If you’re looking for a way to earn low-risk returns on your savings, you have a few different options to choose from. And, high-yield savings accounts are one of them. But while the rates on high-yield savings accounts are quite high right now, they are also variable. What that means is that if rates decline, you’ll earn less in interest on the money deposited in the account.
Another option is a certificate of deposit (CD). A CD is a great way to earn consistent, low-risk returns on your money. With a CD, you agree to leave your money in the account for a specific term in return for a fixed interest rate. In turn, you’ll earn the same APY throughout the CD term — and any rate fluctuations that occur during that time won’t impact your earnings.
But there are a lot of different CD terms to choose from, ranging from a few months to a few years. While shorter-term CDs currently offer some of the highest rates on your savings, there are plenty of high-paying long-term CDs that are also worth considering. And that includes 5-year CDs, many of which are offering excellent returns on your savings right now.
16 of the highest-paying 5-year CDs right now
If you want to maximize the returns on your savings while earning a consistent rate of interest, the following 5-year CDs may be worth considering.
U.S. Senate Federal Credit Union: 4.86% APY; minimum deposit of $1,000Department of Commerce Federal Credit Union: 4.71% APY; minimum deposit of $500MYSB Direct: 4.66% APY; minimum deposit of $500Self-Help Federal Credit Union: 4.65% APY; minimum deposit of $500First National Bank of America: 4.65% APY; minimum deposit of $1,000Utah First Credit Union: 4.65% APY; minimum deposit of $2,000Popular Direct: 4.60% APY; minimum deposit of $10,000Merrick Bank: 4.60% APY; minimum deposit of $25,000First Internet Bank: 4.59% APY; minimum deposit of $5,000Cadets Federal Credit Union: 4.58% APY; minimum deposit of $1,000Pima Federal Credit Union: 4.50% APY; minimum deposit of $250Bread Savings: 4.50% APY; minimum deposit of $1,500Barclays: 4.50% APY; no minimum deposit requirementBMO Alto: 4.50% APY; no minimum deposit requirementAlliant Credit Union: 4.35% APY; minimum deposit of $1,000Quontic Bank: 4.30% APY; minimum deposit of $500
5-year CD benefits to consider
There are a couple of benefits to opening a 5-year CD right now. For starters, while the rates on these CDs are not as high as many of the current short-term CDs, the rates are still very competitive.
And, there’s also the benefit of predictability and stability of returns. With a 5-year CD, you know exactly how much interest you will earn over the investment period, as the interest rate is locked in for the entire term. This makes it easier to plan for future financial goals and expenses, such as saving for a major purchase or retirement. If rates drop, you’ll still earn the interest rate you started with for the rest of the term.
Plus, 5-year CDs are often considered a safer option compared to riskier investment vehicles like stocks or bonds, as they are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), typically up to $250,000 per account holder per institution, ensuring the safety of your principal investment.
The bottom line
While there are any number of CD terms to choose from, a 5-year CD can be a great way to maximize the returns on your savings right now. The APYs on these accounts rival what you could earn from many shorter-term CDs and high-yield savings accounts, and you won’t have to worry about any rate fluctuations that occur during that time. But as with any financial tool, it’s important to ensure that you are able to adhere to the terms of the accounts you’re considering. Otherwise, the extra fees or penalties you’ll pay could negate your earnings.