Some banks impose withdrawal penalties that could not only reclaim any interest earned but also reduce your principal balance. If you need to access your money before the five years are over, the early withdrawal penalty could decrease your interest or dividend earnings.

A very important factor, especially with a longer-term certificate, is the CD’s early withdrawal penalty. In the event of a bank or credit union failure, your deposits would be insured for up to $250,000 per account for each account ownership category. Look for financial institutions that are insured by the Federal Deposit Insurance Corporation ( FDIC) or the National Credit Union Administration ( NCUA). To receive the best return on your investment, look for interest or dividends to be compounded on a daily basis, rather than monthly or quarterly. Is the APY being offered sufficient to give you confidence in investing at that rate for a five-year period?

With a five-year CD, you’re taking on a higher risk that interest or dividend rates could increase during the term of the CD. With a five-year CD, you’re looking at a longer-term investment, so you want to be sure that the fixed APY on offer is sufficient to make it appropriate to tie up your funds for five full years, unless you’re willing to risk incurring an early withdrawal penalty. To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Reviews Banks. To appear on this list, the account must be nationally available. Accounts with daily compounding interest schedules were scored higher than those with monthly or quarterly schedules. Minimum deposit requirements of $10,000 or higher affected scores negatively. The following is the weighting assigned to each category:ĬD accounts with higher APYs rose to the top of the list. We also analyzed and ranked each institution by individual term. For the star rating, we ranked each institution on 11 data points within the categories of APY, minimums, compound interest schedule, customer experience, digital experience, available terms and overall availability. To create this list, Forbes Advisor analyzed 142 CD accounts across 84 financial institutions, including a mix of traditional brick-and-mortar banks, online banks and credit unions.

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