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1-Year CD Rates from Online Banks 2022

Certificates of deposit (CD) rates from online banks are often above average if you are willing to open and manage your account using the Internet. Most online banks offer an online application and money can be transferred to fund the CD via an electronic transfer, check, wire, or credit card. You can view a financial snapshot of any online bank by clicking on its name and then the Financial Details tab.

Highest One-Year Online CD Rates - October 1, 2022

1 Year CD National Average: 0.42% ?

Advertiser Disclosure
BANK APY? MIN?

| Aug 26, 2022

Too slow to raise rates. Read More

Early withdrawal penalty is 180 days interest.

| Sep 30, 2022

They locked my account for no reason. I spend more than 2 hours, trying 4 times to call their customer service (Sept. 26). The representative promised me to submit request to unlock my account right away b... Read More

Warning: Early Withdrawal Penalty is 2% of the account balance.

| Apr 12, 2021

Frustrating. The initial application form is a breeze. Then the problems start. Many hoops to jump through.

| Sep 22, 2022

Super easy to join. Happy to receive 3.51% on a 12 month CD!

| Jun 23, 2022

ING was better. They were bought by CapitalOne and ever since, my rates have steadily dropped. Now that rates in general have been rising for months, mine has been flat at 0.30%. No sign of them going up, ... Read More

| Sep 24, 2022

Was going to open a savings acct ----- after reading the reviews, NO WAY. Don't make it difficult for customers, (or potential customers), to do business with you. Read More

| Jul 15, 2021

I finally closed my account. Was great back in the day as everbank but now it is a joke in every way. Read More

Department Of Commerce Federal Credit Union
Restrictions
3.10% $500 Learn More

Early withdrawal penalty is 6 months interest.

| Aug 31, 2022

you can view but you wont get in. application can't go through, they can't help even you called, Bank just make show they exit. Read More

| Jul 1, 2022

Very easy opening process and wonderful staff.

| May 19, 2022

I was a long time customer. I took balances down below $200 in 2020 in order to buy a house during pandemic. I had always planned to deposit again in a rising rate environment. I logged back on today and ... Read More

| Aug 20, 2022

Great experience with Ivy Bank! They are constantly updating their rate to stay competitive. Since I've opened my account they've increased my rate 4 or 5 times. It's easy to apply and open and have had no... Read More

| Sep 14, 2020

two thumbs up Read More

| Sep 1, 2022

updated review - The bank managed to finally provide the requested document listing the beneficiary after a number of calls. So will add a few stars. The website still needs some work to be more descript... Read More

Early Withdrawal Penalty is all interest earned.

| Aug 10, 2022

While they offered good rates, I got nothing but the runaround on membership. Twice submitted required forms in which they said were not clear enough, but only after I called them to see what the holdup w...

| Jun 13, 2022

3 days for an ach is not market when most banks on this list do it instantly. even frigging rising bank. customer service is beyond dreadful. Read More

| Aug 16, 2022

ally is still the gold standard in online banking, but the rate needs to get more competitive and the wait to speak to someone on the phone is just ridiculous. Read More

| Jun 25, 2020

Nope. As with the CIT quote 1.25% APY is a bit optimistic. Banesco's site offers .90%.

| Sep 30, 2022

I have been a customer for 34 years. But I have been dismayed by NFCUs slow responsiveness to be competitive in the market place with savings rates and to offer the best rates in the market. All I see is...

| Sep 1, 2022

awful POS. Sucks. Bad. crappy. Read More

| Sep 23, 2022

I know that the bank is supposedly FDIC insured but the entire soft money lending thing upon which this business is predicated is about to go go under so look out below!

| Aug 31, 2022

never had a problem moving money in/out. After trying a couple banks with higher rates but less service will be moving my money back here. Read More

Early Withdrawal Penalty is 180 days interest.

| Sep 27, 2022

has strange old rules for link external bank , takes more time and difficult for no check writing today, just want advised for their name and dont want you deposit money to their bank for 3% interest. Read More

| Dec 8, 2020

Everyone here in Boston raves about Salem Five but it is shithole operation filled with nasty entitled people. As for this online savings product, the fees are ridiculous, the transfer charges are obnoxiou... Read More

Early Withdrawal Penalty is all interest earned.

| Mar 30, 2021

These guys are the best local bank. Very responsive.

Hingham Savings
1.65% $1,000 Learn More

| Jun 1, 2021

Update: STAY AWAY FROM THIS BANK! They have no clue how to run an online bank. This bank is not ready for prime time. Nothing but problems. Customer service is dismal at best.

