Best 5-Year CD Rates in April 2022 | MagnifyMoney
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Best 5-Year CD Rates in April 2022

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The best 5-year CD rate available nationwide as of today is PenFed Credit Union’s 2.50% APY.

A certificate of deposit (CD) is one of the most conservative ways to grow your money: Funds are deposited for a set time (called a term) at the bank or credit union’s current interest rate. Once the CD has reached maturity, those funds can be withdrawn. If you access funds before that date, you would have to pay a penalty.

The advantage of a CD is that you lock in the interest rate at the time of the deposit, but you give up access to your money to do so. Five-year CDs come with a significant time commitment. MagnifyMoney compiled the top nationally available 5-year CD rates using information from DepositAccounts.com. The listed APY for each 5-year CD below applies to a $25,000 deposit.

Best 5-year CD rates in November 2022

Financial institutionAPYMinimum opening deposit to earn APYTerm duration
#1 PenFed Credit Union2.50%$1,00060 months
KS StateBank2.05%$50060 months
Synchrony Bank2.15%None60 months
Lafayette Federal Credit Union1.91%$50060 months
First National Bank of America2.05%$1,00060 months
Popular Direct2.01%$10,00060 months
First Internet Bank1.71%$1,00060 months
Genisys Credit Union1.70%$50060 months
Teachers Federal Credit Union2.00%$1,00060 months
CFG Bank2.00%$50060 months

1. PenFed Credit Union — 2.50% APY

5 Year Money Market Certificate from PenFed Credit Union APY: 2.50%
Minimum opening deposit to earn APY: $1,000
Duration: 60 months

PenFed’s CDs are actually held as money market accounts, which differ slightly from regular CD deposits in how they’re funded by the financial institution. If you withdraw money in the first year (365 days, to be exact), you’ll incur a penalty of all the interest you’ve earned. If you take cash out anytime after that, you’ll pay 30% of the gross amount of interest you would have earned if you kept your money untouched until your CD matured.

Pentagon Federal Credit Union (often abbreviated to PenFed) is a credit union with membership eligibility that’s extended to everyone. You just need to open a savings account with an initial $5 deposit in order to become a PenFed member.

SEE DETAILS

on PenFed Credit Union’s secure website

NCUA Insured

2. KS StateBank — 2.05% APY

5 Year CD from KS StateBank APY: 2.05%
Minimum opening deposit to earn APY: $500
Duration: 60 months

KS StateBank offers multiple types of CDs: a traditional certificate of deposit, a 27-month “jump up” CD that allows the account holder to boost their rate once during the term and an internet-only jumbo CD if you have $100,000 or more to invest. Interest compounds quarterly, and a penalty of 18 months’ interest is applied when money is withdrawn before the maturity date.

KS StateBank was founded in Manhattan, Kan., in 1969 and began doing business under its current name in 2015. The bank has a few branches in Kansas, provides government financing and has some business lending services.

SEE DETAILS

on KS StateBank’s secure website

Member FDIC

3. Synchrony Bank — 2.15% APY

60 Month CD from Synchrony Bank APY: 2.15%
Minimum opening deposit to earn APY: None
Duration: 60 months

Synchrony Bank’s CDs have a few remarkable features you don’t normally see with other financial institutions. First, they have no minimum balance requirement, so you can open the CD with any amount of money that’s comfortable for you to sock away for a while. Second, they offer a 15-day best rate guarantee: When you fund your new CD within 15 days of opening the account, if the rate is higher on the day you add the money, they’ll give you the best rate. Finally, if you withdraw money before maturity, they’ll charge a penalty of 365 days’ simple interest on the principal amount withdrawn, but there’s no penalty on the interest you’ve earned, which you can withdraw at any time without penalty.

Synchrony Bank is a subsidiary of Fortune 500–company Synchrony, a financial services company that is the largest provider of private-label credit cards. The bank is based in Atlanta but has no physical branches, operating entirely online.

SEE DETAILS

on Synchrony Bank’s secure website

Member FDIC

How CDs work

Term durations

Term durations are a key feature of CDs. By agreeing to the maturity date and interest rate at the time of the deposit, you know exactly how much the deposit will be worth when that date is reached. Until then, your money cannot be withdrawn without incurring penalties.

