The Best 3-Year CDs

The best 3-year CDs are a good option for savers looking at longer-term saving goals. Whether you're planning a dream vacation, a down payment on a second home or want money earmarked for something down the road, CDs give you a risk-free way to reach your goals.

But you'll want to act fast to lock in higher rates. The Federal Reserve recently issued its first rate cut of the year, and with one to two more upcoming before the end of 2025, it now marks a perfect time to lock in a higher rate.

You can secure an excellent CD rate using this Bankrate tool:

Currently, three-year CDs help you earn a rate that outpaces inflation. However, if the Fed does cut rates more this year, locking one in now ensures you remain on that course.

Meanwhile, CDs work best when you're able to park the money and forget about it. If you need to make a withdrawal before your term expires, your bank or credit union closes the CD and assesses a fee.

These fees can offset the interest you earn. Therefore, only lock in longer-term CDs if you're confident you won't need the money before the maturity date.

The best 3-year CDs

Here's a look at the best 3-year CD rates:

What is a CD account?

With a CD account, your cash is locked away for a fixed period of time, typically, one to five years, unless you’re prepared to pay a fee to take it out early.

Because of those early withdrawal fees, CDs aren’t a good place to park cash you plan to spend in the coming months, nor do they make good emergency funds. They're good options, however, if you’re trying to save for a future purchase or event and want to grow your cash without accessing it.

You’re guaranteed a fixed return on your cash, so the rate won’t go up or down based on market conditions, which is both a good thing as you get certainty, but also a possible problem, in case rates elsewhere shoot up and you can't benefit.

As with other savings accounts, they're a good option for those who value risk-free returns, as you aren’t riding the waves of the stock market. In addition, most CD accounts are FDIC or NCUA insured, depending on whether they’re opened through a bank or credit union, so your cash is safe even if your bank or credit union closes.

FDIC insurance protects up to $250,000 per account ($250,000 per person in a joint account), while NCUA insurance protects up to $250,000 per credit union member.

Pros of 3-year CDs:

• CDs offer guaranteed returns on deposits
• Fixed rates on CDs mean that even if rates fall, the APY on your account will remain the same
• Most CD accounts from banks and credit unions are federally insured for up to $250,000
• Since you can only withdraw funds when your CD account matures, you won't be tempted to spend your money elsewhere

Things to consider with 3-year CDs

• No liquidity: Accessing funds from a CD account isn't as easy as with a savings account. If you need to withdraw funds from a CD account before the maturity date, you'll be charged a fee, which will likely offset any interest earned
• Money can't be added to a CD once it's been opened, in most cases
• CDs have a lower earnings potential compared with stocks or mutual funds
• Fixed rates on CDs also mean that if rates increase, you'll miss out on potential earnings
• Rates might not be high enough to outpace inflation, and high-yield savings accounts could offer better rates of return

Which CD term is right for me? 

CDs are excellent savings vehicles if you want to place your money someplace then forget about it. However, with the wide range in terms, it's vital to strike a balance between earmarking money for future goals and having some cash on hand to pay for unexpected expenses.

Your savings goal can influence the term you choose. If you want a shorter option that helps you outpace inflation but gives you back access to your cash promptly, a 1- or 2-year CD might be a wise choice.

Meanwhile, if you have larger savings goals such as helping a child with a down payment on a home or taking that dream retirement vacation, then a longer term ensures you lock in a higher rate now before the Fed could cut rates again in the future.

Bottom line on 3-year CDs

Now is the best time to lock in a higher rate. The Fed cut interest rates at its September meeting and will likely do so again at least once before the end of the year.

This means that for savers with long-term goals, you can secure a high rate now that won't be lowered due to future rate cuts. Not only will this help you achieve your savings goals, but it can also help you outpace inflation.

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