The best 5-year CD rates for December 2020

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The best 5-year CD rates of December 2020

  APY Opening deposit  
Ally
1.00% $0 Learn more
Delta Community Credit Union
1.35% $1,000 Learn more
Navy Federal Credit Union
1.20% – 1.25% $1,000 Learn more
First Internet Bank
0.96% $1,000 Learn more
VyStar Credit Union
1.00% – 1.10% $500 Learn more
Golden 1 Credit Union
1.05% – 1.15% $500 Learn more
First National Bank of America
1.00% $1,000 Learn more

*As of December 2020, the national average APY on a 5-year CD is 0.34%, according to the FDIC.

If you want to grow your money but keep it safe from the turbulence of the stock market, a certificate of deposit (CD) may be a good option.

Right now, the best 5-year CD rates are at least 1.00%. You may be able to find longer terms with slightly higher rates, but most institutions' longest terms are five years. Five-year CDs offer some of the highest guaranteed rates of return you can find right now.

All 5-year CDs with the following banks are FDIC insured, and all certificates with the credit unions are federally insured by the NCUA. For the most part, banks compound your interest daily, and credit unions compound your interest monthly. This means that even if a credit union pays a higher rate, it's possible you'll accumulate less wealth than with an account that compounds your interest more frequently.

Learn more about our top picks

Ally High Yield Certificate of Deposit

Ally Ally High Yield Certificate of DepositDelta Community Credit Union Delta Community Credit Union Certificate of DepositNavy Federal Credit Union Navy Federal Credit Union Standard CertificateFirst Internet Bank of Indiana First Internet Bank of Indiana Certificate of DepositVyStar Credit Union VyStar Credit Union Certificate of DepositGolden 1 Credit Union Golden 1 Credit Union Certificate of DepositFirst National Bank of America First National Bank of America Certificate of Deposit

APY
Min Deposit
Featured Reward
  • A five pointed star
  • A five pointed star
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  • 3.63 out of 5 Stars
    Editor's Rating
    APY

    0.70% to 1.10% APY

    Min Deposit

    $1,000

    Featured Reward

    NoneA five pointed star

  • A five pointed star
  • A five pointed star
  • A five pointed star
  • A five pointed star
  • 3.63 out of 5 Stars
    Editor's Rating
  • Details
  • Pros & Cons
    • Term lengths ranging from 12 to 84 months
    • 180 days interest for terms of 12-23 months, 360 days interest for terms of 24-47 months, 540 days interest for terms of 48 to 84 months
    • FDIC insured
    Pros
    • Competitive APY
    • Term lengths up to 84 months
    Cons
    • $1,000 opening deposit
    • High early withdrawal penalties
    • No term lengths under 12 months

    Why it stands out: First National Bank of America's main strength is its high APYs.

    5-year CD early withdrawal penalty: 540 days interest

    What to look out for: Early withdrawal penalty. You can find institutions that charge less than 540 days interest to take out funds early from 5-year CDs.

    Other 5-year CDs we considered

    We looked at the following 5-year CDs as well, but all of them currently have lower rates than our winners:

    • Marcus High-Yield CD
    • Capital One 360 CD
    • Synchrony Bank CD
    • Suncoast Credit Union Share Certificate
    • Comenity Direct CD
    • CFG Bank CD
    • Popular Direct CD
    • CIT Bank CD
    • Washington Savings Bank CD
    • Pentagon Federal Credit Union Money Market Certificate
    • Citizens Access CD
    • BrioDirect High-Yield CD
    • Sallie Mae CD
    • Amerant CD
    • American Express CD
    • Live Oak Bank CD
    • BMO Harris CD
    • America First Credit Union Certificate
    • Randolph-Brooks Federal Credit Union Certificate
    • NBKC CD
    • TIAA Basic CD
    • Discover CD
    • Connexus Share Certificate
    • TAB CD

    Frequently asked questions

    Why trust our recommendations?

    Personal Finance Insider's mission is to help smart people make the best decisions with their money. We understand that "best" is often subjective, so in addition to highlighting the clear benefits of a financial product or account — a high APY, for example — we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don't have to.

    What is a CD?

    A CD, or certificate of deposit, is a time-sensitive savings account that usually holds your money at a fixed interest rate for a specified period of time. If you don't need immediate access to your savings, a CD can guarantee a return on your money since you lock in a fixed APY for the term of the CD.

