The Best 3-Year CDs: Earn Up to 4.50%
Looking to grow your savings without taking on market risk? These three-year CDs offer competitive fixed rates that can help you reach your long-term savings goals.
The best 3-year CDs are a smart option for savers looking to achieve longer-term savings 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.
The good news is you can find three-year CDs currently outpacing inflation. The Federal Reserve raised its benchmark interest rate by a quarter of a percentage point in September, its first rate hike in more than three years.
While the Fed doesn't directly set CD rates, higher benchmark rates can encourage banks to offer more competitive yields on savings products. I'll show you some of the top-earning accounts I've found, along with things to consider before signing up for one.
How to find the best 3-year CD rates
Currently, 3-year CDs offer a higher return than a traditional savings account. This can help you build more wealth instead of keeping your money sitting in an account earning pennies.
However, CDs work best when you can park the money and forget about it. If you need to withdraw 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.
In the meantime, here are the best three-year CD rates I found:
Account |
APY |
Min Deposit |
Early Withdrawal Penalty |
4.50% |
$1,500 |
6 months of interest |
|
4.45% |
$2,500 |
6 months of interest |
|
4.40% |
$500 |
6 months of interest |
How do CDs work?
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 your rate won't fluctuate with market conditions. That certainty can be an advantage, but it also means you could miss out on higher yields if interest rates rise during your CD's term.
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 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
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 put your money away and forget about it. However, with a wide range of terms, it's vital to balance saving for future goals and keeping some cash on hand for unexpected expenses.
Your savings goal can influence the term you choose. If you want a shorter option that also gives you access to your cash, 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. Right now is the time to strike while returns outpace inflation.
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