers competitive returns on 14 CDs. Synchrony promises that CDs funded within 15 days of opening will have higher yields if rates rise during this period.

The bank also offers a money market account and a savings account. Both offer competitive annual returns and do not require a minimum balance.

Popular Direct - 3.40 percent annual yield, $10,000 minimum deposit.

Popular Direct, an online bank, is a subsidiary of Popular Inc, a financial services company with a 120-year history. Popular Direct was formerly known as Banco Popular North America.

Popular Direct offers CDs with eight maturities, from three months to five years, and caters to serious savers, with a minimum deposit of $10,000 at opening. Interest is compounded daily. Popular Direct does not offer specialized CDs, such as those with or without penalties.

Popular Direct also offers a savings account with a competitive rate.

Barclays - 3.25% annual yield, $0 minimum deposit.

Barclays was founded in London over 300 years ago. Barclays does not require a minimum balance to open a CD online. It offers nine CD terms ranging from three months to five years. A savings account is also available.

Capital One - 3.25 percent annual yield, no minimum deposit.

Capital One is an online bank that also has branches. It is based in McLean, Virginia.

Capital One offers nine competitive terms for regular CDs. CDs and Capital One's 360 Performance Savings Account do not require a minimum balance.

Bethpage Federal Credit Union - 3.25 percent annual yield, $50 minimum deposit.

Bethpage Federal Credit Union is one of the largest credit unions in the United States, with about 438,000 members. It was opened in 1941 for Grumman employees. Anyone who opens a $5 savings account can become a member.

Bethpage offers nine CDs, from three months to five years, and a Bump-Up CD at 39 months.

Marcus by Goldman Sachs - 3.25 percent annual interest, minimum deposit of $500.

Marcus by Goldman Sachs is the online consumer banking unit of Goldman Sachs Bank USA. Marcus offers a variety of CDs, three penalty-free CD terms and a savings account, all with competitive yields. Marcus began offering CDs in 2017.

Marcus also offers debt consolidation, home improvement and personal loans.

Alliant Credit Union - Annual yield of 3.25 percent, minimum deposit of $1,000.

Alliant Credit Union was founded in 1935 as United Airlines Employees' Credit Union. Today it has about 600,000 members nationwide.

Alliant offers competitive annual interest rates and a low minimum CD balance. Alliant also offers a number of CDs for individual retirement accounts (IRAs).

BMO Harris - 3.25 percent annual return*, minimum deposit of $1,000.

BMO Harris is a regional bank that also offers online accounts. Headquartered in Chicago, it has more than 500 branches in Arizona, Florida, Illinois, Indiana, Kansas, Minnesota, Missouri and Wisconsin.

BMO Harris offers CDs with durations ranging from one month to five years, each of which requires a minimum opening deposit of $1,000.

*Average annual yield not available in Arizona, Florida, Illinois, Indiana, Kansas, Minnesota, Missouri, and Wisconsin.

First Internet Bank of Indiana - 3.25 percent annual yield, minimum deposit of $1,000.

First Internet Bank of Indiana opened in 1999 and was the first FDIC-insured financial institution to operate entirely online, according to the bank's website. Its products are available in all 50 U.S. states.

First Internet Bank's products include CDs with eight term options, a money market savings account with a competitive yield, a savings account and two checking accounts.

TAB Bank - Annual yield of 3.25 percent, minimum deposit of $1,000.

Transportation Alliance Bank was established in 1998. In addition to offering eight CD terms - six months to five years - it also offers a savings account, a money market account and a checking account.

TIAA Bank - Annual yield of 3.25 percent, minimum deposit of $1,000.

TIAA Bank is a division of TIAA FSB and has nine branches, all in Florida.

TIAA offers CDs with maturities from three months to five years. It also offers a step-up CD, which allows for one-time rate increases when rates go up. For customers with large deposits who need extensive FDIC insurance coverage, TIAA Bank offers a service that allows them to insure more than FDIC limits by spreading the money over a network of banks.

Discover Bank - 3.25 percent annual yield, minimum deposit of $2,500.

