Deposit account rates are on the decline. The good news: You can lock in a competitive return on a certificate of deposit (CD) today and preserve your earning power. In fact, the best CDs still pay rates above 4%. Read on for a snapshot of CD rates today and where to find the best offers.

CDs today typically offer rates significantly higher than traditional savings accounts. Currently, the best short-term CDs (six to 12 months) generally offer rates around 4% to 4.5% APY.

As of August 27, 2025, the highest CD rate is 4.4% APY. This rate is offered by two banks: Marcus by Goldman Sachs on its 6-month CD, and NexBank on its 1-year CD.

The following is a look at some of the best CD rates available today from our verified partners:

The 2000s were marked by the dot-com bubble and later, the global financial crisis of 2008. Though the early 2000s saw relatively higher CD rates, they began to fall as the economy slowed and the Federal Reserve cut its target rate to stimulate growth. By 2009, in the aftermath of the financial crisis, the average one-year CD paid around 1% APY, with five-year CDs at less than 2% APY.

The trend of falling CD rates continued into the 2010s, especially after the Great Recession of 2007-2009. The Fed's policies to stimulate the economy (in particular, its decision to keep its benchmark interest rate near zero) led banks to offer very low rates on CDs. By 2013, average rates on 6-month CDs fell to about 0.1% APY, while 5-year CDs returned an average of 0.8% APY.

However, things changed between 2015 and 2018, when the Fed started gradually increasing rates again. At this point, there was a slight improvement in CD rates as the economy expanded, marking the end of nearly a decade of ultra-low rates. However, the onset of the COVID-19 pandemic in early 2020 led to emergency rate cuts by the Fed, causing CD rates to fall to new record lows.

The situation reversed following the pandemic as inflation began to spiral out of control. This prompted the Fed to hike rates 11 times between March 2022 and July 2023. In turn, this led to higher rates on loans and higher APYs on savings products, including CDs.

Fast forward to September 2024 — the Fed finally decided to start cutting the federal funds rate after it determined that inflation was essentially under control. Today, we're beginning to see CD rates come down from their peak. Even so, CD rates remain high by historical standards.

Take a look at how CD rates have changed since 2009:

Traditionally, longer-term CDs have offered higher interest rates compared to shorter-term CDs. This is because locking in money for a longer period typically carries more risk (namely, missing out on higher rates in the future), which banks compensate for with higher rates.

However, this pattern doesn’t necessarily hold today; the highest average CD rate is for a 12-month term. This indicates a flattening or inversion of the yield curve, which can happen in uncertain economic times or when investors expect future interest rates to decline.

Read more: Short- or long-term CD: Which is best for you?

When opening a CD, choosing one with a high APY is just one piece of the puzzle. There are other factors that can impact whether a particular CD is best for your needs and your overall return. Consider the following when choosing a CD:

Your goals: Decide how long you're willing to lock away your funds. CDs come with fixed terms, and withdrawing your money before the term ends can result in penalties. Common terms range from a few months up to several years. The right term for you depends on when you anticipate needing access to your money.

Type of financial institution: Rates can vary significantly among financial institutions. Don't just check with your current bank; research CD rates from online banks, local banks, and credit unions. Online banks, in particular, often offer higher interest rates than traditional brick-and-mortar banks because they have lower overhead costs. However, make sure any online bank you consider is FDIC-insured (or NCUA-insured for credit unions).

Account terms: Beyond the interest rate, understand the terms of the CD, including the maturity date and withdrawal penalties. Also, check if there's a minimum deposit requirement and if so, that fits your budget.

Inflation: While CDs can offer safe, fixed returns, they might not always keep pace with inflation, especially for longer terms. Consider this when deciding on the term and amount to invest.

In a falling interest rate environment, it’s more important than ever to ensure your savings are earning a solid return. Putting your money in a certificate of deposit (CD) is one smart way to lock in today’s elevated rates before they’re gone.

In fact, many banks and credit unions are offering CD rates of 4% APY and higher. And the best CD rates may be found at your local financial institution.

Use the following map to see the highest CD rate available in each state. You can toggle between banks and credit unions to find a financial institution that fits your needs.

