Banking » Compare Banks » Best 5-Year CD Rates For August 2023: Comparison
Advertiser Disclosure

This website is an independent, advertising-supported comparison service. The product offers that appear on this site are from companies from which this website receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). This website does not include all card companies or all card offers available in the marketplace. This website may use other proprietary factors to impact card offer listings on the website such as consumer selection or the likelihood of the applicant’s credit approval.

This allows us to maintain a full-time, editorial staff and work with finance experts you know and trust. The compensation we receive from advertisers does not influence the recommendations or advice our editorial team provides in our articles or otherwise impacts any of the editorial content on The Smart Investor. While we work hard to provide accurate and up to date information that we think you will find relevant, The Smart Investor does not and cannot guarantee that any information provided is complete and makes no representations or warranties in connection thereto, nor to the accuracy or applicability thereof.

Learn more about how we review products and read our advertiser disclosure for how we make money. All products are presented without warranty.

Best 5-Year CD Rates For September 2023: Comparison

The top CDs for 5 year offer about 4%-5% APY. Here's a rates comparison, how much you can earn and what is the early withdrawal penalty
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor, which helps consumers make better financial decisions.  Silvermann’s areas of expertise include investing, banking, and credit cards. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more. Aside from being a finance expert, his background includes working as a business and financial analyst. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.
Interest Rates Last Update: September 20, 2023
The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor, which helps consumers make better financial decisions.  Silvermann’s areas of expertise include investing, banking, and credit cards. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more. Aside from being a finance expert, his background includes working as a business and financial analyst. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.
Interest Rates Last Update: September 20, 2023

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

We earn a commission from our partner links on this page. It doesn't affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money.

Table Of Content

CDs or certificates of deposits are fixed term savings products. These are classified as a safe investment as there is minimal risk that you will lose your investment, particularly if you choose a financial institution with FDIC coverage.

You will receive a specified APY or rate of return on the balance in your CD account, with many CDs offering interest that is compounded daily to maximize your returns.

Compare 5-Year CD Rates

A five-year CD means that it has a five-year term, so your money is tied up for five years. If you do need some or all of your money before this maturity date, you will incur an early withdrawal penalty, which is usually several months of interest.

After five years, when your CD matures, you will have the option to withdraw all or some of your funds or renew for another five year CD.

Financial Institution
5-Year CD APY
Minimum Deposit
4.50%
$1,500
3.80%
$500
4.10%
$0
4.00%
$2,500
4.42%
$500
4.00%
$1,000
4.00%
$2,500
4.65%
$5,000
4.10%
$0
3.00%
$0
1.49%
$250
4.40%
$500
4.00%
$50
4.00%
$1,000
4.35%
$1,000

How Much You Can Earn With 5 Year CD?

Most CDs have interest that compounds daily, which can help bolster your returns, but this will not compensate for a far lower rate. So, it is always a good idea to shop around to see which banks, credit unions and financial institutions are offering the best 5 year CD rates.

Here's your expected earnings (before tax) if you lock your money for 60 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
60 Months CD APY
Interest Earned
Bread Financial
4.50%
$23,316
Marcus
3.80%
$20,609
Capital One Bank
4.10%
$22,407
Discover Bank
4.00%
$22,407
PenFed Credit Union
4.00%
$21,206
Vanguard
5.50%
$24,538
Fidelity
4.65%
$24,538
Sallie Mae
4.00%
$21,805
Ally Bank
4.10%
$23,316
American Express Bank
3.00%
$17,382

What Are the Main Drawbacks of a 5 Year CD?

There are several potential drawbacks of a five year CD, which may influence whether it is the right product for you.

  • Tied into Rates: When you take out your CD, you lock in your rate, which may seem attractive now. However, rates can fluctuate significantly, particularly over a period of several years. If the rates change, you may find that your CD rate is not the most attractive.
  • Not Necessarily Offering the Best Rates: While many financial institutions offer the best CD rates for longer term products, this is not necessarily the case. If you look carefully at the rates, you may find that you are getting the same or only a slightly higher APY with a five year CD compared to a one or two year CD, even if you deposit a large sum of money in Jumbo CD.
  • Long Term Investment: A lot can change in five years and while you may not anticipate needing the money now, this could change in a few years. Unfortunately, any withdrawals before the five year maturity date will incur a penalty. Here are the excped penalties for the top 5 year CD options:
Financial Institution
Early Withdrawal Penalty For 60 Months CD APY
Bread Financial
365 days of interest
Marcus
180 days of interest
Capital One Bank
6 months of interest
Discover Bank
18 months of interest
PenFed Credit Union
365 days / 30% of dividends
Sallie Mae
180 days of interest
BMO Harris
545 days of interest
Ally Bank
150 days of interest
American Express Bank
540 days of interest
Chase Bank
365 days of interest
CitiBank
180 days of interest

5-Year CD vs. Savings Account: Things To Consider

If you’re considering CDs, you may wonder how a five year CD stacks up against a savings account, but unfortunately, there is no easy answer to this question. It depends entirely on what CDs and savings accounts you’re looking at.