Early Withdrawal Penalty is 1% of principal.

| Sep 6, 2019

Went to bank yesterday this is not a good rate. Needs to be updated. Read More

| Nov 9, 2020

Here's what you will need: To be a resident of New Jersey or select Eastern Pennsylvania counties (the zip code provided in your application will receive an error stating "Zip code is not valid for this ap...

| Mar 4, 2021

They are liers. Please don't open their credit cards to avoid being taking advantage of!!! I hope they bankrupt SOOOOOON. Read More

| Aug 28, 2022

Rates are totally uncompetitive now.

| Dec 13, 2019

yes good

| Jun 2, 2022

I've been a customer since CIT emerged from the financial crisis as a real competitor in this space (14 years or so). Zero complaints about anything over this time ... until today. Now they are offering a... Read More

Home Savings Bank
0.35% $5,000 Learn More

Warning: Early Withdrawal Penalty is 12 Months of Interest

| Jun 20, 2018

Their website says the offer is going away tomorrow at 9AM EST. Hurry! Read More

OneWest Bank, a division of First-Citizens Bank and Trust
0.30% $1,000 Learn More

| Jul 3, 2019

Just set up an account. Don't know long term yet, however they were (Kelsey) a dream to work with.

| Aug 13, 2019

I filled out the application 10 days ago answering all questions and sent a file with a copy of my drivers license to Western Bank. I received an email saying that a banker would call me within one busines...

Early Withdrawal Penalty is 181 days interest.

| Jun 10, 2022

This bank hasn't raised their rates! Maybe I was sleeping but I need to get out of here fast. Read More

| Sep 14, 2022

you need open new account once interest going up, keep in mind your savings account only go down never go up unless you open new account. Read More

| Jun 26, 2022

ACH transfers are not allowed. Called and was told that I had to set up wire transfers (and pay fees) or I could come in to the bank and get a bank check. Read More

| Sep 20, 2021

Run for them hills and quickly too I might add if you want to keep more of your money than you put in their process for any length of time. If they can run a automatic payment to come out of my account ev...

| Aug 7, 2020

Had a car loan with them. Paid it off because I was selling the vehicle. They told me it would take 10 business days to clear the transaction (it was immediate via electronic) and was out of my account th... Read More

$1,000 minimum deposit to open an account. A penalty may be imposed for early withdrawal. Account fees may reduce your earnings.

| May 21, 2021

avoid this Read More

Ohio Catholic Fcu Federal Credit Union
Restrictions
0.15% $100,000 Learn More
Edu Federal Credit Union
Restrictions
0.10% $500 Learn More
Ohio Catholic Fcu Federal Credit Union
Restrictions
0.10% $500 Learn More

| Apr 18, 2018

Worst experience of my life. Did not fund and gave $25 to my own charity. Read More

| Jul 28, 2020

Dropped rates again with restrictive transfer limits and poor service. Better rates and liquidity elsewhere. Beware!!! Read More

| Aug 8, 2022

Left USAA after 30 years and never looked back. The rates were high and the claims problems were horrible once a major claim hit (my first and only one). Much happier since leaving USAA (and there rigid, u... Read More

All rates listed are Annual Percentage Yield (APY). The Min listed is the minimum deposit account balance required to obtain the rate listed.

Summary: Today's Highest Online CD Rates - October 2022

Bank Institution Product Term Interest Rate (APY)
Rising Bank, a division of Midwest BankCentre 1-Year 3.70% APY with $1,000 minimum
Merrick Bank 1-Year 3.60% APY with $25,000 minimum
Connexus 1-Year 3.51% APY with $5,000 minimum
Rising Bank, a division of Midwest BankCentre 3-Year 3.85% APY with $1,000 minimum
Merrick Bank 3-Year 3.65% APY with $25,000 minimum
Connexus 3-Year 3.61% APY with $5,000 minimum
Bread Savings, a division of Comenity Capital Bank 5-Year 4.25% APY with $1,500 minimum
M.Y. Safra Bank 5-Year 3.75% APY with $500 minimum
KS StateBank 5-Year 3.70% APY with $100,000 minimum

PRODUCT INFORMATION

One-Year CD - Online Banks 2022

Certificates of Deposit (CDs) are offered by most banks in a variety of maturity dates. The 1-year rates in the table above are listed in descending order based on Annual Percentage Yield (“APY”) which is the rate of return that you will earn, when adjusted for compounding, over a 12 month period, and the way in which banks are required by US banking regulations to advertise their CD rates.

