Certificates of deposit, also known as CDs, are bank accounts with very generous interest rates in exchange for locking your money in place for a predetermined period of time. CDs are a popular choice among everyday consumers because they’re essentially risk-free, as long as the bank is FDIC-insured. CDs are also extremely flexible, since term lengths can vary from a few months to several years. On the shorter end of this spectrum are 6-month CDs: certificates of deposit that can be withdrawn after six months. Since 6-month CDs have such a short term, their interest rates are among the lowest for certificates of deposits.
CDs are a great place to invest for short-term financial obligations, like a wedding or family vacation. They can also be useful financial tools for a CD ladder.
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The Best 6-Month CDs of October 2019
What is a 6-month CD?
A 6-month CD is a certificate of deposit that “matures” in six months. After choosing an amount to invest, you won’t have access to those funds for six months, unless you pay a steep penalty fee for a withdrawal. After the term has ended, you’ll get your original investment back, plus the interest it accrued. In exchange for keeping your cash locked in the account, CDs often offer higher interest rates than any other deposit accounts (such as checking, savings, and money market accounts).
6-month CDs vs. savings accounts
A high-yield savings account is still the best place to stash the majority of your savings, because it allows you to withdraw and transfer funds up to six times every month, while still earning respectable interest. Meanwhile, you can’t withdraw a single cent from a certificate of deposit until the term expires (unless you want to pay a penalty fee). If you’d like to invest some of your savings in an account with a small-but-guaranteed rate of return, a CD might be a perfect solution. But only set aside cash you’re sure you won’t need for the duration of the CD’s term, and park the rest of your savings in a high-yield savings account.
6-month CDs vs. money market accounts
Like a savings account, money market accounts offer more flexibility than a 6-month CD. You’ll be able to withdraw from a money market account up to six times per month without penalty fees. Some money market accounts require a relatively high minimum balance, however, so a 6-month CD could be a better choice if you have limited funds to work with. While money market accounts often yield higher interest rates than savings accounts at a traditional brick-and-mortar bank, they still won’t be quite as high as a certificate of deposit.
6-month CDs vs. 1-year and 3-year CDs
Certificates of deposit are available in a wide variety of lengths, including six months, one year, and three years. The longer the term, the higher the interest rate, so a 3-year CD will generate more interest than a 6-month CD. Just keep in mind that you won’t have access to your funds for a much longer period of time.
The best 6-month CD providers of 2019
Ally – 1.00%
Ally offers 6-month CDs with a Ten Day Best Rate Guarantee, meaning if interest rates go up within the first 10 days after opening, the bank will honor the higher rate.
Barclay’s – 0.65%
If you don’t have a lot of money to invest, Barclay’s is a great choice. There is no minimum balance to open an account as long as you’re earning at least $0.01 per day in interest.
Capital One – 0.60%
Capital One’s online-only CDs are federally insured just like normal certificates of deposit, but are convenient and can be set up from anywhere. Interest payments can be received monthly or in a lump sum at the end of the term. Capital One does not have a minimum balance requirement.
Charles Schwab – 1.86%
Charles Schwab offers short-term CDs with high interest rates compared to competing banks, and its 6-month CD is no exception. The bank also offers convenient online tools. Schwab CD OneSource® lets you reinvest and purchase CDs through other issuers, while being able to track all your investments in one place.
Discover – 0.65%
In addition to its 6-month CD, Discover offers certificates of deposit with terms all the way up to 10 years. Although the interest rate on its 6-month CD isn’t too impressive, the rate jumps to 2.40% for a 12-month CD.
Marcus – 0.60%
Marcus CD accounts can be opened online in minutes, as long as you can meet the minimum $500 balance. The bank also honors a 10-day rate guarantee, meaning you’ll get a higher interest rate if it goes up in the first 10 days after your account is opened.
Synchrony – 1.00%
Synchrony offers its 6-month CD account holders a competitive interest rate. However, you’ll have to invest at least $2,000 to open a certificate of deposit. Like most other banks, Synchrony charges penalties for early withdrawal of funds, but you can withdraw from your interest balance at any time.
TIAA Bank – 1.90%
This 6-month CD has one of the highest interest rates, but also the highest minimum balance; you must invest at least $5,000 to open an account. However, TIAA’s unique “yield pledge” promises that its interest rates will always be within the top 5% of competitors.