Note: CD rates are accurate as of August 19, 2025. Always verify rates and account details directly with financial institutions before opening an account.

Top CD rates are competitive across the US. That said, these five states have the highest rates today.

The highest CD rate in the country can be found in South Dakota. Sentinel Credit Union is offering a 70-day special CD at 7% APY. The minimum deposit needed to open an account is $500 and the maximum investment is $7,000.

To join this credit union, you must live, work, worship, attend school, or own a business or other legal entity in Pennington, Lawrence, Meade, Custer, Lyman, Todd, Tripp, Gregory or Mellette county in South Dakota. Immediate family members of current members are also eligible to join. Once you join, you’re a member for life – even if you relocate, switch jobs, or retire.

To secure membership, you need to open a regular savings account and maintain a minimum balance of $5.

F3 Credit Union (F3CU) offers the second-highest CD rate in the country on its limited-time 12-month certificate. New members can earn a 6.13% APY with a minimum opening deposit of $500 and a maximum deposit of $10,000.

To join F3CU, you must live, work, worship, or go to school in Santa Clara County; be employed by or retired from the U.S. Postal Service in an eligible county; be a civil service employee in an eligible county; or be an employee, contract employee, or legal counsel of the credit union.

If you are eligible to join, you can establish membership by filling out an online application, depositing at least $50 into a regular share account, and paying a $5 membership fee.

Read more: What is a share certificate?

Alpena Alcona Area Credit Union (AAACU) is offering a special 7-month CD for new members with 6% APY. The minimum opening deposit is $250.

To become a member of AAACU, you must live, work, worship, or attend school in the state of Michigan. If you meet that requirement, all you need to do is fill out an application on AAACU’s website to join.

Right now, new members may also be eligible for a new member reward of up to $250.

For a limited time, Lewis Clark Credit Union (LCCU) is currently offering a 19-month certificate with 5.12% APY. You must live in an eligible county in Idaho or Washington state and deposit a minimum of $500 to join and open an account.

Moline Municipal Credit Union (MMCU) is offering a 13-month CD that pays 5.12% APY. The minimum opening deposit is $1,000. Additionally, CDs with a minimum deposit of $100,000 can earn an even higher rate of up to 5.64% APY.

Membership with MMCU is open to anyone who is an employee of:

The City of Moline

Moline Police and Fire departments

Metro bus system

Trinity Hospital / Unity Point Health

Membership is also open to anyone who lives or works in Rock Island County. Family members of current members are eligible to join as well.

To secure membership, you must deposit a minimum of $25 into your new credit union savings account via direct deposit. Once your membership is approved, it’s good for life.

Read more: 7 credit unions anyone can join

CDs are not a one-size-fits-all financial product. There are several factors to consider before opening a CD.

A CD’s annual percentage yield, or APY, represents how much your balance will earn in one year when factoring in compound interest. APY is one of the most important factors to evaluate since it impacts how much your balance will grow over time. However, it shouldn’t be the sole deciding factor in which CD you choose.

A CD’s term refers to the length of time you’re required to keep your money on deposit in order to earn interest and avoid penalties. Terms can range from a few months to several years.

Choosing the right term length comes down to your savings timeline and the interest rates available. Often, longer-term CDs pay more favorable interest rates as a reward for locking in your money for a longer period. However, if interest rates are on the decline (as they are now), that may not be the case. That’s why it’s important to shop around and compare different terms and rates from various financial institutions to find the best CD for you.

Read more: Are 10-year CD rates​ worth it?

A minimum opening deposit is the minimum amount of money you need to deposit in a CD to open the account. Some financial institutions require just a few dollars, while others might require several thousand dollars. When evaluating CDs, consider how much you currently have saved and what minimum deposit amount makes sense for you.

Read more: What's the typical minimum balance for a certificate of deposit?

Withdrawing your funds from a CD before it reaches maturity will result in an early withdrawal penalty. Usually, this is expressed as a portion of your earned interest. Before you open a CD, be sure to read the fine print and find out how much it could cost you if you need to pull out your money early.