Discover Bank is known for its credit cards, but it also offers a wide range of banking products, including checking accounts, money markets, and savings accounts. Discover Bank's CDs have maturities ranging from three months to 10 years.

The savings account offers a competitive annual return and does not require a minimum balance.

LendingClub Bank - 3.25 percent annual yield, $10,000 minimum deposit.

LendingClub Bank is a digital financial company that offers banking products to individuals and businesses. It acquired Radius Bank in early 2021. In addition to the five CDs, LendingClub Bank also offers a high-yield savings account and a personal and business checking account.

Sallie Mae - 3.25 percent annual yield, minimum deposit of $2,500.

Sallie Mae Bank offers 11 CDs, savings accounts, money market accounts, credit cards and private student loans.

Sallie Mae Bank offers a competitive yield on all deposit products.

Sallie Mae Bank was founded in 2005 and is headquartered in Salt Lake City, Utah. In 2014 Sallie Mae became an independent banking company.

Citizens Access - 3.25 percent annually, minimum deposit of $5,000.

Citizens Access made its debut in 2018. It offers five CDs and a savings account. The five-year CD is the longest.

A minimum deposit of $5,000 is required to open a CD or savings account with Citizens Access.

How to find the best rates for five-year CDs.

Savers looking for the best rates on CDs are likely to venture online. Even if a bank is relatively small or little known, if it is a member of the FDIC, you can rest easy knowing that each depositor (i.e., you) is protected for at least $250,000 per insured bank. For a National Credit Union Administration (NCUA) institution, the standard amount of insurance is $250,000 per shareholder (depositor), per insured credit union, per ownership category (account type).

However, attention must be paid to ease of use. Banks that make it difficult or time-consuming to deposit and withdraw funds may delay the time when you lose the benefit of a few extra basis points of interest on your savings. (One basis point equals 0.01%, so 1% equals 100 basis points).

Things to consider when choosing a CD.

Consider the following points to help you choose the right CD:

• Early withdrawal penalties: be aware of the penalties that may apply if you withdraw before the CD's maturity date.
• Minimum deposit required: many CDs require a minimum deposit at opening.
• ANNUAL PERCENTAGE YIELD: The annual percentage yield is the annual interest earned if you keep money in the CD for the entire term of the contract. To compare CDs, compare annual rates of return rather than interest rates.
• Duration: the time it takes to accumulate interest on your money. In general, it is best to choose a CD with a shorter duration than you think you will need the money for. For example, if you need the money in about two years, an 18-month CD might be a good choice.
• Insurance: make sure the CD is offered by an FDIC-insured bank or NCUA-insured credit union.

Frequently asked questions about 5-year CDs.

• Advantages and disadvantages of 5-year CDs.

  Before choosing a 5-year CD, weigh the pros and cons to determine if it is right for you.

  Advantages:

  • Limited liquidity. CDs do not allow immediate access to funds (unlike savings accounts), which can be an advantage if you are tempted to spend your money elsewhere. A CD can help you keep your savings intact. However, make sure you do not need the money before the CD expires. It is also important to know the early withdrawal penalty you will incur if you need to withdraw the funds before maturity.
  • Security. CDs from banks and credit unions insured by the FDIC are backed by the full faith and credit of the U.S. government up to $250,000.
  • High yield. Banks generally offer a higher average annual yield for a five-year CD than a traditional savings account or a shorter-term CD.
  • Wide choice. From thousands of banks and credit unions, you can choose a CD with the interest rate, maturity date and minimum deposit amount that meets your needs.
  • Fixed and predictable yields. When you put your money in a CD, you are guaranteed a fixed yield on a specific date, which can help you plan your financial goals.

  Disadvantages:

  • Limited liquidity. The inability to access funds instantly is a disadvantage for those who may need the money before the CD expires. There is usually a penalty in case of early withdrawal. If you think you will need the money in less than five years, consider a CD or a shorter-term savings account.
  • Inflation risk. Money in a CD can lose its purchasing power over time if inflation exceeds interest income. (Note: Supply chain problems and other economic factors have recently led to price increases in the current COVID-19 pandemic.)
  • Low relative return. Other investment options may offer a higher rate of return. However, these investments generally carry more risk, including the possibility of losing principal. If you leave your money in the CD for its full term with an FDIC-insured bank and follow FDIC guidelines, your fixed-rate CD will earn that return. The same is true for NCUSIF-insured credit unions.
  • Reinvestment risk. If you put your money in a five-year CD, you will have to wait a long time before you can use it. If interest rates rise in the meantime, you will not be able to invest in a higher-rate CD.

