Find the Best CD Rate for You

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Certificates of deposit, also known as CDs, work similar to savings accounts. The primary difference is you cannot withdraw your money as easily as you could with a savings account. You can usually get your money out early, but will often pay a small penalty fee. This concept is heavily at work behind the availability of the best CD savings interest rate, as banks are literally paying more for your prolonged business.

How it Works

A CD is purchased for a specific term, which ranges from 3 months to 5 years depending upon your needs and the bank’s offerings. The longer you agree to keep your money in the bank, the more interest you will earn. Some banks allow you to receive the interest as checks; most simply add the accrued interest to your CD.

Usually you’ll also need a minimum amount of money to purchase a CD; most banks require $500 to $1,000. Some will work with as little as $100 while others want at least $5,000 for the best rates.

Three-Month CDs

A 3-month CD may be ideal if you would like to try out the world of deposit certificates but are hesitant to tie up your money long-term. However, interest rates may be somewhat low. The good news is they are almost always higher than regular savings accounts and rarely have any maintenance fees.

If you don’t have much at all to put away in a CD, consider trying Ally Bank. As of March 2010, this Internet-based bank offers 3 month CDs with no minimum deposit required. The interest rate is .89 percent, which is one of the highest noted on

Those with more money to put away for three months can take advantage of slightly better interest rates through Nexity Bank. This Alabama-based financial institution requires a minimum of $1,000, but pays 1.10 percent interest.

One Year CDs

If you can part with that cash for a year, more options open up for gaining high-quality interest rates. American Express Bank requires no minimum deposit and pays yields of 1.49 percent interest. Those with $1,000 or more may want to investigate Aurora Bank, which offers 1.56 percent interest rates on these types of CDs.

Three Year CDs

Once again, Ally, Aurora, and American Express banks all but dominate this segment of the high-interest rate market for three-year CDs. Ally and American Express require no minimum deposits; the corresponding interest rates are 2.36 and 2.23. Aurora maintains its $1,000 CD minimum and offers three-year customers 2.34 percent interest.

However, those seeking another banking option may also want to consider Discover Bank; this major Delaware-based financial institution offers customers with at least $2,500 a 2.4 percent interest rate.

Five Year CDs

If you have $500, then Nationwide Bank can offer you a 3 percent interest rate for a five year CD. Discover Bank pays 3.05 percent interest, but you must have $2,500 to place into the CD account.

Those without much money to sock away can still rely upon Ally and American Express banks for the best CD interest rate for their needs; the percentages are 3.04 and 2.91 respectively.