Most banks and credit unions offer CDs. Which one is right for you depends on your banking needs and priorities when it comes to factors such as fees, technology, and customer service.

However, you aren’t limited to your local community when it comes to finding high-yield CDs. Online-only banks are an increasingly popular banking option, and many offer highly competitive deposit interest rates with no fees. Plus, these accounts can be opened from anywhere in the country.

Read more: The 10 best online banks of 2025

CD rate data was provided by CD Valet, a website and mobile app that delivers comprehensive and unbiased CD rates in terms from one to five years from local and national financial institutions. Rates are accurate as of August 18, 2025.

The Federal Reserve lowered the federal funds rate for the third time this year — and there may be more cuts next year.

Rate cuts can be cause for celebration, particularly if you're planning to buy a home or pay off debt. But you can also expect to earn less interest on bank deposits and some investments. In other words, now is a good time to reevaluate where you keep your savings and look for ways to maximize your interest earnings.

Interest rate reductions have several implications when it comes to banking and borrowing money. Here's what you can expect after a rate cut from the Fed:

Loans: If you have a fixed-rate loan, nothing will change. However, if you want to take out a new mortgage or car loan, for example, or refinance an existing loan, the interest rates offered by lenders will be lower. As a result, it's more affordable to borrow money since you’ll accrue less interest — and monthly loan payments may be lower, too.

Bank accounts: The annual percentage yield (APY), or interest you earn on bank deposits, decreases. As a result, you'll earn less on the cash you keep in your checking and savings accounts.

Low-risk investing: If you already have an investment account that gives you guaranteed returns, such as a certificate of deposit (CD) or Treasury bill, your rate will stay the same. However, the rates offered on new accounts will begin dropping.

The upcoming Fed rate cut is expected to be conservative, so you may only see gradual changes to your interest rates in the short term. However, more cuts are likely to come, so now is a great time to lock in high rates and prepare your next steps.

For your day-to-day cash and emergency savings, it's best to keep the money in the bank, since you need to maintain easy, penalty-free access to your funds.

But as banks reduce the interest rates offered on deposit accounts (which they can do at any time), your balances will earn less. As a result, you'll want to check the APY on your bank accounts and shop around to see if you can earn a higher rate elsewhere. Here are some bank accounts that might earn more than your regular checking or savings:

High-yield checking

High-yield savings

Online bank accounts

Read more: How do banks set their savings account interest rates?

When it comes to money you don't plan to use within the next few months, consider moving it out of your savings account and into a CD right away. By doing so, you could lock in around 4% APY or higher before rates take another hit.

In addition to comparing rates, look for CD accounts with longer terms, since the goal is to retain your high rate long past any future rate cuts.

This strategy is particularly useful for anyone who's been saving for a down payment on a home. By moving your savings into a CD, you can lock in a high APY while waiting for mortgage rates to drop. If you're not exactly sure when you'll need your money, you might also consider CD laddering, or opening up multiple CDs with staggered maturity dates.

Like CDs, Treasury bills are a good choice if you're saving up for a future expense and you want to lock in high rates before they start falling. At present, you can still get above 4% on several T-bill terms. However, the Fed's rate cut means these rates won't stay for long.

Before you buy a T-bill, compare the rates and terms with available CDs to see where you can maximize your earnings. And keep in mind that you don't have to pay state or local taxes on T-bill earnings.

Read more: CDs vs. Treasury bills: Maximizing your savings

As rates fall, you'll have to increase your risk in order to maintain or beat what you've been earning on cash deposits and fixed-income assets. That means that when your current CDs, T-bills, and bonds mature, you may want to move the money to your stock portfolio.

While rate cuts tend to be good for the stock market, it's too soon to tell how it will respond over the coming months. In other words, some patience is required. But while you're waiting to see how the market stabilizes, some experts suggest investing in stocks that are more sensitive to rate cuts, such as real estate investment trusts (REITs) and small caps.

Read more: High-yield savings account vs. investing: Which is right for you?

If you’re looking for a secure place to store your money and earn interest, a high-yield certificate of deposit (CD) could be a good option. These accounts require you to keep your money on deposit for a set period of time, known as the term. In exchange for locking in your funds, you may earn a higher rate than what traditional savings accounts offer.

