By Christina Lavingia, Editor
This is the third installment of GOBankingRates’ third annual “Best Banks” series, linking consumers with the best banks and bank accounts of 2015. Come back each week of January and February for our rankings and reviews of the year’s best institutions and products, including brick-and-mortar banks, military financial institutions, online banks, checking accounts and savings accounts.
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In all honesty, the allure of CD accounts has all but faded in our current interest rate market. With the Federal Reserve keeping rates low, the promise of higher yields in exchange for depositing funds isn’t being upheld at most institutions.
Certificates of deposit come with less liquidity than standard checking or savings accounts — you’re usually charged a penalty, a loss of accrued interest, for not making good on your promise to keep your funds deposited for the predetermined duration. However, higher interest rates are supposed to follow, like the rates north of 17% experienced in the 1980s. With yields much lower in today’s environment, those who seek the safety of a CD to grow their funds must be extra critical of the accounts they open.
CD accounts can still be useful and beneficial financial tools, though. With higher rates than traditional checking and savings accounts, on average, these accounts are great when trying to grow a set amount of funds, on the side, for a future expense or goal.
GOBankingRates found in October that the average CD interest rate, taking into account all term lengths, was just 0.51% APY. On the other hand, the average APY of GOBankingRates’ 10 Best CD Accounts of 2015 was 1.03% APY, more than twice that average. What’s more, many of the top rates were attached to shorter terms.
To help depositors in the new year who have resolutions to save money, GOBankingRates looked at the best 10 CD accounts in the U.S. in the third installment of its 2015 “Best Banks” series. The ranking methodology was based on two criteria that can vary widely with this product: minimum deposit and interest rate.
>>Video: 5 Reasons You Need to Switch Banks This Year
10 Best CD Accounts of 2015
All listed accounts are online CD products, meaning these products are available anywhere. GOBankingRates evaluated CD accounts based on 12-month account terms.
1. Nationwide Bank
Why: With a relatively low minimum deposit to open of $500 and few requirements for eligibility, Nationwide Bank‘s CD account rewards customers with an APY of at least 1.14% on deposits up to $99,999.99 and 1.19% APY on accounts over $100,000 for a 12-month term.
Review: This account topped the list thanks to its low minimum balance to open and high account yields. With limited requirements to open — the account holder must be 18 years or older and have a Social Security number — depositors can take advantage of higher-than-average CD returns on account balances of $0 to over $100,000. Unlike other banks that sometimes penalize depositors who hold higher balances, Nationwide Bank rewards longer terms and higher balances with greater interest rates. This account offers yields that are more than double average CD rates at a relatively short term.
How to open: Those interested in opening a CD account with Nationwide Bank can do so through its online application for an individual or joint account. The initial $500 deposit can be made via electronic transfer from another personal deposit account or through a mailed check.
2. GE Capital Bank
Why: With a low $500 minimum deposit equal to Nationwide Bank’s requirement and an only slightly lower interest rate of 1.10% APY, the GE Capital Bank CD account earned the second spot among the best CD products of 2015.
Review: Much like Nationwide Bank’s CD account, GE Capital Bank rewards its customers for depositing higher balances for longer terms. From six months to six years, every GE Capital Bank CD rate is higher than the national average, ranging from 0.70% APY for a six-month term to 2.30% APY for a six-year deposit. The maximum account balance is high, at $1,000,000; early withdrawal penalties do apply and the account comes with a 10-day rate guarantee upon opening.
How to open: Account holders must be 18 years or older and provide a Social Security number, email address (when applying online), date of birth and valid U.S. street address to open an account. Those opening an account electronically must also have an existing bank account and routing number to transfer money; funds can be moved online, through wire transfers or by mailing a check.
3. Ally Bank
Why: Though it sports a lower APY than Nationwide Bank and GE Capital Bank, Ally Bank‘s CD account ranks among the top for having no minimum deposit requirement. Its 12-month CD earns a still-impressive 1.05% APY.
Review: As it touts on its website, the interest rate on Ally’s 12-month CD trumps many of the most popular banks, including Bank of America, Wells Fargo, Chase and HSBC Bank. Depositors still enjoy yields nearly as high as those from Nationwide Bank or GE Capital Bank’s CD options; however, this account is particularly good for those who have little to contribute to a CD or plan to make deposits over time.