A certificate of deposit represents a time commitment between a depositor (someone who has money to put in the bank) and a bank. The depositor agrees to leave a specified amount of money in the bank for a set period of time. The bank agrees to keep the money safe and to provide a fixed rate of return.

A 1-year CD has a very brief time commitment and can also generate a rate of return above the prevailing savings rate. Therefore, many people use 1-year CDs to slightly augment their rates of return over savings with only slightly more risk than they would have if they were entirely in savings accounts and money market accounts.

FDIC Insurance

Provided the bank is FDIC-insured and the deposit amount is within FDIC limits, the principal is also secured by an agency of the United States federal government against loss. Further information about FDIC insurance is found in this article and if you have specific questions about your own circumstances you should use the FDIC’s Electronic Deposit Insurance Estimator.

CD Risk

The principal of a CD is safe and insured as long as the deposit amount is FDIC limits. Interest that accrues and is paid or deposited to the principal also is safe as long as the total balance remains within FDIC limits.

A CD however bears two significant risks:

  • Liquidity risk

    If you think you may need access to your principal during the period of the time commitment for a major purchase or an unforeseen expense, CDs are generally not a good place to store money. The terms of most CDs outline the penalty that will be assessed in order to access your capital. This penalty is usually assessed in terms of time periods. For example, a common penalty on a 1-year CD is 3 months, although you should always check this carefully in the terms and conditions before opening a CD as it could be longer. Banks and credit unions are not obliged to offer an early withdrawal penalty, and may change or remove or even refuse to honor the early withdrawal penalty in their paperwork. For further details, please read this article. BestCashCow never recommends a strategy involving the purchase of a CD when you have a high likelihood that you will need your capital.
  • Inflation risk

    Since CDs are considered a very safe investment when you stay within FDIC and NCUA-limits, they often do not pay much over the anticipated rate of inflation, and can often pay under this rate. Were interest rates to rise (or the inflation rates to rise), the real or inflation -adjusted value of your CD can drop over time, especially when you factor in the tax consequences of ownership of a CD. In the event of rates rising, you may be able to use the early withdrawal penalty to get your principal but for the reasons mentioned above, BestCashCow does not recommend relying on such a strategy.

Be sure to think about how CDs fit into your overall portfolio objectives.

CD Laddering

An effective strategy used by many to bolster their savings strategy is to own CDs with various maturities. In other words, a depositor with $400,000 and put $100,000 in a 3 month CD, $100,000 in a 6 month CD, $100,000 in a 9 month CD and $100,000 in a one-year CD, then your liquidity risk in highly diminished because you are always near maturity on one of your CDs. (Note that no more than 2 of these CDs should be at the same bank in order to avoid exceeding FDIC limits).

The reality is that we are in a very low interest rate environment, and any CD with a maturity of less than 1 year is going to pay below, perhaps well below, the prevailing rates in the leading online savings accounts or at brick-and-mortar banks. Therefore, the strategy outlined above would be largely absurd in the current environment.

A laddering strategy that would make more sense for the same depositor who might otherwise hold $400,000 in cash would be to put $100,000 in a one year CD every three months. Liquidity risk in the same way is diminished as the depositor is never more than 3 months from maturity, yet the depositor is picking up some small improvement over the best savings rates than where all of his money to be in cash.

Laddering strategies can also involve longer term CDs, but one that involves terms as little as 1 year can improve on the savings rates with minimal impairment to your liquidity.

More information on CD laddering is available in this article.

How Interest is Paid

The method of distributing the interest earned on a CD varies by bank. Some banks pay interest monthly, other semi-annually, and others at the maturity of the CD. In general, online banks pay the interest electronically either by adding it to the principal balance or with an ACH transfer back to the depositor's primary linked checking account. Other online banks may pay via a check in the mail.

Interest Rate

Currently, the most competitive banks offer 1-year rates that are slightly above the top online savings and money market rates. Depositors need to decide if they want the fixed rate of the CD or the flexibility of the savings account (savings accounts do not come with any term time requirements).

In a rising rate environment, it is generally better to keep money flexible and liquid and put it into either short term CDs or savings or money market accounts.  In a falling rate environment, it is generally better to lock the rate using a CD or some other fixed rate investment. In a stable rate environment, you may be able to collect a small premium in exchange for your loss of liquidity.

Online banks generally offer CDs available to residents of any of the 50 states. The CD must be opened online and funded either by online transfer or by mail.

