Table Of Content
A two-year CD has a two-year term, meaning your money is committed to it for that long. You will be charged an early withdrawal penalty, which is often several months' worth of interest, if you do need some or all of your money before this maturity date.
When your CD matures after two years, you can choose to take all or a portion of your money or renew for another two years.
Compare 2-Year CD Rates
Comparing interest rates is an important step when choosing a 2-year CD. The interest rate is the most important factor in determining the returns you will receive from a CD, and it can vary significantly between different banks and credit unions.
Financial Institution | 2 Year CD APY | Minimum Deposit |
|---|---|---|
4.00% | $0 | |
4.53% – 4.58% | $5,000 | |
3.75% | $0 | |
4.00% (25 months) | $500 | |
4.00% | $0 | |
4.00% | $2,500 | |
4.00% | $1,000 | |
4.05% | $2,500 | |
4.40% | $1,000
| |
4.50% | $2,500 | |
4.20% – 4.25% | $1,000 | |
4.00% (25 months) | $1,000 | |
4.00% | $500 | |
4.10% | $25,000 | |
1.00% – 3.51% | $250 | |
4.10% | $1,500 | |
4.75% | $1,000 | |
1.20% | $250 | |
3.00% | $50 | |
4.50% | $1,000 |
How Much You Can Earn With 2-Year CD?
Here's your expected earnings (before tax) if you lock your money for 24 months. This is just an estimate, and the actual amount of interest you earn may be different based on the terms and conditions of the CD.
Financial Institution | 2 Year CD APY | Interest Earned |
|---|---|---|
Synchrony Bank
| 4.00% | $8,852
|
Connexus Credit Union | 4.53% – 4.58% | $8,231 – $8,766
|
American Express Bank
| 3.75% | $8,761
|
Capital One Bank
| 4.00% | $8,852
|
Discover Bank
| 4.00% | $8,852
|
PenFed Credit Union | 4.00% | $9,174
|
Fidelity | 4.00% | $9,931
|
Vanguard | 4.50% | $10,583
|
Sallie Mae | 4.05% | $9,498
|
TIAA Bank
| 4.40% | $8,852
|
LendingClub | 4.50% | $8,423
|
Navy Federal | 4.20% – 4.25% | $8,637 – $8,744
|
Marcus | 4.00% | $8,959
|
Merrick Bank | 4.10% | $9,390
|
TD Bank | 1.00% – 3.51% | $8,744
|
Bread Financial | 4.10% | $9,282
|
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What Are the Main Drawbacks of a 2-Year CD?
While a 2-year CD can be a good option for some investors, there are a few potential drawbacks to consider:
Limited liquidity: One of the main drawbacks of a 2-year CD is that your funds are locked in for the full term of the CD. If you need to access your money before the end of the 2-year term, you may incur a penalty, and you may also miss out on potential returns from other investments.
Interest rate risk: If interest rates rise after you've invested in a 2-year CD, you may miss out on potential returns from other investment options. Additionally, if you renew your CD at the end of the 2-year term, you may be locked into a lower interest rate.
Inflation risk: The returns from a 2-year CD may not keep pace with inflation over the long term, which can erode the purchasing power of your investment.
While a 2-year CD can be a good option for some investors, it's important to consider your individual financial goals and risk tolerance before investing.
Financial Institution | 2 Year CD Early Withdrawal Penalty |
|---|---|
Synchrony Bank
| 180 days of interest
|
Connexus Credit Union | 180 days of interest
|
American Express Bank
| 270 days of interest
|
Capital One Bank
| 6 months of interest
|
Discover Bank
| 6 months of interest
|
PenFed Credit Union | 365 days / 30% of dividends
|
Sallie Mae | 180 days of interest
|
TIAA Bank
| 25% of total interest |
Live Oak Bank | 180 days of interest
|
LendingClub | All interest |
Navy Federal | 180 days of dividends |
Marcus | 180 days of interest
|
Merrick Bank | 180 days of interest
|
TD Bank | 9 months of interest
|
Bread Financial | 180 days simple interest
|
When You May Want to Skip a Two Year CD
There are several reasons why you may want to skip a 2-year CD:
Higher returns are available elsewhere: If you're looking for higher returns on your investment, you may be better off investing in other options such as stocks, bonds, or real estate. These types of investments may offer higher returns, but they also come with higher risks.