    With most institutions, you typically won't be able to deposit more money or access your funds before the CD matures without paying a penalty.

    You will, however, earn interest on the amount and have the option to collect those payments monthly or reinvest them into your CD. Most banks offer varying rates for different terms and deposit amounts — in many cases, the longer the term, the higher the rate.

    At the CD's maturity date, you'll typically have a 10- to 14-day grace period in which you can withdraw your money and close the account or renew the term.

    What is a 5-year CD?

    With a 5-year CD, you stash away your money for 60 months and typically earn a fixed rate. You have the option to renew your CD at the end of the five-year period, or close the account and pocket the money.

    How do CD rates work?

    Most CDs lock in your rate for the entire term. For example, if you open a 5-year CD at a 1.20% APY, you'll earn 1.20% for the entire five years. If you renew your CD after it matures, you'll earn the new rate available in five years.

    There are exceptions to the fixed-rate rule. Some institutions offer variable-rate CDs or CDs that allow your rate to change after a predetermined amount of time.

    Which is best: a 1-year, 3-year, or 5-year CD?

    Terms of one, three, and five years are some of the most common CD options. Your choice will likely depend on how soon you plan to need the money and which term pays the highest rate. For the most part, longer terms pay higher rates — but that isn't always the case.

    Going for a shorter term gives you the opportunity to snag a better APY if rates are up in a year. With a 3-year or 5-year CD, you could miss out on higher rates. But on the other hand, you could avoid lower rates with a 3-year or 5-year term if rates drop later.

    Many experts recommend CD laddering. With this strategy, you open multiple CDs with different term lengths so you can take advantage of higher rates with longer terms, but also access some of your money earlier. For instance, you might open 1-year, 3-year, and 5-year CDs at the same time, which means you'll get some of your money back in one year, then more in three years, then more in five years.

    See Business Insider's picks for the best CD rates »

    Which is better, a 5-year CD or a high-yield savings account?

    The choice between a 5-year CD and high-yield savings account will depend on several factors.

    First, an institution typically pays a higher rate for a 5-year CD than for a savings account.

    A CD also locks in your rate for the entire term. If rates are dropping, this could make the CD a better choice, because your savings account APY could decrease over the next few months. If rates are rising, the savings account might be a better fit, because your rate could go up. Either way, there's a good chance rates will fluctuate over a five-year period.

    It also depends on when you'll need to access your money. You should be able to access funds from your savings account regularly — but if you need access to money from your 5-year CD before it matures, then you'll have to pay a fee.

    You can also continuously add money to your savings account, whereas most 5-year CDs block you from making additional deposits after opening the account.

    See Business Insider's picks for the best high-yield savings accounts »

    Which is better, a 5-year CD or a money market account?

    Like with a high-yield savings account, you may prefer a money market account over a CD if you want quick access to your money. Money market account rates also fluctuate, so you may prefer a money market account if rates are rising, but a CD if rates are dropping. Still, remember that rates will likely go up and down over a five-year term.

    Many banks require higher deposits for money market accounts than CDs, which could affect your decision. It's also good to remember that you can add more funds to your money market account over time, while a CD only allows an opening deposit.

    See Business Insider's picks for the best money market accounts »

    Which is better, a 5-year CD or another investment account?

    CDs aren't generally considered investments the same way something like an index fund, which puts your money into the stock market, is. Instead, a CD is typically viewed as a type of savings account, and your potential for losses and gains — your risk — is much more limited. Because the stock market is risky, experts generally don't advise investing money you'll need in the next five years. In the case of a stock market drop, you wouldn't have time to make up your losses.

    If you need to access your money in five years and want a guaranteed rate of return, a 5-year CD is a better choice than a different type of investment account. 

    If you're comfortable parting with your money for longer and want to take more risk with your money, then you may want to invest in the stock market. One way to do this is through tax-advantaged retirement accounts, like a 401(k) or IRA, which grows your money over decades. Another is through brokerage accounts, which are useful tools to build long-term wealth, but can't guarantee a given return like a CD can.

    There is such a thing as an IRA CD, which is sort of a combo savings/investment account. It's a safe investment tool that may be a worthwhile option for people who are close to retirement age.

    This post was most recently updated on December 1, 2020.

    Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

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