Where can I get the best CD rates?

Rates vary from bank to bank. Often online banks offer significantly higher rates of return for their CDs than traditional banks.

The power of the internet gives us the ability to quickly find the best CD Rates. CDs provide banks with a stable source of reserve funds. When banks sell you a CD, they can then turn around and lend the money in your account out to borrowers for more than they’re paying you and other CD account holders. If your CD is earning you 4 percent, for example, the bank might lend it out to other borrowers for 6-7 percent. So it pays to shop around because each bank will have its own philosply on how to set it’s CD rates.

As an example, Discover Bank is offering competitive CD rates on durations from three months to five years, paying higher than the national average. Here are the current Discover Bank CD Rates:

3 month CD – 0.65% APY

6 month CD – 0.90% APY

9 month CD – 1.00% APY

12 month CD – 1.60% APY

18 month CD – 1.80% APY

24 month CD – 2.05% APY

30 month CD – 2.20% APY

3 year CD – 2.40% APY

4 year CD – 2.55% APY

5 year CD – 3.10% APY

7 year CD – 3.40% APY

10 year CD – 3.70% APY

The minimum to open an account is $2,500. Interest from the advertised CD rates is accumulated daily and credited monthly. Discover Bank is FDIC insured and your deposits are covered up to $250,000.

How do CDs work?

CDs are low-risk investments you buy through a bank or thrift institution. For money you don’t intend to use for a specified length of time-6, 9, or 12 months, or several years-the bank will guarantee you a fixed return, usually substantially more than what you can earn on your checking or savings account.

But CDs share an important attribute with checking and savings accounts: they are insured by the Federal Deposit Insurance Corporation (FDIC). All CDs you hold in one institution are insured by the FDIC up to $250,000 per person, per deposit category. That’s a safety net you won’t find with stocks, bonds or mutual funds.

Ease and accessibility are two of the many great features of CDs. Unlike stocks or mutual funds, you don’t need a brokerage account to buy a CD. You don’t even need to file any paperwork. Just call your bank or go online to buy CDs without incurring transaction costs.

While you can access your money in an emergency, there are penalties for taking out assets before the maturity dates on each CD, typically equal to returns earned over the prior one to three months.

What should I know before buying a CD?

Before buying any CD, make sure you familiarize yourself with rules that govern it.

Whenever or wherever you buy CDs, it is essential that you read the fine print to understand the terms. Just as banking and checking accounts come with different features from bank to bank, the terms of different CDs can vary substantially from one to the other.