FREQUENTLY ASKED QUESTIONS ON CERTIFICATES OF DEPOSIT

What are CD rates?

CD rates are the fix rate that the bank pays a depositor for entering a CD for the entire term of a CD. They are expressed in annual percentage yield (“APY”) terms, so that they are standardized. $100,000 invested in a one year CD at 1% will be worth $101,000 at maturity in exactly 1 year. $100,000 invested in a two-year CD at 1.50% will be worth $101,500 in exactly 1 year and worth $103,022.50 at maturity (assuming the interest is not paid out before maturity, but is added to the principal). Please see BestCashCow’s Savings & CD Calculator to better understand the magic of compounded interest over time.

Do CDs Pay Interest Monthly or Yearly?

When opening a CD, it is important to consider how interest is credited or paid. Interest can be credited to the CD monthly, quarterly or annually. For those CDs of one year or less, interest may be credited only at maturity.

When interest is paid, the CD holder may have arranged for the interest to be mailed to them as a check. The other option is for the interest to be added to the principal of the CD.

Regardless of how and when interest is paid, it is required to be expressed (standardized) by all banks in the form of an annual percentage yield (“APY”) rate.

How Is Interest on CDs Taxed?

Interest on CDs is taxed as ordinary income. Your bank will provide you with a 1099-INT detailing the interest that you must report on your tax return at the end of each year. Regardless of whether interest is paid in the form of a check or added to principal, CD holders need to report the interest in the year in which it is paid. Purchasing a Certificate of Deposit of one-year or less that pays a single lump sum interest payment at maturity may defer tax on interest until the following year, but otherwise holders of CDs should generally expect to pay ordinary taxes on interest earned in every year in which they hold a CD. Further detail is found in IRS Publication 550 (page 5).

Why Are CD Rates So Low?

CD rates on terms of 1 and 2 years were very constantly low for many years from 2009 to 2015 as the Fed Funds rate was held at zero following the great recession. Rates on longer term CDs were occasionally more interesting during this period (depending more heavily on the level and direction of the US Treasury Bond).

The US Federal Reserve’s action towards normalizing interest rates has been painfully slow (resulting from Brexit, European financial instability, etc.), and CD rates have remained at levels that are very low by historical norms. However, we have seen CD rates rise in 2016 and 2017 as the Federal Reserve has begun to slowly raise the Fed Funds rate.

Are CD rates going up or down? When are they expected to rise?

If the Federal Reserve accelerates its plan to raise the Fed Funds rate or if global economic developments were to cause US treasury rates to rise, we would quickly see higher CD rates. However, the global economic environment is uncertain with European long-term interest rates being negative. Should the US also enter a recession and the US 10-year Treasury rate fall still further, it is possible that CD rates could fall further.

What is a good rate for a CD?

BestCashCow lists the best CD rates available from online banks above, and the best rates from local banks and credit unions. A good rate is the best rate that you can find at an FDIC or NCUA-insured institution, provided that it compensates you adequately over the best savings rates for the liquidity that you are giving up. Only you can determine based on your own personal circumstances whether that is a good CD rate for you. BestCashCow’s Savings & CD Calculator can help you to understand how much more interest a CD can generate over a savings account.

Is there an advantage to a 12-Month Certificate of Deposit over Online Savings Accounts?

At any moment in time, there is ordinarily a premium to an online 12-month CD rate over an online savings rate. The table below demonstrates the spread between the two over the last several years. Whether it makes sense for you to take advantage of these higher rates in the 12-month rate depends on your own need for liquidity and your view on whether and how fast savings rates will rise.


What are the advantages of online one-year CDs?

  • Funds deposited in FDIC banks and within insurance limits are protected by the full faith and credit of the United States government.
  • CDs provide a predictable, set rate of return.
  • The CD can be opened from the comfort of your house.
  • The CDs are generally available to any resident of the United States.

What are the disadvantages of one year CDs?

  • One year CDs pay interest rates that are just above the leading rates offered on online and branch-based savings and money market accounts. There is a very slight premium for having the money locked up for one year. Your own circumstances and tax rate will help you to determine if that premium provides adequate compensation to you for your loss of liquidity.
  • The deposited money is committed for one year.
  • The account must be opened online and all inquiries must be conducted online or via the phone.
  • Depending on the bank, the opening and funding process can take several days to weeks although the bank generally locks the rate once the application has been received and approved.

