Table Of Content
CDs are a fixed term savings product. They are considered a safe investment as there is no risk that you will lose your initial investment and you can receive a specific rate of return or APY on the amount in your CD.
The three month in a three month CD refers to the term. This means that if you take out a three month CD, your CD will mature in three months. At this point, you can withdraw some or all of the account funds or renew the CD for another three month term.
Compare 3-Month CD Rates
While every bank, credit union, and other banking services offers different rates, 3-month CD rates are signficantly lower compared to 12 and 24 months.
Also, many institutions don't offer three months' CDs, so the choices are quite limited. So, if you’re looking for the highest three month CD rates, you may want to look at online banks and credit unions, who tend to offer the best three month CD rates.
Financial Institution | 3 Months CD APY | Minimum Deposit |
|---|---|---|
3.50% – 4.00% | $1,000 | |
0.05% | $500 | |
2.00% – 2.01% | $2,500 | |
2.00% | $0 | |
3.00% | $0 | |
4.45% | $1,000 | |
4.40% | $10,000 | |
4.91% | $25,000 | |
3.72% | $1,000 | |
4.60% | $1,000 | |
3.10% | $1,000 | |
4.50% | $1,000 | |
4.63% | $1,000 | |
4.55% | $1,000 | |
2.15% – 2.20%
| $1,000 | |
4.00% | $1,000
| |
1.75% | $50
| |
4.55% | $25,000 |
How Much You Can Earn With 3 Month CD?
A key factor in how much your CD pays is the type of financial institution. Generally speaking, traditional banks tend to offer lower rates, since they need to cover the overhead of maintaining their own branch and ATM networks, but there are some exceptions.
In our CD calculator below, you can calculate earnings based on the expected rate and see how your deposit rows over time:
* Make sure to adjust APY, terms and deposit
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What Are the Main Limitations of a 3 Month CD?
No financial product is perfect and there are several potential drawbacks that you need to consider before opening one. These include:
- Mediocre Rates: CDs are available in a variety of terms from one month to ten years, but most financial institutions tier their APYs with the highest rates being offered with the longer terms. This means that a three month CD may not offer the best CD rates.
- Early Withdrawal Penalties: Although three months is a short time, if you need access to the cash in an emergency situation or there is a limited time offer to get a far better return, you’ll incur an early withdrawal penalty. Early withdrawal penalties apply if you take out some or all of the money in your CD before it matures. The penalty is usually calculated as a number of days of interest, so depending on how long you’ve held the CD you could end up losing any interest you’ve accrued.
Financial Institution | Early Withdrawal Penalties For 3 Months CD APY |
|---|---|
Chase Bank
| All interest earned |
CitiBank | All interest earned |
Wells Fargo | 1 month of interest |
Discover Bank
| All interest earned |
BMO Harris
| All interest earned |
Ally Bank
| 60 days of interest |
When to Consider a Three Month CD?
There are a number of circumstances when it is worth considering a three month CD. These include:
- You are concerned about rising interest rates: If interest rates are continually rising, you may worry about tying your money up for a long time. With a three month CD, you can earn more than you would with a typical savings account, but you’ll have the money back to reinvest in a higher paying product.
- You’re building a CD ladder: If you’re considering building a CD ladder, three month CDs can be a great vehicle towards longer term products. You can purchase various three month CDs over a few months and then reinvest the funds when each one matures to eventually end up with a CD maturing every month or year, depending on your strategy.
- You have a need for the funds in three months: If you’re planning a project, but will not need the funds for several months, a three month CD can be a great way to maximize your return. However, you’ll need to check the rates on savings products carefully to ensure that you’re getting the best 3 month CD rates.
When You May Want to Skip a Three Month CD?
Of course, there are circumstances when a three month CD may not be the best choice for you.