Not sure where to start? We reviewed more than 300 data points to determine the best CDs available today for 6-month, 1-year, and 18-month terms. We then identified the 10 best CD rates overall among the accounts we reviewed.

Best CD rates available today

Best CD accounts for February 2025

Best 6-month CDs

Best 1-year CDs

Best 18-month CDs

Learn more about CDs

Best CDs Methodology

Note that all interest rates, fees, and requirements are accurate as of the publish date. Please verify account details directly with the financial institution.

Here’s a closer look at the top CD rates among all of the CD accounts we evaluated:

Getting the best possible interest rate on your CD is important, but so is choosing the right account to meet your needs. That includes a term length that matches your savings goal, low fees, excellent support, and more.

To help you find the right CD, we evaluated approximately 60 CD accounts across 6-month, 1-year, and 18-month terms. We then identified the 10 best account options available today for each term based on interest rates, minimum opening deposit requirements, interest compounding frequency, and access to customer service. Read on to see our top picks.

The following is a snapshot of our picks for the best 6-month CDs available today. Keep reading for more details about these accounts.

Account details

APY: 4.00%

Minimum opening deposit: $0

Ally Bank’s 6-month CD currently offers 4.00% APY with no monthly maintenance fees and minimum opening deposit requirement. Another perk: Ally offers around-the-clock customer service via telephone, chat, and email.

Note that the penalty for making an early withdrawal from this account is 60 days’ interest.

Read our full review of Ally Bank

Account details

APY: 3.80%

Minimum opening deposit: $0

Barclays’ 6-month CD offers 3.80% APY with no minimum deposit required to open an account. Interest on this CD compounds daily.

The penalty for making a withdrawal before your CD reaches maturity is 90 days’ simple interest on the dollar amount withdrawn.

Read our full review of Barclays Bank

Account details

APY: 4.20%

Minimum opening deposit: $500

The Marcus by Goldman Sachs 6-month CD offers 4.20% APY — nearly three times the national average. Interest compounds daily. You must deposit a minimum of $500 to open an account.

The penalty for making an early withdrawal from this account is 90 days’ interest on the original principal balance at the interest rate in effect for the account.

Read our full review of Marcus by Goldman Sachs

Account details

APY: 3.70%

Minimum opening deposit: $0

Synchrony Bank’s 6-month CD boasts 3.70% APY with no monthly maintenance fees or minimum balance requirements. Interest on this account is compounded daily and credited monthly.

The penalty for making an early withdrawal from this CD is equal to 90 days’ simple interest at the current rate.

Read our full review of Synchrony Bank

Account details

APY: 4.27%

Minimum opening deposit: $500

Depositors who prefer a credit union over a traditional bank may be interested in America First Credit Union’s 6-month CD. This short-term CD offers 4.27% APY with a minimum of $500 required to open an account.

The penalty for making an early withdrawal from this account is equal to 60 days of dividends.

To become a member of America First Credit Union, you’ll need to submit an online application and meet certain eligibility requirements.

Read our full review of America First Credit Union

Account details

APY: 4.00%

Minimum opening deposit: $500

Bank5Connect is an online-only bank offering competitive rates on its deposit products. The current rate for a 6-month CD is 4.00% APY, and a minimum of $500 is needed to open an account. Interest compounds monthly, which is less frequent than most of the accounts we reviewed.

The penalty for making an early withdrawal from this account is equal to three months’ interest.

Read our full review of Bank5 Connect

Account details

APY: 4.45%

Minimum opening deposit: $1,000

Bask Bank’s 6-month CD has a higher minimum opening deposit at $1,000. So, this account may not be the best option if you’re still working on building up your savings.

Those who do have the funds to get started will benefit from a 4.45% APY and daily interest compounding. The penalty for making a withdrawal before your CD hits maturity is 90 days’ simple interest based on the principal amount withdrawn.