Ally Bank’s CD is one of only two on this list (and only five of the total CD accounts surveyed) that has no minimum deposit requirement. Withdrawals, however, are subject to a penalty that starts at 60 days’ interest and varies based on the account’s duration. Depositors do enjoy a 10-day grace period upon an Ally Bank CD maturing, during which they may remove their funds with no penalty. After the 10 days, the CD will automatically renew. Ally Bank CDs come with no maintenance fees or fees to open.
How to open: Prospective account holders can open an Ally Bank CD by visiting the bank’s website, selecting their desired product, providing personal information, making an opening deposit and enrolling in online banking.
4. Bank5 Connect
Why: Given a $500 minimum account balance and interest rate of 1.00% APY on 12-month terms, Bank5 Connect‘s CD account locked in the fourth spot on this list. With six-month increments, those who cannot commit to a two-year CD or longer have multiple options for short-term products.
Review: Account holders must deposit at least $500 and maintain that minimum daily in order to qualify for interest. Bank5 Connect offers six-, 12- and 18-month CDs, as well as two- and three-year options. As is standard for CD accounts, depositors who withdraw funds prematurely will face a penalty of three to six months of interest, based on the CD term. For those with large deposits, Bank5 Connect offers the added benefit of Depositors Insurance Fund protection, meaning all funds not insured by the FDIC (in excess of $250,000) are DIF-insured, protecting 100 percent of your invested money.
How to open: Simply visit Bank5 Connect’s website and have your Social Security number, valid ID and previous home address (if you’ve resided in your current location for under two years) ready, as well as have a credit card, debit card or bank account routing number on hand to fund your account. The online application takes just 10 minutes. Account holders must be 18 years of age or older and a U.S. citizen or U.S. resident alien to be eligible.
5. CIT Bank
Why: CIT Bank‘s Term CD offers a higher interest rate, comparable to GE Capital Bank’s, at 1.10% APY, but requires a higher minimum deposit of $1,000.
Review: CIT Bank Term CDs come in a variety of terms, from six months to five years. Although the minimum deposit is high, this can be advantageous for depositors, as interest compounds daily. In addition, customers enjoy no account-opening fees or maintenance charges. All of CIT Bank’s CD accounts, save for its six-month option, are also available as IRA CDs. With higher minimum balance requirements and higher rates, CIT Bank’s CDs are designed to help depositors increase their savings by a noticeable amount, making the lack of liquidity worth it. In addition to the Term CDs, CIT Bank offers other options, like RampUp CDs, which allow you to boost the rate, and Jumbo CDs.
How to open: As is standard for these online CD accounts, interested depositors can obtain one by visiting CIT Bank’s website and providing the standard documents: a U.S. address, Social Security number, driver’s license or ID, and a check or bank account number to transfer the initial deposit. Prospective customers must be 18 years of age or older and a U.S. citizen or resident alien to open an account.
6. TIAA Direct
Why: With an equally high minimum account balance of $1,000 compared to CIT Bank, TIAA Direct‘s CD account offers slightly lower yields of 1.01% APY on 12-month CDs, just shy of double the average U.S. CD rate.
Review: Depositors enjoy choice when they open a CD account with TIAA Direct. With 11 CD products ranging from six months to five years to choose from, depositors can select a term that better meets their needs and desired interest rates. Interestingly, interest rates do not directly correlate with term length, as the 12-month CD carries a higher APY than others offered on longer terms. The interest rate remains fixed for the duration of the CD and automatically renews. Interest is compounded daily and credited monthly. Withdrawals are subject to a penalty.
How to open: To obtain a CD with TIAA Direct, depositors can visit its website and complete an application that requires a U.S. mailing address, Social Security number and driver’s license or other government-issued ID. Applicants must also be 18 years or older and a U.S. citizen or legal resident to open an account. The total process takes about 10 minutes.
7. First Internet Bank
Why: With a higher minimum account balance of $1,000, First Internet Bank‘s CD account comes with an APY just shy of TIAA Direct’s of 1.00% on 12-month terms.
Review: First Internet Bank’s 1.00% APY is a decent yield that’s significantly higher than the average CD rate. With eight CD terms to choose from, ranging from 0.45% APY for a three-month term to 2.10% APY on a five-year CD, those looking to earn higher yields than a savings or checking account can offer are smart to open a CD account with First Internet Bank. However, those who might have to withdraw their funds early should be warned: Early withdrawal penalties are high at First Internet Bank, and could wipe out all interest earnings on three- and six-month CD accounts.
How to open: Interested depositors can easily open an account simply by visiting First Internet Bank’s rates page. Upon selecting the CD term, prospective account holders will be guided to an online application. The status of the application can be conveniently monitored online and customers can save their applications to complete at a later date. Applicants will be required to provide a name, address, date of birth and other identifying information when opening their account.