Common CD terms typically range from six months to five years, although some financial institutions offer terms as short as 30 days. Sometimes a credit union or bank will have terms that don’t fall neatly on an annual date. For example, a top-ranked account may have a term of 59 months, just short of five years.

Early withdrawal penalties

CDs are accounts that trade easy access to your money for security. To withdraw funds before the end of the term (date of maturity), account holders usually pay a penalty that is calculated in terms of interest (either a percentage of it or set number of days’ worth), whether you’ve earned that interest yet or not. Those penalties typically don’t result in a net loss on the CD, unless there’s a minimum penalty, in which case the funds will be taken from the money you initially deposited.

Some specialized CDs allow for penalty-free withdrawals, but the APY paid on those accounts is typically lower than traditional accounts with an early withdrawal penalty. The lower APY may be a better option if you think that you might need the money before the CD matures or a savings account could work as an alternative.

CD ladders

You can choose to structure your deposits in a CD ladder to allow for more frequent access to your funds. A CD ladder is a strategy where you break your initial deposit into smaller deposits that roll over rather than putting it all in one CD.

Instead of depositing $50,000 into one 5-year CD, you could hypothetically deposit $10,000 into a 5-year CD every year over the course of 5 years. One-fifth of your deposit would then be available for withdrawals once a year, starting at the end of the first CD’s term. Otherwise, your entire deposit would mature on a 5-year schedule.

Insurance

Deposit accounts such as CDs are often insured by the FDIC or National Credit Union Administration (NCUA), up to $250,000. Banks are insured by the FDIC, and credit unions are insured by the NCUA. In the event of a bank or credit union failure, the U.S. government will ensure that those deposits are paid out. Before opening a deposit account, make sure you confirm that your financial institution is covered by the FDIC or NCUA.

Alternatives to CDs

If you’re seeking to safely store your money, there are several options in addition to CDs. Other deposit accounts are one alternative: A savings account will generally bear interest and allow for more frequent withdrawals or deposits than a CD. Checking accounts sometimes earn a little bit of interest, too, but they’re designed for frequent transactions.

As of late 2021, 5-year CD rates were at their lowest in years. The federal funds rate is currently set as low as possible, due to economic recovery, and the interest rates paid by deposit accounts have decreased significantly as a result. Since interest rates may rise over the next 5 years — and are unlikely to fall much — savings accounts actually may bear more interest than to a CD over that time frame. Plus savings accounts allow you to withdraw your money without penalty, the key downside to a CD.

The bond market is another alternative. Unlike stocks, which could leave you exposed to market volatility, bonds are relatively safe, especially if they’re backed by the government. (Private companies can also issue bonds.)

In exchange for the initial investment, bondholders are assured that the bond will be worth a certain interest rate, which is paid out over the course of the bond’s duration. Bonds are often packaged and sold together as mutual funds or exchange-traded funds (ETFs), and investors consider them to be a stable counterweight to stocks in an investment portfolio.

Should I open a CD now?

A CD provides a predictable way to grow your money: You’ll know exactly how much interest the account will bear over time by locking in an interest rate, but you’ll forfeit liquidity.

When deciding whether to open a CD, consider when you’ll need access to your money and how the CD’s interest rate compares with other savings vehicles — and whether you think those rates may soon rise. Interest rates tend to correlate with the federal funds rate, a target set by the Federal Open Market Committee (FOMC), depending on broad economic conditions. As of late 2021, that rate was set as low as possible, due to the ongoing economic recovery from the COVID-19 pandemic.

If you lock your money into a CD in an environment of rising rates, you’ll lose out on some of the interest you may have otherwise earned. Ultimately, whether a CD is right for you depends on your financial situation and risk tolerance.

Summary of highest 5-year CD rates

Frequently asked questions

A certificate of deposit (CD) is a savings vehicle that locks in an interest rate and term when the initial deposit is made. Further deposits often cannot be made, and early withdrawals almost always come with a penalty. CDs are commonly offered at banks and credit unions.

A CD works as a timed deposit: You agree to a certain interest rate over a certain duration when opening an account, and you cannot withdraw money before then without incurring a penalty. Once that date has been reached, you’ll have the opportunity to withdraw funds or roll them over into another CD.

As of November 2022, the average interest rate paid on a 60-month CD is 0.29%, according to the FDIC.

If you put $500 into a five-year CD with a 1.00% APY, your deposit will be worth $525.51 after it reaches maturity.