You need access to your money: If you need to access your funds in the next 2 years, a 2-year CD may not be the best choice. With a CD, you're committed to leaving your funds invested for the full term, and early withdrawals may incur penalties.
You're not comfortable with a fixed interest rate: If you're concerned that interest rates may rise over the next 2 years, you may want to skip a 2-year CD. With a CD, you're locked into a fixed interest rate for the full term, and you won't be able to take advantage of higher returns if interest rates increase.
You're looking for more flexibility: If you're looking for more flexibility with your investments, a 2-year CD may not be the best choice. With a CD, you're committed to leaving your funds invested for the full term, and you won't be able to make changes to your investment until the CD matures.
2-Year CD vs. Savings Account: Things To Consider
A 2-year CD and a savings account are both savings vehicles, but they have some key differences:
- Interest Rates: A 2-year CD typically pays a higher interest rate than a savings account. This is because the bank can count on having your funds invested for a longer period of time, and it can offer a higher rate to compensate for the lack of liquidity.
- Accessibility: A savings account is a highly liquid investment, and you can access your funds at any time without penalty. With a 2-year CD, your funds are locked in for the full term of the CD, and early withdrawals may incur penalties.
- Flexibility: A savings account is a flexible investment, as you can make deposits or withdrawals at any time. With a 2-year CD, your funds are locked in for the full term, and you won't be able to make changes to your investment until the CD matures.
In conclusion, a 2-year CD and a savings account both have their pros and cons, and the best choice for you will depend on your individual financial goals and risk tolerance.
If you're looking for a low-risk investment with easy accessibility, a savings account may be the better choice. If you're looking for a higher return and are willing to lock in your funds for a set period of time, a 2-year CD may be a good option.
Financial Institution | 2 Year CD APY | Savings Account APY |
|---|---|---|
Synchrony Bank
| 4.00% | 4.65% |
Connexus Credit Union | 4.53% – 4.58% | 3.41% – 5.15% |
American Express Bank
| 3.75% | 4.25% |
Capital One Bank
| 4.00% | 4.25% |
Discover Bank
| 4.00% | 4.25% |
PenFed Credit Union | 4.00% | 3.00% |
Sallie Mae | 4.05% | 4.50% |
TIAA Bank
| 4.40% | 5.05% |
Live Oak Bank | 2.00% | 4.30% |
LendingClub | 4.50% | 5.00% |
Navy Federal | 4.20% – 4.25% | 0.25% |
Marcus | 4.00% | 4.40% |
Merrick Bank | 4.10% | N/A |
TD Bank | 1.00% – 3.51% | 0.01% – 4.00% |
Bread Financial | 4.10% | 5.15% |
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How We Picked The Best 2-Year CD Rates: Methodology
The Smart Investor team has extensively reviewed banks and credit unions to identify the best 2-year CD (Certificate of Deposit) rates available. We focused on four main categories to rate them:
Interest Rates and Terms (50%): We looked at the interest rates offered on 2-year CDs and any associated terms and conditions. Banks offering higher interest rates and favorable terms, like low minimum deposit requirements and reasonable penalties for early withdrawal, received higher ratings in this category.
Account Features (20%): This category assessed additional features and benefits offered by each 2-year CD, such as automatic renewal options, choices for interest payouts (monthly, quarterly, or at maturity), and eligibility for promotional rates. CDs with more features or flexibility earned higher scores.
Customer Experience (20%): We evaluated the ease of opening a 2-year CD, communication with customer service representatives, usability of online banking platforms (tested by our team), and availability of support channels. Banks with smooth processes, responsive customer service, and user-friendly online interfaces received higher ratings.
Financial Stability and Reputation (10%): Our team analyzed each bank's financial stability and reputation, considering factors such as customer satisfaction ratings, JD Power scores, TrustPilot reviews, and the bank's Better Business Bureau (BBB) profile. Banks with strong financial standings and positive reputations received higher ratings.
We assigned weights to various features and qualities within each category to ensure a comprehensive evaluation of each 2-year CD.