8. Barclays Bank
Why: Another account with the perk of no minimum balance requirement, Barclays Bank Delaware‘s Online CD account comes with an APY of 0.80% on its 12-month term.
Review: Although it carries a lower interest rate, the first below 1.00% APY on the list, it’s rare to find a CD account with no minimum balance requirement — and still boast a significantly higher-than-average CD rate. Barclays doesn’t skip on choice, either, offering nine different CD terms for customers to choose from in a range of three months to five years in length. Because there is no minimum deposit requirement, customers have more freedom to decide how much money they’re willing to set aside — and might be less likely to break their CDs and incur penalties as they have the ability to place as little as they wish into their accounts. The product doesn’t force extra investment from you in the form of maintenance fees, either.
How to open: Barclays Bank Delaware offers an easy-to-use online interface for new customers to submit applications. Simply visit its website to open an account. Applicants will be required to supply their social security numbers and routing info for existing accounts to fund the CD.
9. Synchrony Bank
Why: With a higher minimum account balance — the highest on this list — Synchrony Bank‘s CD accounts require account holders to invest $2,000 into their CDs in exchange for a competitive return (1.10% at the time data for these rankings was gathered, though the rate has since been bumped to 1.15% APY).
Review: The high APY, matched by an equally high minimum balance, put Synchrony at No. 9 on this list. CD accounts at Synchrony range from three months to five years in length and can have balances in excess of $100,000. Fees will be imposed if early withdrawals are made, so customers should be strategic about withdrawing their funds.
How to open: Synchrony Bank’s user-friendly interface makes obtaining an account simple. Just visit the bank’s website to get started.
10. Presidential Online Bank
Why: Presidential Online Bank‘s CD account requires a minimum deposit of $1,000 to open and comes with an interest rate of 0.95% APY on terms of 12 months.
Review: All eight of Presidential Online Bank’s CD accounts require $1,000 to open, and longer-termed CDs are given higher interest rates. For those who need short-term savings solutions, Presidential Online Bank is a great option, as it offers 30-day, 60-day, 90-day and 182-day CD accounts. With these products to choose from, it shouldn’t be difficult to avoid a withdrawal penalty, which are steep at Presidential Online Bank — half the term’s interest on most accounts but up to the full term’s interest on the shortest CD lengths. A weeklong grace period upon opening the account is offered on CDs terms over 30 months, allowing depositors to withdraw from the account penalty-free. The online bank’s CDs with terms of 12 months or more also come in IRA form.
How to open: CD accounts from Presidential Online Bank can be obtained through the bank’s website. Simply visit, review the account information and apply all in one place. Applicants must supply their addresses, social security numbers and other information to open an account.
Methodology:
To compile its list of the top 100 banks by asset size, GOBankingRates surveyed the FDIC’s list of banks sorted by assets, excluding non-active institutions, those with less than $1 billion in assets, investment banks and any institutions that require customers to use investment services to access commercial bank accounts. This list of 100 banks included 10 online banks as well as conventional brick-and-mortar institutions. In addition, the study considered an additional 20 online-only banks, according to the GOBankingRates database (no asset threshold was consulted for online banks). These lists were compiled Oct. 23, 2014 and verified against the individual institutions’ websites.
GOBankingRates examined certificate of deposit (CD) accounts belonging to 120 banks: the top 90 U.S. banks by asset size, as well as the top 30 online banks (see above for selection details), and evaluated each institution’s one-year CD product. CD accounts were evaluated according to 1) minimum opening deposit and 2) annual percentage yield (APY) in order to quantitatively rank each institution’s product. Each criterion was individually scored from most to least favorable; APY was weighted as the most important factor and accounts were ranked by overall score. Data was compiled via the GOBankingRates interest rate database and verified against the individual institutions’ websites.
Annual percentage yield was based on minimum deposit required to open an account. Note that some interest rates might be short-term or promotional offers only and it is possible additional terms and conditions must be met in order to obtain the interest rates listed. Rates and availability might vary by region. All CD account data was last verified as of December 29, 2014; terms and conditions are subject to change at any time at the discretion of individual financial institutions. Please verify terms and conditions before opening an account.
GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack, Inc., an online marketing company serving top-tier banks, credit unions and other financial services organizations. Some banks mentioned in this ranking are clients of ConsumerTrack, Inc., which serves more than 100 national, local and online financial institutions. Rankings are 100 percent objective and no institution, client or otherwise, paid for inclusion or specific placement.
