A Five-Year Certificate of Deposit Paying 3% in 2018

As we begin 2018, 5-year Certificates of Deposit offered nationally and online don't yet earn 3%. Depending on where you live, you may however find a 5-year CD in your city offered by a local bank that pays 3%. Or, you may find a 5-year time deposit (which is the credit union terminology for a 5-year CD) offered by a local credit union that pays over 3%.

Interest rates have moved dramatically higher in 2017. When we began 2017, it was difficult to find a nationally offered 5-year CD at 2%.

With the Federal Reserve under Jay Powell predicted to move the Fed funds rate at least 3 times in 2018, BestCashCow predicts that we will see 5-year CDs higher than 3% in 2018. Therefore, we would suggest that you refrain from buying a 5-year CD at least until you see a 3-handle.

And, when you do see 3% APY on a 5-year CD, you should be aware that we may be poised to move still higher from there. For that reason, we also recommend that you look for CDs with early termination fees (or penalties) of 6 months’ interest or less. Many of the 5-year CD rates that are listed in our online CD table have more onerous penalties for early termination. You should also be aware that the issuing bank may retain the right not to honor an early termination request.

As we start 2018, savings accounts and one-year CDs are a safer bet. You may also want to check CD specials online and locally.

Happy New Year from all of the folks at BestCashCow.