What to Look for in A Certificate of Deposit

What to Look for in A Certificate of Deposit

Before you even consider any CD (as with any savings account) be sure that you are dealing with an FDIC-insured bank - In order to secure the viability of the US banking system, the Federal Deposit Insurance Corporation (FDIC), an independent agency of the federal government, provides insurance in each qualified bank account for each qualified institution. Each depositor's insurance is provided to a maximum amount of $250,000 in each class of ownership.

While all deposits (CDs, Checking, Savings) held in the same type of ownership are added together and insured to up to the maximum amount, funds held in different classes of ownership (Individual, Joint, Trust, Retirement) may fall under separate FDIC insurance provisions. Please visit the FDIC's website to determine if your financial institution is insured and use its "ask Edie" program to determine your coverage limits.

We recommend that you deposit savings in only FDIC insured institutions and that you do not exceed FDIC coverage limits. Additionally, some major financial institutions claim that deposits over the single account FDIC insurance limits are insured because the financial institution divides your deposits between several separately chartered financial institutions; however, most of these claims have not been tested in the event of a bank failure.

You can check the best online rates here, but also check the best local rates and credit union rates.

You should also compare rates for different deposit terms (eg. 1-year versus 3-year versus 5-year rates). Except during periods rate expectations lead to an inverted yield curve, you will generally earn a higher yield with a longer term CD.

All banks listed on BestCashCow.com are FDIC-insured. All FCUs listed on BestCashCow.com are insured by the NCUA.

CDs, unlike savings accounts, are not completely liquid. Particularly, most certificates of deposit bear substantial penalties for early withdrawal, if it is even allowed. Ordinarily, the penalty for early withdrawal wil be a loss of accrued interest, but certain banks may also assess penalties that will result in a loss of some of your principal, especially if you withdraw you CD immediately after setting it up.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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Today's Highest Online CD Rates

Bank Product Term Interest Rate (APY)
Northern Bank Direct 1-Year 5.60% APY with $500 minimum
Finworth, a division of InsBank 1-Year 5.38% APY with $50,000 minimum
TotalDirect, a division of City National Bank of Florida 1-Year 5.35% APY with $25,000 minimum
Dollar Savings Direct, a division of Emigrant Bank 3-Year 5.00% APY with $1,000 minimum
First Internet Bank of Indiana 3-Year 4.66% APY with $1,000 minimum
IncredibleBank 3-Year 4.58% APY with $1,000 minimum
First Internet Bank of Indiana 5-Year 4.55% APY with $1,000 minimum
BMO Alto, a division of Bank of Montreal Harris 5-Year 4.50% APY with no minimum
Department of Commerce 5-Year 4.34% APY with $500 minimum

See More Online CD Rates →


  • Nina Avdonina

    December 06, 2018

    Popular direct does not have a branch. According my communication with Popular Bank the bank is not responsible for Popular Direct Accounts. It looks like Popular direct is not FDIC-insured bank, is it?

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