Ever wished your money earned higher dividends than your savings account offers? Two-year CDs are great for this. In finance, a CD is a certificate of deposit, a promise that you will leave your money in the bank for a specific time period. In return, banks reward you with higher dividends.
Most financial institutions offer 2-year CDs, but rates vary. To help you get the most bang for your buck, we’ve scoured top banks to bring you four of the best 24-month CD rates to get you started.
The 4 best 24-month CDs
- First Internet Bank: Best online bank
- Discover: Best for no account fees
- Marcus Goldman Sachs: Best 10-day rate guarantee
- TIAA Bank – Yield Promise: Best IRA compatibility
Top 2-year CD Rates: nationally available banks
|Bank||Yield||Early Withdrawal Penalty||Minimum Deposit|
|First Internet Bank||1.41%||360 days of interest||$1,000|
|Discover||1.75%||6 months of interest||$2,500|
|Marcus Goldman Sachs||1.85%||270 days of interest||$500|
|TIAA Bank – Yield Promise||1.75%||182 days of interest||$5,000|
What is a certificate of deposit?
A certificate of deposit is a product offered by most financial institutions. In essence, it is an agreement between you and your bank. You agree to leave a specific lump-sum deposit for a predetermined amount of time in the bank. In exchange, the bank offers a premium rate for your deposit, which matures at the end of its term.
There are advantages and disadvantages to investing in CDs. One of the biggest advantages is the premium rates offered. However, rates can change and they differ by term and institution. So, always ask or research the current rates before you invest.
A disadvantage is an early withdrawal. You can withdraw your money early, but doing so usually incurs a penalty — often a percentage or even all of the interest you earned. Overall, CDs are a great way to earn more on your money and increase your wealth. Here’s how CDs compare to other savings accounts.
CD vs traditional savings account
A traditional savings account is designed for easy access. They are also a great way to save for an emergency, a wedding, or something else. You’ll earn less in interest, but have the benefit of accessibility without penalty should you need your funds.
CDs are designed for a longer-term savings plan. Think of them as a kind of committed relationship. If you want the benefits — in this case, it’s premium interest rates — then you need to commit your lump-sum deposit for a specific amount of time. That period could be a few months or a few years.
CD vs money market account
Money market accounts are different from 24-month CDs. Like savings accounts, money market accounts give you easy access to your money. Likewise, you can start a money market account for as little as a few months or keep it for many years. If you choose to empty your MMA, there’s no penalty. Terms vary, though, and are subject to change. While these accounts generally pay higher interest rates than savings accounts, they are usually lower than CDs. If you’re looking for a “set it and forget it” account that maximizes interest, then a 24-month CD is a better choice.
CD vs savings bonds
Savings bonds are another great investment, but some bonds carry more risk based on market volatility. You can buy bonds for 1- through 30-year terms. Like CDs, early withdrawal comes with a penalty. The type and term of your bond determine the rates offered and while bond interest is non-taxable, you can expect to pay tax on capital. Knowing when to buy and when to sell are the key. So, work with a professional.
Unlike bonds, CDs are covered by the FDIC and NCUA institutions for up to $250,000. With that said, here are the best CDs for 2019.
The best CDs
First Internet Bank: Best for rates from an online bank
Signing up for 2-year CDs with First Internet Bank is easy, but there are a few requirements. For one thing, you must be a legal U.S. resident. Also, you must be at least 18 years old. Moreover, you need to have a Social Security number as well as a government ID.
Since First Internet Bank is completely online, there are no monthly or annual statements, but you can access your account information anytime via online or mobile banking. As for its rates, the bank updates its rates daily at 10 a.m. EST. So, to get the best 24-month CD rates, time your research and purchases accordingly. The bank offers automatic CD renewal and charges no maintenance fees to manage your account.
Discover Bank: Best for no account fees
According to the Vault, Discover Financial Services is the fourth largest credit card issuer. Discover also supports a number of community initiatives like Big Brothers Big Sisters, Junior Achievement, financial literacy programs and more. It began in 1986 and has grown its offerings to also include loans, CDs, money market accounts and more.
Discover offers a wide range of CDs and terms for you to choose from. Like other institutions, there are a few things to consider before you buy. Discover requires a minimum $2,500 deposit to open a CD account, but there are no account maintenance fees to mention. Discover calculates CD interest day and it bases simple interest on a 30-day month. Like other CDs, there is a penalty for early withdrawal and Discover has its set to six months of simple interest. If you’re concerned about keeping track of when you can make changes at maturity, it covers that as well with 30 days notice and a 9-day grace period before the CD goes to auto-renewal.
Marcus Goldman Sachs – Best for a 10-day rate guarantee
If you’re looking for a financial institution steeped in history, you’ll find it at Marcus Goldman Sachs. It was started in 1869 by founder, Marcus Goldman and has thrived in its goal of sharing its financial expertise and grown to become the multinational investment bank that it is today. Goldman Sachs offers many investing products from loans to high-yield savings and CDs and more.
Marcus Goldman Sachs has an interesting setup that sets them apart from many of their competitors. Not only can you open a CD with a minimum deposit of $500, but the bank gives you 30 days to fully fund your CD account. They also have guaranteed rates, which is common among other top banks but isn’t always the case. So, it’s nice to have that assurance when looking for the best 24-month CD rates and which institutions to consider.
One of the interesting things about this pick for best 24-month CD rates is that the institution will give you the highest published interest rate and APY during the first 10 days from the time you open your account. This only applies to Marcus branded CDs with at least $500 deposited during that period.
TIIA Bank – Yield Promise – Best for rate promise with IRA compatibility
TIIA Bank has a 5-star BauerFinancial rating, which speaks for itself since BauerFinancial ratings are unbiased, independent ratings. Considering TIIA also offers no monthly account maintenance fees and industry-competitive yields, TIIA CD offerings might be worth a try. Here’s the breakdown.
TIIA has a minimum deposit requirement of $5,000 to get started, which is larger than many other banks and you also have to be an existing TIIA Bank client who is also eligible for online check deposit enrollment. However, you can access your account anytime using its Apple mobile app. It also has an interesting take on the best 2-year CD rates by backing its annual percentage yield with a promise to always provide you with one of the highest rates from among the top 5% of its competitors. Finally, TIIA also offers you CDs that are IRA eligible, which can help boost your retirement savings plan.
The final word
If you’re looking for a great way to begin investing in your future, the best 24-month CDs are a great place to start. Choosing the best CD, though, is like comparison shopping. You need to see where you can get the best bang for your buck. Solid financial research leads to better financial decisions. Knowledge is a powerful tool, indeed.