Read our full review of Bask Bank

Account details

APY: 3.75%

Minimum opening deposit: $500

Quontic’s 6-month CD currently provides 3.75% APY with a minimum deposit of $500 to open an account. Interest compounds daily and is credited monthly. There are no monthly service fees.

One major drawback of this CD: The penalty for making an early withdrawal is equal to the interest for the full length of your term, which means you could lose part of your principal deposit if you withdraw your funds too soon.

Read our full review of Quontic Bank

Account details

APY: 3.90%

Minimum opening deposit: $1,000

EverBank’s 6-month CD has one of the highest minimum opening deposits on our list at $1,000, but it offers 3.90% APY, which is more than double the national average for 6-month CDs. Interest on this CD compounds daily.

The penalty for making an early withdrawal is 45 days’ simple interest.

Read our full review of EverBank

Account details

APY: 4.00%

Minimum opening deposit: $2,500

Live Oak Bank’s 6-month CD offers the highest rate on our list at 4.00% APY. The minimum to open this account is $2,500, which is on the higher end compared to the other CDs we evaluated. The early withdrawal penalty for this account is equal to 90 days’ simple interest.

The following is a snapshot of our picks for the best 1-year CDs available today. Keep reading for more details about these accounts.

Account details

APY: 3.90%

Minimum opening deposit: $0

Ally Bank’s 1-year CD offers a competitive 3.90% APY and $0 minimum deposit, making it a great option for savers who are just getting started. Interest compounds daily

The penalty for making an early withdrawal is 60 days’ interest.

Read our full review of Ally Bank

Account details

APY: 4.25%

Minimum opening deposit: $500

The Marcus by Goldman Sachs 1-year CD offers 4.25% APY— almost three times the national average for 1-year CDs. Interest compounds daily. You’ll need a minimum of $500 to open an account.

The early withdrawal penalty for this CD is equal to 90 days’ interest on the original principal balance at the interest rate in effect for the CD.

Read our full review of Marcus by Goldman Sachs

Account details

APY: 4.00%

Minimum opening deposit: $0

Synchrony Bank’s 1-year CD offers a competitive 4.00% APY, but poses a stiffer penalty for early withdrawals. Making a withdrawal from your account before its maturity date will result in a penalty of 90 days’ simple interest at the current rate. This account is free to open and interest compounds daily.

Read our full review of Synchrony Bank

Account details

APY: 4.35%

Minimum opening deposit: $500

America First Credit Union’s 1-year CD offers a competitive rate of 4.35% APY with a minimum deposit requirement of $500. Interest compounds monthly, which is less frequent than some of the other accounts on our list.

Early withdrawals from this CD incur a penalty of 60 days of dividends.

Read our full review of America First Credit Union

Account details

APY: 4.00%

Minimum opening deposit: $0

The Barclays Bank 1-year CD offers 4.00% APY with no minimum deposit requirement to open an account. It also scored favorably for its daily compounding interest.

The penalty for making an early withdrawal from this account is equal to 90 days’ simple interest on the dollar amount withdrawn.

Read our full review of Barclays Bank

Account details

APY: 3.85%

Minimum opening deposit: $0

The 1-year CD from American Express National Bank offers 3.85% APY and requires no minimum opening deposit. The early withdrawal penalty is equal to 270 days’ interest on the amount withdrawn at the current rate.

Read our full review of American Express National Bank

Account details

APY: 4.40%

Minimum opening deposit: $1,000

Bask Bank’s 1-year CD offers 4.40% APY, though it does require a higher minimum opening deposit of $1,000. On the plus side, it does not come with any monthly fees. Interest on this account compounds daily.

Making an early withdrawal will result in a penalty of 90 days’ simple interest based on the principal amount withdrawn.

Read our full review of Bask Bank

Account details

APY: 3.90%

Minimum opening deposit: $0

BMO Alto’s 1-year CD is free to open and boasts 4.10% APY without any additional fees. Interest on this CD compounds daily and is credited to your account monthly and at maturity.

Making an early withdrawal from this account will incur a penalty of 180 days’ interest.

Read our full review of BMO Alto

Account details

APY: 3.25%

Minimum opening deposit: $500

Quontic Bank’s online 1-year CD offers 3.25% APY, which is more than double the national average. A minimum deposit of $500 is required to open a CD. Interest compounds daily and is credited monthly.

