Savings rates fluctuate over time and, if you’re hoping to invest safe money in a low interest rate environment, you’re probably considering a certificate of deposit (CD) to boost your return. If the biggest banks in the nation come to mind, you’re probably comparing the best CD rates at Chase, Bank of America, Wells Fargo and Citibank.
Don’t limit your search to the big banks. Banks and credit unions of all sizes offer higher returns in exchange for your agreement to keep money on hold over a period of time. If you need money before CD funds mature, you’re likely to pay a penalty for early withdrawal. Keep in mind that not all certificates of deposit are the same. Start your search for the best CD rates by knowing the national average for CD rates in the maturity range of interest. Learn how much more money you can earn on your savings.
Best CD Rates at Chase, Bank of America, Wells Fargo and Citibank: Your Profile
Rates on CDs may vary slightly by region but, most of the time, the amount of your initial deposit and the deposit term are more important variables to consider.
Before contacting a bank or credit union, know the amount of your initial deposit. If you’ve got less than USD 1,000 to invest, it’s possible to find a competitive CD rate. If you’ve got more than USD 50,000 to 100,000, it’s easier to secure the best CD rates if you compare offerings in your deposit term range.
Remember that, unlike your savings account, you can’t take a partial withdrawal from a certificate of deposit. If there’s a possibility that you might need access to funds in six months, buy a six-month CD or keep additional funds available in your savings account.
Although you’re likely to get a higher CD rate if your deposit term is five years or more, it’s not always the case. Ask about promotional rates or create a CD ladder. If a two year deposit term yields just 10 basis points less than five year paper, consider your options before making an investment
Best CD Rates at Chase, Bank of America, Wells Fargo and Citibank: High Rates
Typically, you’ll find the best CD rates at online banks or credit unions:
- Online banks like Capital One and Ally Bank have changed how many people invest in CDs. It’s simple to open an account, simpler to check your account any time of day or night, and simplest to get higher CD rates than those offered by your neighborhood branch.
- Credit unions tend to offer more competitive rates, especially if the credit union is lending more money and in search of deposits.
Your online bank may have lower operating costs. They can offer multiples of your local big bank’s miserly CD annual percentage yields.
If investing in CDs with a credit union appeals to you, compare CD rates from borrowing credit unions around the country. Sometimes, you’ll discover higher rates in a certain region or city. To invest with a credit union, you must apply for membership. Sometimes, it’s easy to qualify and, in other cases, you won’t.
For instance, patients visiting the National Institutes of Health (NIH) can open an account with the NIH Federal Credit Union. Low minimum deposits, high base rates, and relationship rates can help if you or a loved one participates in an NIH study.
Creativity and thinking long-term can help you identify the best CD rates in the land.
Best CD Rates at Chase, Bank of America, Wells Fargo and Citibank: Long-Term CDs
The best CD rates are something of a “catch-22.” Investors prefer higher rates on longer deposit terms but don’t want to risk paying early withdrawal penalties. Comparing CD rates should always include comparing early withdrawal penalties.
Some longer-term CDs have relatively modest penalties for early withdrawal. For instance, a bank offers a competitive rate on a five-year CD. The initial deposit is just USD 1,000. If you hold the CD for four years and six months and need to cash in the CD, you might pay six months’ interest.
However, before you decide to go short, do the math. If the five-year APY is 2.20 percent and you believe the funds will remain in place for two years or more, you’ll earn a higher rate than the one or two-year CD even after you deduct the early withdrawal penalty.
Some banks lessen the pain with lower CD early withdrawal penalty rates. If your bank shaves off one month from the six-month penalty above and you need money before the CD matures in five years, that’s important information. Compare early withdrawal rates before deciding to invest in any certificate of deposit.
Best CD Rates at Chase, Bank of America, Wells Fargo and Citibank: Big Bank Rates
According to The Wall Street Journal, the nation’s biggest banks tend to offer the lowest CD rates because they have other, cheaper ways to borrow money.
If you’re a customer at the private bank at Chase, Bank of America (or Merrill Lynch), Wells Fargo and Citibank, you may have additional savings options.