If the savings account in question offers a low APY and has a monthly maintenance fee, a five year CD is bound to look attractive. On the other hand, if the savings account offers comparable or better rates and there are no withdrawal restrictions, the CD may not be a good idea.

Some things to consider before opting for either a savings account or a CD include:

  • Minimum initial deposit: Many banks have a minimum amount you need to deposit to open a CD account, which may or may not be achievable for you.
  • Ability to continue saving: If you don’t have much cash now, but you have made plans to save money each month, a CD is not the right choice for you, as you can’t deposit additional funds.
  • Maintenance Fees: Although unusual, some banks do charge a maintenance fee on CDs, but they are more common with savings accounts.
  • Withdrawal restrictions: Ideally, you’ll not withdraw money from your CD for the five year term, but it is worth checking if there are withdrawal restrictions on the savings account you’re considering.

As we can see in the table below, there are differences in APY between 5 year CD to savings account:

When You May Want to Skip a Five Year CD

Of course, there are also situations when a five year CD may not be the best product for you. These include:

  • Rates are on the rise: If inflation and therefore interest rates are on an upward trend, you may not want to open a five year CD. Locking in your rate works both ways and if the rates are continually being increased, you may regret signing up for the same rate for five whole years.
  • You may need the cash: If there is a possibility that you may need some or all of your funds before your CD matures, committing to a five year CD is not a good idea. Early withdrawal penalties can be as much as 365 days of interest, so depending on when you make the withdrawal, you could lose all of the interest you’ve accrued. In a worst case scenario, if you don’t have enough accumulated interest to cover the penalty, the remainder could come out of your savings fund!
  • The rate isn’t competitive: If there is no difference in rate between a one year CD and a five year CD, it doesn’t really make sense to commit your money for longer.
Financial Institution
60 Months CD APY
Savings Account APY
Bread Financial
4.50%
5.00%
CitiBank
2.50%
4.35%
Marcus
3.80%
4.40%
Capital One Bank
4.10%
4.30%
Discover Bank
4.00%
4.30%
PenFed Credit Union
4.00%
3.00%
Chase Bank
1.50%
0.01% – 0.02%
BMO Harris
0.25%
1.00%
Ally Bank
4.10%
4.25%
American Express Bank
3.00%
4.25%

FAQs

As of September 2023, you can get around 4-5% if you lock your money for 60 months.  The interest earned on a 5-year CD (certificate of deposit) will vary depending on the bank or financial institution offering the CD.

Typically, the interest rate on a 5-year CD is higher than that of a shorter-term CD but lower than that of a longer-term CD. It's a good idea to shop around and compare rates from different banks to find the best rate for you.

A 5-year CD, or certificate of deposit, is a savings account offered by banks and credit unions that offers a fixed interest rate for a specific period of time, in this case, five years. The interest rate is usually higher than a traditional savings account, but it will not change during the five-year term.

It is difficult to predict exactly how high 5-year CD rates will go in the future. Factors such as the overall state of the economy, inflation, and Federal Reserve interest rate policy can all impact CD rates.

Generally, CD rates tend to follow the direction of interest rates set by the Federal Reserve. If the Federal Reserve raises interest rates, CD rates may also increase.

It depends on the current interest rates and your financial goals. A 5 year CD typically offers a higher interest rate than a shorter term CD, but it also ties up your money for a longer period of time. If interest rates are high and you don't anticipate needing the money in the next 5 years, a 5 year CD may be a good investment.

However, if interest rates are low or you may need the money sooner, other investments such as a savings account or money market fund may be more beneficial.

Compare CD Rates

Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor, which helps consumers make better financial decisions.  Silvermann's areas of expertise include investing, banking, and credit cards. Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more. Aside from being a finance expert, his background includes working as a business and financial analyst. Above all, he is passionate about teaching people how to manage their money and helping millions on their journey to a better financial future.