Making an early withdrawal from this CD will incur a penalty of one year's interest.

Read our full review of Quontic Bank

Account details

APY: 4.21%

Minimum opening deposit: $1,000

TAB Bank’s 1-year CD has one of the higher minimum opening deposits on our list at $1,000. However, this account also offers a competitive 4.21% APY. Interest compounds daily.

The early withdrawal penalty for this account is equal to 90 days’ interest on the amount withdrawn.

Read our full review of TAB Bank

The following is a snapshot of our picks for the best 18-month CDs available today. Keep reading for more details about these accounts.

Account details

APY: 3.80%

Minimum opening deposit: $0

Ally once again took the top spot on our list for its 18-month CD. This account boasts a 3.80% APY and doesn’t require a minimum opening deposit to get started. Interest on this account compounds daily.

Making a withdrawal before this CD reaches its maturity date will incur a fee equal to 60 days of interest.

Read our full review of Ally Bank

Account details

APY: 3.25%

Minimum opening deposit: $0

The 18-month CD from Barclays Bank offers 3.25% APY with no minimum opening deposit or monthly fees. Interest on this account compounds daily.

Making an early withdrawal from this account results in a penalty of 90 days’ simple interest on the dollar amount withdrawn.

Read our full review of Barclays Bank

Account details

APY: 3.80%

Minimum opening deposit: $0

Synchrony Bank’s 18-month CD offers a competitive 3.80% APY with no minimum opening deposit. Making an early withdrawal from this account incurs a penalty of 180 days’ simple interest.

Read our full review of Synchrony Bank

Account details

APY: 4.10%

Minimum opening deposit: $500

The 18-month CD from Marcus by Goldman Sachs’ offers 4.10% APY and requires a minimum deposit of $500. Interest compounds daily. Making an early withdrawal from this account results in a penalty equal to 180 days’ interest on the original principal balance at the interest rate in effect for the CD.

Read our full review of Marcus by Goldman Sachs

Account details

APY: 4.10%

Minimum opening deposit: $500

America First Credit Union’s 18-month CD offers 4.10% APY and requires a minimum opening deposit of $500. Dividends are compounded and credited monthly.

The early withdrawal penalty for this account is equal to 180 days of dividends.

Read our full review of America First Credit Union

Account details

APY: 4.00%

Minimum opening deposit: $500

Bank5Connect’s 18-month CD requires a minimum opening deposit of $500 and offers 4.00% APY. Interest compounds monthly. The early withdrawal penalty is six months’ interest.

Read our full review of Bank5 Connect

Account details

APY: 4.16%

Minimum opening deposit: $1,000

TAB Bank’s 18-month CD features the highest rate on our list for 18-month CDs at 4.16% APY, and interest compounds daily. The minimum opening deposit for this account is $1,000.

The penalty for early withdrawals is equal to 180 days’ interest on the amount withdrawn.

Account details

APY: 4.00%

Minimum opening deposit: $1,000

Bask Bank’s 18-month CD provides a competitive 4.00% APY with a minimum opening deposit of $1,000. The penalty for making an early withdrawal from this account is equal to 180 days’ interest based on the principal amount withdrawn.

Read our full review of Bask Bank

Account details

APY: 4.00%

Minimum opening deposit: $2,500

Live Oak Bank’s 18-month CD offers a competitive 4.00% APY, and interest compounds daily. This account also has one of the highest minimum opening deposits on our list at $2,500.

The early withdrawal penalty for this account is equal to 90 days’ simple interest.

Account details

APY: 4.10%

Minimum opening deposit: $10,000

Popular Direct took the final spot on our list for its 18-month CD, which boasts 4.10% APY and requires a minimum opening deposit of $10,000. Interest is compounded daily.

The penalty for making an early withdrawal from this CD is equal to 270 days' simple interest.

CDs are a type of deposit account that may or may not be the right fit depending on your unique savings goals. Before opting for a CD, it’s important to fully understand how they work, the benefits and drawbacks of a CD, and where CD rates stand today.