- You don’t need the money in the short term: If the rates are fairly stable in the marketplace and you are certain that you won’t need the funds in the short term, you may be better with a longer term CD. While this may tie up your money for longer, you are likely to be able to access higher rates.
- The rates aren’t as high as savings accounts: Another reason to skip a three month CD is if you can find a savings account offering the same or higher APYs. In this scenario, you won’t have the tie in restrictions, but can still get a decent return on your savings fund.
3 Month CD vs Savings Account
We’ve touched on savings accounts as an alternative to a three month CD, but there are some crucial differences between these products. Generally, savings accounts have no withdrawal restrictions, so if you find you need the money, you can simply withdraw it from your account.
However, whether a savings account is a better option than a three month CD will depend on the specific product. For example, if a savings account is offering a lower than average rate and there is a monthly maintenance fee on the account, then it is a no brainer about whether you should open a three month CD.
On the other hand, if you’re looking at a high yield savings account, you may be able to get a better rate than a three month CD, particularly if you’re using a traditional bank. This means that you can earn more on your balance and you’re not tied into a specific term, you can withdraw your money as and when you like.
Financial Institution | 3 Months CD APY | Savings Account APY |
|---|---|---|
Chase Bank
| 3.50% – 4.00% | 0.01% |
CitiBank | 0.05% | 4.00% |
Wells Fargo | 2.00% – 2.01% | 0.26% – 2.51% |
Discover Bank
| 2.00% | 4.00% |
BMO Harris
| 0.05% | 0.01% |
Ally Bank
| 3.00% | 4.00% |
FAQs
How much interest does a 3 month cd earn?
You can get about 2-3% when you lock your money for three months. The interest earned on a 3-month CD can vary depending on the bank or financial institution and the current interest rate environment.
Typically, the interest rate on a 3-month CD is lower than the rate on a longer-term CD, such as a 5-year CD. It is best to check with your bank or financial institution for the current interest rate on a 3-month CD.
How does a 3 month cd work?
A 3 month CD, or certificate of deposit, is a type of savings account offered by banks and credit unions. It is a fixed-term investment, meaning that the money deposited into the account cannot be withdrawn for a specific period of time, in this case, 3 months.
When the 3-month term is up, the depositor has the option to withdraw the money, including the interest earned, or to renew the CD for another term. If the depositor chooses to withdraw the money before the term is up, they will typically be subject to a penalty fee.
How high will 3 month cd rates go?
It is difficult to predict exactly how high 3 month CD rates will go. As of December 2024, the rates suppose to increase even more in the future due to FED rate increase, but predicting future interest rates is always uncertain.
Is a 3 month cd a good investment?
It depends on your investment goals and risk tolerance. A 3-month CD typically offers a lower interest rate than longer-term CDs, but it also has a shorter term and less risk.
Also, some savings account offer a higher rates than 3 months CDs, so it worth to check it before locking your money.
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How We Picked The Best 3-Month CD Rates: Methodology
The Smart Investor team conducted an extensive review of banks and credit unions to identify the best 3-month CD (Certificate of Deposit) rates available. We considered key factors essential for CDs, focusing on four main categories:
Interest Rates and Terms (50%): We evaluated the interest rates offered on 3-month CDs, as well as any terms and conditions associated with the account. Banks offering higher interest rates and favorable terms, such as low minimum deposit requirements and penalties for early withdrawal, received higher ratings in this category.
Account Features (20%): This category assessed the features and benefits offered by each 3-month CD, such as the ability to automatically renew the CD at maturity, options for interest payouts (e.g., monthly, quarterly, or at maturity), and whether the CD is eligible for promotional rates. CDs with additional features or flexibility earned higher scores.
Customer Experience (20%): We closely examined the ease of opening a 3-month CD, communication with customer service representatives, the usability of online banking platforms (tested by our team), and the availability of support channels. Banks with streamlined 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.
In each of these categories, we assigned weights to various features and qualities to ensure a comprehensive evaluation of each 3-month CD
