Getting a 5-Year CD
60-month CDs offer investors a great opportunity to lock in interest rates and guarantee a profit, regardless of what happens in the market. Compared to many shorter-term CDs, 60-month CDs often offer higher interest rates, but require you to leave your invested money untouched for a longer period of time in return.
For many people, 60-month CDs are a great way to save for a specific need, like an emergency account, a future wedding, a house or even retirement. Wealth-building, though, requires having a solid plan in place for growing your hard-earned cash. The best 60-month CDs can help you reach your financial goals with a high APY and other fringe benefits. To help you get started, here are five of the best 60-month CD rates from top banks.
6 best 5-year CD rates of 2020
- Ally Bank — 1.15% APY; $0 minimum deposit
- Discover — 1.15% APY; $0 minimum deposit
- Navy Federal Credit Union — 1.25% APY; $1,000 minimum deposit
- CIT Bank — 1.05% APY; $1,000 minimum deposit
- Synchrony — 1.20% APY; $2,000 minimum deposit
- Capital One — 1.00% APY; $0 minimum deposit
Ally Bank – Highest customer satisfaction
Founded in 1919 as a division of the car manufacturer General Motors, Ally now offers one of the best online experiences for people looking for banking, investing, lending and certificates of deposit (CDs). Ally’s CDs are available from 3-month to 60-month CD terms, and the CDs with the longest terms have interest rates that grow over the life of the CD.
With the 60-month CD from Ally, the APY rate is an impressive 1.15%. Rates this high are often reserved for investors with large sums of money, but with Ally, you get access to these great rates regardless of the amount you choose to invest in your CD.
Discover — Best IRA CD
Discover’s 5-year CD rates are currently fixed at 1.15% APY and have no minimum deposit. This is the same whether you choose a standard, high-yield CD or an IRA CD.
Discover offers two different IRA CDs: Roth and traditional. A Roth CD is funded with after-tax dollars. So, contributions are not tax-deductible and withdrawal doesn’t incur a tax penalty from the IRS. A traditional IRA CD is funded with pre-tax dollars, meaning that you pay taxes on it later and cannot access funds until you are 59½ without incurring an IRS tax penalty. Early withdrawal for any CD — high-yield traditional, Roth, or traditional IRA — does incur a penalty from Discover bank, which equals six months of interest. So, that’s something to keep in mind.
On all CD options, interest compounds daily and you’ll have 9 days’ grace before the CD auto-renews and there are no account maintenance fees. Online banking and mobile app are available. Finally, if you need to reach out, Discover’s customer service is available 24/7.
Navy Federal Credit Union – Best for military members and veterans
This institution offers an APY of 1.25% for its 5-year CDs. The minimum deposit is $1,000. Dividends are compounded daily and credited monthly. Online banking and mobile app are available. One unique feature is that the institution allows some CD funds to be used as loan collateral, but this doesn’t apply to all CDs.
Beyond the strict membership restrictions that only allow military members and affiliates bank here, early withdrawal is equal to 365 days of interest. Should your CD principal fall below the minimum deposit balance, the CD will be closed with a penalty. If you opt to use your CD as loan collateral, you are limited to one loan per CD.
CIT Bank – Best online CD
Founded in 2000 and headquartered out of Pasadena, California, CIT Bank has grown into a major player thanks to its 60-month CDs. Why? One word — rates. CIT Bank currently offers an APY rate of 1.05% on a 5 year CD and its 1-year, 13-month, 18-month CDs, with a rate of .75% and 1.00% on the 2-year and 3-year CD. The minimum investment is slightly higher than the no-minimum options, but it’s still affordable at $1,000.
The early withdrawal penalty of up to 12 months on 5-year CDs is average when compared to several other CD options from other banks. All accounts are FDIC insured, with daily compounding interest and auto-renewal.
Synchrony — Best customer perks
While the bank does have one of the higher minimum opening deposit levels at $2,000, the corresponding APY rates make it all worth it. The bank offers CD terms from 3 months to 5 years, with APY rates that slowly grow as you get longer in term length. The 60-month CD comes with a 1.20% APY currently, which is higher than many of the other 5-year options available.
There is a penalty on early withdrawals of your principal of up to 365 days, but there are no penalties on withdrawing your interest earnings at any time from your CD. You can also set your interest up to transfer to a Synchrony savings account or money market account to maximize your earnings.
Capital One — Best mobile app
Capital One CDs are another one of the options that fall into the no fee, no minimum balance, and no-hassle category. 5-year CDs are available with an APY rate of 1.00% regardless of the amount you choose to invest. You can manage your investments directly from the Capital One mobile app, which repeatedly scores high marks among users on both iOS and Android.
The early withdrawal penalty on Capital One CDs is only up to 6 months of interest for CD terms over 12 months. Some banks charge 12 months or more in penalty fees, so the maximum 6-month penalty is a nice change.
Compare the 6 best 5-year CDs of 2020
|Provider||APY||Early Withdrawal Penalty||Minimum Deposit|
|Navy Federal Credit Union||1.25%||365 days||$1,000|
|CIT Bank||1.05%||12 months||$1,000|
|Capital One||1.00%||6 months||$0|
What is a 5-year CD?
A 60-month certificate of deposit is a savings deposit account. It doesn’t give you easy access to your funds like conventional savings accounts. Instead, it is a time deposit with a term agreement between you and the bank. You agree to deposit a predetermined amount of money into the account for a term of five years, untouched. The bank agrees to provide a higher yield of interest during that time. Each bank and CD have different perks and disadvantages. So, let’s dive in and explore what our top five picks have to offer. Compare CD rates from all different terms to see how 5-year CDs stack up.
Who is a 5-year CD good for?
When it comes to guaranteed return investments, the three most popular options are savings accounts, money market accounts and certificates of deposit (CDs). If liquidity and access to your money are important over the next five years, a savings account or money market will likely be your best option. If you have funds you won’t need to access over the next five years, a 60-month CD may offer the ability to earn a higher rate of return. The exact rate you’ll earn can be calculated using a CD calculator.
Whether a 5-year CD term is right for you will ultimately depend on your goals, but if you can part with your money for 60 months and want to lock in a guaranteed return regardless of market fluctuations and volatility, a 5-year CD could be good for you. If you’re looking for the highest returns and are okay with accepting some risk, you’d be better served looking at other investment products like stocks and bonds.