A certificate of deposit, or CD, is a fixed-rate savings account that requires you to agree not to withdraw the balance before a specified length of time. A 5-year CD can be purchased at many banks, credit unions or investment firms and is ideal for investors looking to lock in a competitive annual percentage yield, or APY, and benefit from steady growth without risking a loss of money deposited.
A CD’s APY is tied directly to the Federal Reserve’s federal funds benchmark rate. So far in 2022, that rate has increased four times. As such, the average 5-year CD APY is now 0.75%. You should definitely shop around to find the most competitive rates for CDs. When evaluating a 5-year CD, compare more than just the APY offered. Be sure you understand the minimum deposit required, any penalties incurred if you have to withdraw the money before the CD reaches its maturity date, or whether the CD will renew automatically.
Review CNET’s list of the top 5-year CDs before making a final decision.
CNET’s picks for the top 5-year CD rates
Bank Name
APY
Minimum Deposit
Synchrony
3.50%
$0
CFG Bank
3.40%
$500
Capital One
3.25%
$0
Marcus by Goldman Sachs
3.25%
$500
Ally
3.00%
$0
Pennsylvania State Employees Credit Union
3.00%
$500
Quaint Oak Bank
2.00%
$500
NBKC
1.76%
$250
Members 1st Federal Credit Union
1.25%
$500
Union Bank (Michigan)
1.20%
$500
Annual percentage yields (APYs) shown are as of September 2, 2022. APYs may have changed since they were last updated and may vary by region for some products.
Early withdrawal penalty: 365 days simple interest at the current rate
About the bank: Synchrony is an online-only bank that takes advantage of limited overhead to offer attractive rates for deposit accounts. Transactions can be handled via its website or mobile app. Synchrony Bank also offers additional CD types like bump-up or no-penalty that provide more flexibility.
About the bank: CFG Bank is a Maryland-based community bank that offers competitive rates on CDs, with reasonable deposits required to open accounts, making them accessible to a wide range of savers nationwide.
About the bank: Capital One, the 10th largest bank in the US, is an online bank with physical locations that you can visit in nine states across the eastern and southern US. It has also expanded the bank branch concept into a coffee shop-style Capital One Cafe with some banking services available in addition to treats, free Wi-Fi and a workspace that’s open to the public.
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APY: 3.25%
Minimum deposit: $500
Early withdrawal penalty: 270 days interest
About the bank: Marcus by Goldman Sachs is the online banking arm of the New York-based multinational investment bank and financial services firm. While this is the seventh-largest bank in the US, all deposits must be electronically transferred using its mobile app because there are no branches or ATMs available.
About the bank: Ally is another online-only bank that offers a robust set of deposit products, loans and services. The bank also offers bump-up CDs (those that adjust to a higher APY if available) and no-penalty CDs. You can handle all of your banking needs through its mobile app or free via the Allpoint ATM network. There are no fees with any accounts, and 24/7 customer support via phone, chat or email.
Early withdrawal penalty: 180 days’ worth of earnings on principal
Membership eligibility: Membership is restricted to people who meet certain criteria such as work for a Pennsylvania state agency, are related to a Pennsylvania state employee or work for a partner organization. Visit Pennsylvania State Employees Credit Union for a complete list of membership eligibility.
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APY: 2.00%
Minimum deposit: $500
Early withdrawal penalty: 913 days of interest on the amount withdrawn plus any accrued interest.
About the bank: Quaint Oak Bank has physical locations in Pennsylvania, but offers basic banking products such as savings accounts, CDs and mortgages online. Its competitive rates on CDs and low minimum deposits make Quaint Oak Bank a contender to explore among larger, more well known banks. It does, however, have one of the most expensive early withdrawal penalties of the group we’ve evaluated.
Early withdrawal penalty: Varies based on amount, rate and date of withdrawal
About the bank: NBKC has branches located in Kansas and Missouri. It offers competitive rates on deposit accounts which can be opened via its website. The low minimum deposits and no overdraft fees are attractive benefits as well.
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Early withdrawal penalty: 270 days’ dividends, whether earned or not
Membership eligibility: Membership is open to anyone with a valid US social security number.
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APY: 1.20%
Minimum deposit: $500
Early withdrawal penalty: 365 days interest
About the bank: Union Bank is an independent bank serving the community of Lake Odessa, Michigan since 1934. Its primary focus is the surrounding community and farming industry, but it offers competitive rates on deposit accounts with reasonable minimum deposit requirements available through its online banking services.
FAQs
Why should I get a 5-year CD?
A 5-year CD is ideal for investors looking for a fixed rate savings vehicle that doesn’t risk any loss to the original principal yet offers higher APYs than traditional savings or money market accounts. A 5-year CD will generally earn a higher APY than those with lower terms, however, it’s important to compare because rates vary across institutions and CD terms. If you anticipate being able to leave your deposit untouched for 5 years, then a 5-year CD can be a savings option for consistent growth over a known period of time.
What are the pros and cons of 5-year CDs?
Pros and cons of 5-year CDs
Pros
Cons
5-year CDs offer consistent, fixed-rate growth.
The deposit will incur a penalty such as the loss of 365 days of interest earned if withdrawn before the CD reaches the maturity date.
5-year CDs have a national average savings rate of 0.75% APY, which is nearly six times the average annual savings rate of 0.13%.
If interest rates rise, a 5-year CD is locked into the interest rate set at the time of purchase.
5-year CDs purchased through banks and credit unions are insured by up to $250,000, minimizing risk of loss of the original principal.
Five years is a long time to restrict access to cash that may be needed if emergency situations arise.
Can a 5-year CD lose value?
Rates on 5-year CDs can vary significantly. According to our sister site, Bankrate, the average APY for a 5-year CD is 0.75%. The highest APY to make our list is 3.50%. The following table compares the potential earnings at those two rates on an initial deposit of $5,000.
Example
Bank
APY
Ending Value
Synchrony Bank
3.50%
$5,938
Average 5-year CD
0.75%
$5,190
What are alternatives to a 5-year CD?
CD terms can vary from three months to five years. Generally, CDs with longer terms of maturity pay higher interest rates. Additionally, there are other safe savings accounts to consider, such as high-yield savings accounts or I bonds.
Methodology
CNET Reviews CD rates based on the latest APY information from issuer websites. We evaluated CD rates from more than 50 banks, credit unions and financial companies. We selected the CDs with the highest APY for five-year terms from among the organizations we surveyed, and considered rates for shorter terms if five-year terms were identical or unavailable.
Banks surveyed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Barclays, BMO Harris, Bread Savings, BrioDirect, Capital One, CFG Community Bank, Citizens Access, Colorado Federal Savings Bank, Connexus Credit Union, Consumers Credit Union, Discover Bank, First Internet Bank of Indiana, First Tech Federal Credit Union, FNBO Direct, GO2bank, Golden 1 Credit Union, HSBC Bank, Huntington Bank, Lake Michigan Credit Union, LendingClub Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Merrick Bank, Nationwide (by Axos), Navy Federal Credit Union, NBKC, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Vio Bank, and Wells Fargo.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
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