When it comes to saving and growing your money, you want to make sure you’re doing it efficiently. This is especially true if you’re building a CD ladder, where every component should be optimized for your savings goals. CD ladders are typically built from accounts that mature within a year of each other. For many savers, that means finding the best 1-year CD rates, the best 2-year CD rates, the best 3-year CD rates – and so on.
To help you find the best CD rates on 2-year accounts, we sifted through data from DepositAccounts.com. To start, we sorted by highest APY on 2-year CDs APY. We also took into consideration the minimum deposit requirement for each account.
|Institution||APY||Minimum deposit amount to earn APY|
|PenFed Credit Union||1.60%||$1,000|
|Abound Credit Union (26 months)||1.40%||$500|
|Colorado Federal Savings Bank||1.40%||$5,000|
|First National Bank of America||1.65%||$1,000|
|KS State Bank (27 months)||1.35%||$1,000|
|First Internet Bank||1.31%||$1,000|
Not only does Synchrony offer a whole host of CDs, but there’s also no minimum deposit to open one. As if the APY and no minimum weren’t enough, they also allow you to withdraw interest anytime with no penalty. (If you withdraw principal, though, it will cost you 180 days’ simple interest at the current rate.) You’ll get a 10-day grace period when the CD matures to make any changes; otherwise, it will automatically renew.
Synchrony is an FDIC–insured online-only bank with headquarters in Atlanta. They’re also the leading supplier of private-label credit cards in the United States.
PenFed’s money market certificate can be opened with $1,000 or more. Dividends are posted monthly on the account. Their penalty works a little differently than most on this list. If you withdraw money within 365 days of opening the CD, the penalty will equal the last 365 days of dividends earned; after 365 days, the penalty will be 30% of the gross amount of dividends that would have been earned if the certificate had reached maturity. Speaking of which, you can choose your maturity option when you open your CD and change it anytime. Your options are to transfer the funds to another PenFed account, roll the funds over into a new certificate or have the money paid to you via mailed check or ACH transfer.
Virginia-based Pentagon Federal Credit Union, which is the second largest credit union in America, was established in 1935. Membership is open to anyone just by opening a savings account with them with at least $5.
Opening a CD with Popular Direct gets you the second-highest APY on our list, but at a cost: You’ll need to invest at least $10,000. The good news is, the interest compounds daily (and credits monthly), so on such a high amount, you’ll rack up interest quickly. This CD automatically renews at maturity. The penalty fee for early withdrawal is 270 days’ simple interest.
Popular Direct, which was established in 2016, is based in Miami Lakes, Fla., but they do business as a digital bank only.
Lafayette Federal Credit Union offers 7-month to 5-year certificates, including its 2-year fixed-rate certificate, which requires $500 to open. Interest is compounded and paid quarterly. An early withdrawal from this account will trigger a penalty equal to 270 days’ worth of dividends.
Chartered in 1935, Lafayette is headquartered in Rockville, Md. It has branches in Maryland, Virginia and the District of Columbia, in addition to CO-OP Shared Branches throughout the country. Membership is open to those who live or work in its serviced areas, are employed by approved agencies or companies or are an immediate family member of a current member. You can also join Lafayette if you are an existing member of or become a member of the Home Ownership Financial Literacy Council.
Merrick Bank’s 24-month CD earns a competitive rate, but it requires a hefty minimum investment of $25,000, which must be deposited in a single transaction by ACH transfer only. Interest is compounded daily and credited monthly. Making an early withdrawal from this account will trigger a penalty equal to 180 days’ interest. There’s a 10-day grace period at maturity where you can decide to cash out your CD or change any terms or amount before it automatically renews.
Merrick Bank was founded in 1997. They are headquartered in Draper, Utah.
You can open Abound’s 26-month certificate special with as little as $500. Interest is compounded and paid quarterly. If you withdraw any principal before the CD matures, it will cost you 90 days’ interest, whether you’ve earned it yet or not, in which case the penalty will be taken from the principal.
Membership is largely based on whether you live, work, study or worship in one of eight Kentucky counties as well as members of the military and civil service. But if you choose “Other” from the drop-down menu on the application, the credit union says it will assist you in becoming a member.
Colorado Federal Savings Bank’s 24-month CD requires at least $5,000 to take advantage of this interest rate that earns their certificate a spot in our top 10. Interest is compounded daily and posted monthly. Making a withdrawal from the account before maturity will result in a penalty equal to six months of interest. The CD automatically renews at maturity.
Colorado Federal Savings Bank was founded in 1990 in Greenwood Village, Colo. The bank doesn’t have any branches and operates solely online instead.
First National Bank of America offers a wide range of CD terms, from 12 to 84 months, each with a competitive rate. These CDs require a starting minimum deposit of $1,000. Interest is compounded quarterly, but withdrawing any money before maturity will result in a penalty of 360 days’ interest. Your CD will roll over automatically when the term is up.
First National Bank of America first opened in 1955 and is based in Michigan, with three branches in the state in addition to its headquarters.
Interest is compounded quarterly, and the CD automatically renews when it matures. If you withdraw any of the principal before then, you’ll pay a penalty of 12 months’ interest earned on the amount withdrawn. This is a “jump up” CD, which allows you to lock in a new rate once over the course of the term if they raise the rate on the same CD with the same term.
KS StateBank started as Kansas State Bank of Manhattan in 1969 and took on its current name in 2015. They’re headquartered in Manhattan, Kan., with five branches in the state and one in Phoenix, Ariz. All of their CDs can be opened online from anywhere in the United States.
First Internet Bank offers this competitive rate on a low minimum deposit and also charges no maintenance fees. Interest is compounded and credited monthly. The early withdrawal penalty is equal to 360 days’ interest. Your CD will automatically renew at the end of the term.
Founded in 1999, First Internet Bank is FDIC-insured and operates entirely online.
As we’ve said, the key to maximizing your savings is finding the right accounts for stashing your money with the highest CD rates. Luckily, the best 2-year CD rates above all earn at substantially higher interest rates than the average 2-year CD rate. On average, 2-year CD rates earn just 0.45% APY, as of December 2022.
Let’s say you deposit $5,000 into a CD earning at the national average. At the end of your 24-month CD, you’ll have earned $45 in interest. Boost that APY to 1.00%, and your earned interest grows to $100, a much better return on your cash.
It’s also helpful to check out how often a bank compounds interest. Most often, you’ll see CDs with monthly or daily compounding interest. In basic terms, compounded interest is the interest you earn on already-earned interest. For example, with daily compounding, your balance earns interest today. Then tomorrow, that new, higher balance will earn even more interest, and so on. It’s a simple change that can grow your savings a little bit more efficiently. Depending on the prevailing interest rates, deposit amount and term, it could mean the difference of a couple of dollars or enough to sway you toward a CD with more frequent compounding.