By taking advantage of the generous APYs offered on top-yielding CD accounts, you could grow your savings with almost zero risk. Savings rates on CDs have been on the rise since last year, following the Federal Reserve’s effort to lower inflation through several interest rate hikes. And as interest rates have risen, many banks have begun offering even more competitive yields on savings accounts.
At their most recent meeting, the Fed decided to once again raise rates by a quarter of a point following last month's rate pause. This is the 11th interest rate hike since March 2022, bringing the federal funds rate to the highest level its been in 22 years — a target range of 5.25% to 5.5%. And officials predict that it won't stop there; at least one more rate hike is predicted before the end of the year. In their official statement, the Federal Reserve stated they were "strongly committed to returning inflation to its 2 percent objective."
This rate increase, and any future increases, could push savings rates slightly higher. However, keep in mind that as inflation starts to cool, it’s a good idea to take advantage of savings rates while they remain high.
Currently, many of the top-yielding accounts for 1-year CDs, 3-year and 5-year CDs have rates well over 4%. So, if you’re saving for an upcoming purchase, or just looking for a fixed and safe return on your cash, opening a 3-year CD account could be a smart option. Just make sure you won’t need access to your money before its maturity date.
Top earning 3-year CD accounts
Try our tool, in partnership with Bankrate, that allows you to shop around for CD rates available today.
Here are some of the top-yielding 3-year CD accounts available now.
U.S. Senate Federal Credit Union
APY: 5.13%
Minimum Balance: $1,000
Quorum Federal Credit Union
APY: 4.85%
Minimum Balance: $1,000
Lafayette Federal Credit Union
APY: 4.84%
Minimum Balance: $500
MYSB Direct
APY: 4.76%
Minimum Balance: $500
Summit Credit Union
APY: 4.30%
Minimum Balance: $500
Credit Human
APY: 4.35%
Minimum Balance: $500
CFG Bank
APY: 4.30%
Minimum Balance: $500
Hughes Federal Credit Union
APY: 4.86%
Minimum Balance: $1,000
Seattle Bank
APY: 4.60%
Minimum Balance: $1,000
Crescent Bank
APY: 4.75%
Minimum Balance: $1,000
Bread Financial
APY: 4.75%
Minimum Balance: $1,500
First Internet Bank
APY: 4.75%
Minimum Balance: $1,000
What is a CD account?
With a CD account, your cash is locked away for a fixed period of time of typically 1-5 years, unless you’re prepared to pay a fee to take it out early.
Because of those fees, they aren’t good options for cash you plan on spending in the coming months, so they don’t make good emergency funds. They are good options, however, if you’re trying to save for a future purchase or event and want to grow your cash without accessing it.
You’re guaranteed a fixed return on your cash, so the rate won’t go up or down based on market conditions which is both a good thing as you get certainty, but also a possible problem in case rates elsewhere shoot up and you don’t benefit.
Like other savings accounts, they are a good option for those who value risk-free returns as you aren’t riding the waves of the stock market. In addition, most CD accounts are FDIC or NCUA insured, depending on whether they’re opened through a bank or credit union, so your cash is safe even if your bank or credit union closes. FDIC insurance protects up to $250,000 per account ($250,000 per person in a joint account), while NCUA insurance protects up to $250,000 per credit union member.
1-year vs 3-year vs 5-year CD accounts
Given your money is essentially locked away (unless you pay fees to get it out early), you need to carefully consider how long to tie your cash up for between the various types of CD options.
For example, if you plan on purchasing a vehicle in around 3 years, opting for a 3-year CD can help you bolster your savings for when the time comes. It’s a “set it and forget it” type of investment. Your cash will grow thanks to compound interest with little effort on your part.
In that scenario, a 5-year CD account is risky as you may need to pay a fee to get your money out after, say three years.
You can use our savings calculator to see how much you’ll earn on your cash over time if you opt for a 3-year CD account.