The highest-paying CDs are currently offering APYs up to 4.45%, though these are only available at select banks. Nationally, the average interest rate on a 6-month CD is 1.63%, according to the FDIC. Current CD rates are falling from their recent peak thanks to the Federal Reserve’s recent decision to begin lowering the federal funds rate.

The interest rate on a CD plays a key role in how your money grows over time. A higher rate means your balance will earn interest faster and give you a better return on your investment. Today, CD rates range quite a bit depending on the financial institution. However, the best rates hover around 4% APY.

One of the biggest benefits of a CD is that these rates are locked in; once you open and fund your account, you don’t have to worry about your rate changing. This is also why it’s crucial to make sure you’re locking in the best possible rate when opening an account. Learn more about what is considered a good CD rate.

CDs work differently than other types of deposit accounts. Unlike a traditional savings account, for example, a CD requires you to keep your money on deposit for a set period of time. However, CDs also typically offer higher interest rates than most other types of savings accounts in exchange for locking in your money.

CD terms can range from a few months to several years. As long as your money remains untouched, you can expect your balance to keep growing. However, making an early withdrawal from your CD will likely result in a penalty. Learn more about how CDs work and how to choose the right one.

The minimum amount needed to open a CD varies depending on the financial institution and the specific type of CD. Often, you’ll need at least $500 to $1,000 to open an account, although there are many banks and credit unions that offer CDs with no minimum balance requirement. Learn more about minimum balances for CDs.

CDs are not all structured the same way, and you might find that one type of CD works better for your savings strategy than another.

These are the most common types of CDs available:

High-yield CD: A high-yield CD offers a higher rate than traditional CDs.

No-penalty CD: This type of CD gives you the option to withdraw funds from your account before the maturity date without paying a penalty.

Bump-up CD: These CDs allow you to take advantage of interest rate increases during the term. For example, say you opened your CD at 4.00% APY, but your financial institution raised that rate to 4.25% soon after. With a bump-up CD, you can request to increase your rate to the current one being advertised.

Jumbo CD: Jumbo CDs typically offer a higher interest rate but require a higher minimum deposit than most other CD products — usually starting at $100,000.

Callable CD: If interest rates fall, your bank may redeem a callable CD before its maturity date. In this case, you’d get your principal balance back, plus any earned interest up to that point.

Brokered CD: Brokered CDs are purchased from a brokerage firm, rather than a bank. They are often higher risk than traditional CDs.

Share certificate: A share certificate is essentially the same thing as a CD, except they’re offered by credit unions.

CDs are usually insured by the federal government. Any CD you open with an FDIC-insured bank or NCUA-insured credit union is covered up to $250,000 per depositor. If your financial institution fails, the government guarantees the balance of your account up to $250,000. Learn more about FDIC insurance for CDs.

Consider these important pros and cons of CDs before opening an account:

Pros

CDs are a great intro to personal finance tools. Unlike the stock market, CDs offer safe, reliable returns with no rate changes.

CDs offer fixed interest rates with higher returns on average compared with other deposit accounts.

When you open a CD at a federally insured bank or credit union, that CD is insured up to $250,000.

Opening a CD may discourage you from tapping into your savings early.

Cons

You'll typically pay an early withdrawal penalty if you need your cash before the CD’s maturity date.

The competitive rates on CDs — especially longer-term CDs — might not keep up with inflation.

The minimum balance needed to open a CD may be too high.

Although CDs are safer, they offer lower returns than mutual funds and stocks.

Learn more about the pros and cons of CDs.

CDs can give you a solid return on your savings if you secure an account with a high APY, but they are not without their limitations. When determining if a CD is right for you, consider how often you need to access your money and whether there are other options that could help you meet your savings goals. Learn more about when CDs are worth it.

Most CDs impose an early withdrawal penalty if you access your funds before the account reaches maturity. The exact amount of the penalty depends on the financial institution’s policies and often the length of the CD term. This penalty is usually expressed as a certain number of days or months’ worth of interest. Learn more about early withdrawal penalties.