All banks listed on BestCashCow are FDIC insured; BestCashCow.com strongly recommends that you stay within FDIC insurance limits and that if you are unsure of how the limits affect you, please visit the FDIC website.

To understand all of the income generating options available to a saver, please view the Income Generating Investments Comparison Chart.

What to Look for in an Online CD Account:

FDIC and NCUA Insurance - In order to secure the viability of the US banking system, the Federal government provides insurance to a maximum amount of $250,000 per individual per institution (or $500,000 for joint account holders). This insurance is provided to banks through the FDIC and to credit unions through the NCUA. All banks listed on BestCashCow are FDIC insured; most, but not all, credit unions listed on BestCashCow are NCUA insured. Ordinarily, all deposits (CDs, Checking, Savings Accounts) held in the same type of ownership are added together and insured to $250,000, funds held in different types of ownership (Individual, Joint, Trust, Retirement) may fall under separate insurance provisions. In order to determine if your financial institution is insured and to ascertain your coverage limits, please visit - as appropriate - either FDIC.gov and use the BankFind functionality or NCUA.gov and use the Share Insurance Toolkit. We recommend that you deposit funds in only FDIC and NCUA insured institutions and that you do not exceed coverage limits.

Minimum Deposit - There is such competition for your money that the best CD rates are often available for sums as little as $500.

Term and CD Rates- Three month and six month certificates of deposit rates do not dramatically exceed those in online savings and money market accounts, and money market funds. Moreover, investors in states with higher state tax, such as New York and California, in an ordinary environment (not 2011) will perform equally well in a three-month US Treasury Bond or pre-refunded municipal bonds after they account for the fact that interest produced on those products are tax advantaged.

Generally, longer the CD term, the higher the CD rate. In general, the term you choose depends on how long you want to tie up your funds and also what you think will happen to interest rates.

Interest rates will fall. Then it is better to put money into longer-term CDs to maintain the high rate as long as possible.

Interest rates will rise. Put money into short term CDs. By keeping your cash more liquid, you can re-invest it as rates go up.

Interest rates will remain flat. In this case, going for longer-term CDs will help you maximize your interest income.

Learn more about getting the best CD rates.

Avoiding CD Pitfalls:

Early Withdrawal - Any certificate of deposit will bear substantial penalties for early withdrawal, if it is even allowed. Ordinarily, the penalty for early withdrawal will be a loss of all of your accrued interest, but there are certain circumstances where banks will also assess penalties that will result in a loss of some of your principal.

Recent Articles


Warming Slightly to Certificates of Deposit

Rate information contained on this page may have changed. Please find latest cd rates.

I advised readers of BestCashCow.com in April to be especially weary of jumping into CDs with interest rates about to rise. 

I still believe interest rates have a lot further to rise.   Even though oil and gas and other commodity prices have declined in recent weeks, the Fed remains behind the ball with the Fed funds rate at a target 2.25 to 2.50%.    With four more meetings to go before the end of the 2022, I’d bet that the Fed funds rate winds up somewhere between 3.50 and 4% in December, before peaking sometime in February.

Many blog writers who follow our space have noted that the last time that the Fed funds rate was at the current level, just prior to lowering rates on July 31, 2019, savings and money market account rates from the largest, most recognized online banks were yielding a rate within the Fed funds target.   They have hypothesized that these banks, like Marcus By Goldman Sachs that now has a savings rate of 1.50%, are either flush with liquidity or are simply hoping that customers won’t recognize that they are no longer offering rates that are consistent with a Fed funds rate above 2%.   (BestCashCow has a full page of nationally available savings offers that are now above 2% here).  

The reluctance of most major online banks to match the current Fed funds rate is one driver leading folks to look at CDs.   Another driver is a growing view that no matter what happens with inflation, the Fed will pivot to lowering rates again in 2023.

If your interest in CDs is driven by the low rates in major banks, you could consider short-term CDs (one year or less) with the expectation that you will be able to lock in a higher rate at maturity.   They do offer a premium over savings accounts today and may even after one our two more Fed moves.   

If your concern is a Fed pivot, you’d want to look at longer term CDs (three years to five years).

 It has also come to my attention that there are brokered CDs being offered that are competitive with online rates.  We ordinarily do not recommend brokered CDs – offered through places like ETrade, Fidelity, Vanguard or full service brokers – because they lack the ability for early withdrawal with payment of an early withdrawal fee, they need to be purchased a week or two before they are actually issued (during which time you are not earning interest so your effective rate is lower), and they are ordinarily not rate-competitive with the leading rates.

