13 Best 5-Year CD Rates for January 2023

13 Best 5-Year CD Rates for January 2023

A certificate of deposit, or CD, is a time deposit you can buy at a bank. You deposit a sum of money and agree to leave it there for a set term, like five years. In return, the bank pays you a guaranteed rate of interest. You know just how much your investment will earn, plus it’s FDIC-insured — as long as the bank is.

What Are the Highest 5-Year CD Rates?

Financial Institutions With the Highest 5-Year CD Rates

Here are 13 of the best 5-year CD rates.

Popular Direct

Popular Direct will pay you APY on a 5-year CD if you deposit at least $10,000. This CD has one of the best interest rates available, but it also has one of the steepest early withdrawal penalties. You’ll pay up two years’ worth of interest if you take your money out early.

BMO Harris

BMO Harris offers a 59-month CD Special — one month shy of five years — that pays APY. You’ll need to have a at least $5,000 to invest, however, and its regular CD rates are much lower.

Bread Savings

Bread Savings pays APY on its 5-year CD. You’ll need a $1,500 minimum deposit, and if you take your money out early, you’ll lose a year’s worth of interest.

Quontic Bank

Quontic Bank offers a 5-year CD that pays APY, with a minimum deposit of just $500. Make sure you won’t need the money before the five years are up, though — you’ll give up two years’ worth of interest if you withdraw early.

Discover Bank

Discover Bank’s 5-year CD pays APY for a minimum deposit of $2,500. But make sure you can keep the money in there — if you withdraw it early, you’ll incur a penalty equal to 18 months of interest.

Capital One

Capital One has a 5-year CD that pays APY. There is no minimum balance required to open this CD, and you can decide if you want the interest paid monthly, annually or at the end of the term.

Randolph-Brooks Federal Credit Union

Randolph-Brooks Federal Credit Union pays a tiered rate of interest on its 5-year CDs, depending on the amount of your deposit, which has to be at least $1,000. The APY will range from to .

First Internet Bank of Indiana

First Internet Bank of Indiana pays APY on a 5-year CD, with a minimum deposit of $1,000. You’ll lose a year’s worth of interest if you take the money out early, though, so be sure you can leave it in for the full five years.

Barclays Bank

Barclays Bank pays APY on a 5-year CD, with no minimum deposit required. However, to earn interest, you must maintain a balance that would earn a minimum of $0.01.

Synchrony Bank

Synchrony Bank offers a 5-year CD that pays APY. There is no minimum deposit required. The early withdrawal penalty is one year’s worth of interest.

Sallie Mae Bank

Sallie Mae pays APY on a 5-year CD. You’ll need to deposit a minimum of $2,500. It offers an automatic renewal option at the end of your term.

Ally Bank

Ally Bank pays APY on a 5-year CD. You’ll be charged 150 days’ worth of interest if you withdraw the funds early.

Marcus by Goldman Sachs

Marcus by Goldman Sachs, Member FDIC, pays APY on its 5-year CD. There’s a minimum balance of $500. If you fund your CD within 10 days of opening the account, you’ll get the highest published rate paid on that CD during that 10-day period. So, if the rate goes up within 10 days of opening your account, you get the higher rate.

Things To Consider When Comparing CDs

There are a couple of potential drawbacks to buying a 5-year CD. First, interest rates could continue to rise. If this happens, you could be stuck earning 4% or so, while new CDs are being sold at rates of 5% or 6%.

Bump Up CDs

There are a couple of ways to reduce your interest rate risk. One is to look for a “bump up” CD, which lets you “bump up” the interest rate if it rises during your term. Make sure you understand the conditions, though — sometimes you only get one rate bump during the term, and in other cases, the rate increase needs to be within a certain number of months of purchasing the CD.

CD Ladders

The other way to minimize interest rate risk is with a CD ladder. This refers to the practice of buying multiple CDs with various terms. When each comes due, you can reinvest the money into a longer-term CD, so you have one CD coming due each year and get the advantage of the current interest rate. Here’s an example of how a CD ladder works.

Say you have $50,000 to invest. You buy 5 CDs for $10,000 each. You buy one each of a 1-year CD, a 2-year CD, a 3-year CD, a 4-year CD and a 5-year CD. In a year, the 1-year CD matures, so you re-invest that money in a 5-year CD. Another year later, the 2-year CD matures, and you re-invest that money in a 5-year CD. You continue to do this, and after four years, you now have five 5-year CDs, each maturing a year apart.

You can continue to do this for as long as you want, and you’ll always have the advantage of having a CD come due each year, which you can then reinvest at the current interest rate or, if you’re ready to use the money, withdraw.

Early Withdrawal Penalties

Another feature to be aware of is the early withdrawal penalty. If you withdraw your funds from a CD before the end of the term, you will be charged a penalty. The standard penalty used to be three months’ worth of interest, but banks are now increasing this, particularly for longer-term CDs.

So, if you take your money out of a 5-year CD before the end of the five years, you could be forfeiting six, nine or even twelve months’ worth of interest — or more. Make sure you won’t need the money before the term is up.

Another option is to invest in a no-penalty CD, which typically allow you to withdraw some or all of your balance before the end of the term without a penalty, but they often offer lower interest rates and shorter terms.

Final Take

If you’re looking for a solid, guaranteed return on some money that you know you won’t need to touch for at least five years, a CD can be a smart choice.

FAQ

  • Who has the highest paying CD right now?
    • The best APY on a 5- year CD as of Jan. 17, 2023, is from Randolph-Brooks Federal Credit Union. However, you will need a balance of at least $75,000 to earn the best rate.
    • If you don’t have that much to deposit, you may be better off with the next highest: Popular Direct.
  • What is the current interest rate for a 5-year CD?
    • Interest rates for 5-year CDs range widely, depending on your balance and financial institution. Some banks offer as little as 0.01%, while others offer over 4.50%.
  • Can you get 6% on a CD?
    • No, there currently are not any CDs offering 6% APY in the U.S.

Rates are subject to change; unless otherwise noted, rates are updated periodically. All other information on accounts is accurate as of Jan. 17, 2023.

GOBankingRates is a personal finance and consumer interest rate website and an online marketing company serving top-tier banks, credit unions and other financial services organizations. Some companies mentioned in this article might be clients of GOBankingRates, which serves more than 100 national, local and online financial institutions. Rankings and roundups are completely objective, and no institution, client or otherwise, paid for inclusion or specific placement. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by the companies included in the article. All fees and rates are subject to change at the issuers’ discretion. Some interest rates might be short-term or promotional offers only, and it is possible additional terms and conditions must be met to obtain the interest rates listed. Rates and availability might vary by region. Verify terms and conditions before opening an account.

GOBankingRates bases its assessment of “best” and “top” products on the above-stated parameters to create a baseline for comparison. This assessment is an approximation of “best” and “top” designed to help consumers find products that might be appropriate for them. There could be other options available as well. Consumers should consider various options appropriate for their circumstances.

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