When your CD matures, you have a few options for how to proceed. You might decide to renew your CD for the same term length at the current interest rate. You can also withdraw the funds and open a new CD with a different bank, put your money into a different type of savings account, explore new investment options, or use the money to fund a major purchase.

When your CD reaches maturity, your bank will likely give you a short grace period before automatically renewing your CD, during which time you should take action and make a decision about how to best use those funds. Learn more about what to do when a CD matures.

You may be worried about locking your money into a CD and missing out on higher interest rates in the future. And in an environment where interest rates are rising,, missing out on a great rate is a real possibility.

CD laddering can help you avoid the risk of missing out on higher CD rates later. With a CD ladder, you split your savings among multiple CDs with staggered maturity dates (e.g., a 6-month CD, a 1-year CD, and a 2-year CD). When the first CD in your ladder matures, you can access those funds if you need them or roll the cash into a new CD — perhaps at a higher interest rate if one is available at that time. Meanwhile, your longer-term CDs will continue earning the rate you locked in when you opened them. Learn more about creating a CD ladder.

The term of your CD — the length of time it takes your CD to mature — can affect the interest rate a bank offers you. Typically, long-term CDs feature higher APYs as a benefit of letting the bank hold on to your cash for a longer period. But longer terms don’t always equal higher interest rates.

In the current market, average interest rates increase between 1-month and 1-year CDs. Yet that upward trend isn't consistent with all longer-term CDs. Data from the FDIC finds the average 2-year CD rate to be 1.45%, but a 4-year CD sits at 1.24%. As you can see, today's best CD rates aren’t necessarily tied to accounts with the longest terms. Learn more about choosing between a short- or long-term CD.

CDs are considered low-risk investments because they offer a fixed interest rate. Once that rate is locked in, it won’t fluctuate as a result of major economic events or stock market swings. Plus, you won’t lose your principal deposit Still, CDs are not completely risk-free. Learn more about whether you can lose money in a CD.

Gifting a certificate of deposit is possible, but there are certain rules about who you can give one to and how to go about it. Generally, the owner of a CD must open the account in their name, so you can't offer a certificate of deposit gift to another adult. However, you can open a custodial account for a child and offer a CD as a gift. Learn more about gifting CDs.

CDs and bonds are both considered low-risk places to put your money, but they function quite differently. Bonds may offer greater liquidity than CDs because you can sell them at any time, whereas CDs are locked in for the duration of the term. These two types of investments are also insured by different entities. Learn more about CDs vs. bonds.

Another low-risk investment option, Treasury bills have become more popular in recent years. Also known as T-bills, these investments are backed by the U.S. government, offer competitive rates, and may be a more favorable option for short-term savers. Unlike CDs, T-bills provide greater liquidity and can be sold at any time. Learn more about CDs vs. Treasury bills.

Both money market accounts and CDs are known for offering higher interest rates than traditional savings accounts. They’re also both federally insured in most cases. However, CDs and money market accounts differ in a few key ways, including when it comes to fees, accessibility, and more. Learn more about CDs vs. money markets.

Our grading system, collected and carefully reviewed by our personal finance experts, comprised nearly 300 data points for approximately 60 federally insured CDs across 6-month, 1-year, and 18-month terms. We used this data to develop our list of the best CDs.

We evaluated these accounts according to several key metrics, including annual percentage yield, minimum opening deposit, compounding frequency, and more.

The accounts on our list could earn a maximum of 25 points across all metrics. Here’s a closer look at the categories we considered:

Annual percentage yield (APY): Accounts with higher APYs were rewarded with more points than those with lower APYs. Note that rates on our list are current at the time of publishing but are subject to change at any time.

Minimum opening deposit: Many CDs require a minimum deposit to open an account. Accounts with no or low minimum deposit requirements ranked more favorably than those with higher opening deposit requirements.

Compounding frequency: Compounding can occur daily, monthly, quarterly, or even annually. We awarded more points to accounts that compound interest frequently.

Customer service contact methods: Our team awarded one point for every contact method available to customers (phone, email, chat).

Michelle Lambright Black, Kat Tretina, Hal Bundrick, and Zina Kumok contributed to this article.