• Alternatives to five-year CDs

  • Short-term CDs: Short-term CDs allow you to accumulate interest and possibly benefit from rising rates at maturity. One-year and 18-month CDs give you quicker access to your money, but the trade-off is generally a lower annual return.
  • Savings accounts: the main advantage of a savings account is its liquidity, which allows immediate access to funds without penalty. Savings accounts generally have lower and variable annual returns.
  • Money market accounts: allow you to access your money (without penalty) while offering higher returns than most savings accounts. Many institutions require a relatively high minimum opening balance, but this can also mean a higher interest rate. Some accounts may charge a fee if the account is closed within 90-180 days.
  • Bonds: if you are comfortable with higher risk, you might consider investing in bonds. There are several types, including municipal bonds, corporate bonds, and agency bonds.

• Who should consider a 5-year CD?

  Long-term investment vehicles, such as five-year CDs, generally offer higher returns than short-term CDs. However, because of the flat yield curve, you will not gain much more by choosing a long-term CD over a medium-term CD. A five-year CD is ideal for retirees and savers who do not need to invest funds for at least half a decade. The decision to purchase a five-year CD depends on your time horizon and financial goals.

• Why choose a five-year CD?

  A five-year CD can offer one of the best returns available, as longer maturity CDs tend to have higher rates. A five-year CD may be a good option if the annual yield is higher than what is available elsewhere and if you are able to leave funds on deposit for the entire term of the contract. A five-year CD can also be part of a CD ladder that contains shorter maturity CDs, such as one-, two-, three- and four-year CDs. A CD ladder staggers maturities and annual rates, offering higher yields and access to liquidity at regular intervals.

• Is a five-year CD versatile?

  With a five-year CD, savers enjoy a premium over the normal rate of a traditional savings account. However, if you can find a CD with a low penalty of just a few months, the higher interest rates offered by five-year CDs can make them a good choice over shorter maturities, even if you think you will have to cash out the CD sooner.

• Is a five-year CD profitable?

  Two factors determine whether a five-year CD is profitable for you: when you will need your money and whether you can get a competitive annual return. The duration is important because you want to make sure you do not incur a penalty if you withdraw early. You also need to take inflation into account and buy a CD that can track returns.

• Can a five-year CD lose value?

  A five-year CD can lose value if you incur an early withdrawal penalty, which can reduce your principal. However, if you keep the five-year CD for its full term, you will receive the interest shown, assuming it is a fixed-rate CD. Each depositor is insured for a minimum of $250,000 per FDIC-insured bank. The standard amount of insurance is $250,000 per shareholder, per insured credit union, per account type at NCUA institutions.

Methodology for best CD rates in Finwower.

At Finwower we are committed to helping you make smarter financial decisions. We follow strict guidelines to ensure that our editorial content is unbiased and not influenced by advertisers. Our editorial team receives no direct remuneration from advertisers, and our content is carefully vetted for accuracy.

Finwower regularly reviews about 70 popular financial institutions, including major banks and credit unions, as well as a number of popular online banks.

To find the best CDs, our editorial team analyzes several factors, such as the annual return, the minimum deposit required to earn that annual return (or to open the CD), and the wide availability. All the accounts presented on this page are insured by the Federal Deposit Insurance Corp (FDIC) or the National Credit Union Share Insurance Fund (NCUSIF).

When choosing the CD that is right for you, think about how and when you will use the money to avoid early withdrawal penalties.

Written by

Jonah Collins

Loans, Mortgage

Jonah Collins is a personal loans writer for Finwower. Backed by Master's of Science in Finance from Bournemouth University, he has hands-on experience as an investor and trader, along with editing and writing experience in finance, investments.

Read more from Jonah Collins