The Best 3-Year CDs

The best 3-year CDs are a smart option for savers looking to achieve 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.

However, you'll want to act quickly to secure the higher rates. The Federal Reserve recently issued its second interest rate cut of the year, and there may be one more when it meets again in December.

Currently, 3-year CDs help you earn a rate that outpaces inflation. However, if the Fed does cut rates one more time this year, locking one in now ensures you remain on that course.

Meanwhile, CDs work best when you can park the money and forget about it. If you need to make a withdrawal before your term expires, your bank or credit union will close the CD and assess a fee.

These fees can offset the interest you earn, so 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

I’ve reviewed dozens of CD offerings to identify rates that rise above the pack. These offers represent some of the best opportunities for savers looking to secure steady returns.

What is a CD account?

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

Because of 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.

However, they're good options 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 that the rate won’t fluctuate based on market conditions. This 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 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 potential earnings
• Rates might not be high enough to outpace inflation, and high-yield savings accounts could offer better rates of return

Use the tool below to explore some of today's top savings offers, powered by Bankrate:

Which CD term is right for me? 

CDs are excellent savings vehicles if you want to place your money, then forget about it. However, with a 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 also gives you access to your cash fast, 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.

Lock in today’s yield before it slips

Now is a great time to lock in a higher rate. The Fed cut interest rates at its October meeting and might do so again when it meets in December.

It 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 achieve your savings goals, but it can also help outpace inflation.

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