If you are locking into long-term CDs, you should avoid brokered CDs now more than ever.   Three-year, four-year and five-year online CDs will ordinarily provide you with the ability to get out with payment of an early withdrawal fee if you need access to your cash or if interest rates should wind up much higher in one year.   However, please read our warning about reliance of early withdrawal fees here.

At the same time, readers of BestCashCow are writing to us asking whether they should buy 6-month brokered CDs at 2.70% or stay in online savings and money accounts with banks that are not responding to the recent Fed funds increases.   While my answer to these folks is generally that they should seek out higher earning online or local savings accounts, I also think that as long as they are not impairing their liquidity, there is very little to lose by locking into very short-term brokered CDs right now.


Mid-2022 is Just Not the Time to Buy Certificates of Deposit

Rate information contained on this page may have changed. Please find latest cd rates.

My inbox is full of two types of emails from readers of BestCashCow and RatesAndInfo.com, a BestCashCow subsidiary.

The first is from those who are excited to have found a great CD rate, and the second is from those who are inquiring whether this is the time to lock into a short-term or long-term CD.

I understand the excitement.  Interest rates have been stuck at zero for 24 months due to Fed Chairman Jerome Powell’s mismanagement of Fed policy during the pandemic.  While inflation has burned, people have become accustomed to making no more than half a percent in their savings accounts.   And, they are now seeing 1-year online CD rates as high as 1.50%, 3-year CD rates above 2%, and 5-year CD rates pushing 2.50%.   In some areas, local CD rates are even higher.

Check local 1-year CD rates here

Check local 3-year CD rates here

Check local 5-year CD rates here

I wrote a year ago that folks should not be locking into long-term CDs when interest rates are so close to zero.  In an environment where they are still low and projected to go up dramatically in the immediately future, they should be avoiding not just long term CDs, but short term ones as well.

The Fed is about to play some serious catch-up in order to try to get inflation under control.   It is going to raise the Fed fund rate by 1%, possibly more, between now and June 15, some six weeks away.   Online savings rates by then should be above 1.50%.

The Fed is projected to raise the Fed funds rate by another 1% through quarter point hikes at each of its four remaining meetings in the second half of the year.   It could easily raise the benchmark rate by more to get inflation under control (although it also could be influenced, again, to refrain from moves ahead of an election).  Even if the Fed is does not follow through, certificate of deposit rates are not offering a premium which prices in the likelihood of these moves.    

Inflation - especially against the backdrop of a global war, a continued pandemic and an expanding environmental catastrophe - can be very persistent.  It is anybody's guess as to whether and how the Federal Reserve may need to take further action into 2023.

I personally would continue to monitor and compare online savings rates as rates increase through the remainder of 2022.   You should also check local rates where you live.

And, then at the end of the year, I would begin to look at CDs, but I’d expect to see all CD products well above where they are today.


Probably the Worst Moment in the History of Mankind to be Locking into Long Term CDs

Rate information contained on this page may have changed. Please find latest cd rates.

I was recently contacted by a reader about 5-year CD rates.    Given that the best rate available at any online bank, local bank or credit union remains not much better than 1%, I have long and strongly admonished that it would not be a good idea to lock in right now.

The reader pointed out that they are staying true to their program that involves rolling over 5-year CDs as they mature.

I am in favor generally of adhering to programs through thick and thin, but this is absolutely not the time to do it.   At no time have we experienced such tremendous inflationary pressures against a Federal Reserve that is so intent on holding its benchmark Fed Funds rate artificially low (at zero !!).   These circumstances have created bubbles all over the place - in cryptocurrencies, in real property, and in just about any asset.   And, even if Jerome Powell stands to be correct that inflation is transitory and that the Fed needs to maintain rates at this level to ensure a smooth recovery from the virus, you should not expect cash rates (savings and CD rates) to hold at these levels for the next 5 years.

In 2005 and 2006, online savings rates were above 4%.   Within the last three years, they have been well above 2%.   There will be competition for your money again.   In fact, even today as banks are supposedly flush with cash, there are plenty of banks offering over 50 basis points in online savings and money market accounts.

To forfeit liquidity and lock in to a 50 basis point premium over savings rates (a doubling) for the moment against such an uncertain future is simply foolhardy, unless you can find a bank or credit union that will agree in writing to waive all early withdrawal penalties.

The bottom line is that inflation probably isn’t transitory and that higher rates are coming, but if you insist on hedging against rates moving lower, then buy a one-year CD.