Table Of Content
A 6-month CD (Certificate of Deposit) is a type of savings account that offers a fixed interest rate for a period of six months. The depositor agrees to leave the funds in the account for the entire term, and in return, they receive a higher interest rate than a traditional savings account.
CDs are FDIC insured and are considered a low-risk investment option.
Compare 6-Month CD Rates
When comparing 6-month CD rates, it's important to consider the annual percentage yield (APY), which is the amount of interest you'll earn over the course of a year, taking into account the interest rate and the frequency of compounding.
It's important to compare the APYs offered by different financial institutions to get an accurate picture of the return on your investment. Keep in mind that a higher APY may not always be the best choice, as it may come with stricter penalties for early withdrawal or a lower level of financial stability.
Financial Institution | 6 Months CD APY |
|---|---|
Synchrony Bank
| 5.15% |
CIT Bank | 3.00% |
Capital One Bank
| 4.35% |
Discover Bank
| 4.25% |
PenFed Credit Union | 3.00% |
Sallie Mae | 4.80% |
TIAA Bank
| 4.00%
|
Live Oak Bank | 4.80% |
LendingClub | 5.00% |
Ally Bank
| 4.40% |
Marcus | 4.80% |
Merrick Bank | 5.25% |
Total Direct | 5.45% |
Alliant Credit Union | 5.00% |
First Internet Bank | 5.18% |
Popular Direct | 5.30% |
NASA Federal Credit Union | 4.90% |
Air Force Federal Credit Union | 4.55% |
Rising Bank | 5.31% |
Vio Bank | 5.25% |
Dow Credit Union | 5.21% |
Mountain America | 5.25% |
Quontic Bank | 5.05% |
Bellco Credit Union | 4.75% |
Prime Alliance Bank | 5.30% |
Bank 5 Connect | 5.05% |
How Much You Can Earn With 6-Month CD?
The amount you can earn with a 6-month CD depends on several factors, including the interest rate, the amount of money you deposit, and the frequency of compounding.
Here's your expected earnings (before tax) if you choose six months CD. 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 | 6 Months CD APY | Interest Earned |
|---|---|---|
Synchrony Bank
| 5.15% | $2,118
|
CIT Bank | 3.00% | $2,496
|
Capital One Bank
| 4.35% | $1,641
|
Discover Bank
| 4.25% | $1,691
|
Vanguard | 5.35% | $2,547
|
Charles Schwab | 5.32% | $2,476
|
Fidelity | 5.25% | $2,522
|
PenFed Credit Union | 3.00% | $1,340
|
Sallie Mae | 4.80% | $1,992
|
TIAA Bank
| 4.00%
| $1,641
|
Live Oak Bank | 4.80% | $2,395
|
LendingClub | 5.00% | $1,616
|
Ally Bank
| 4.40% | $1,691
|
Marcus | 4.80% | $2,118
|
Merrick Bank | 5.25% | $2,395
|
TD Bank | 1.00% – 5.00% | $1,746
|
What Are the Main Drawbacks of a 6-Month CD?
There are several drawbacks to investing in a 6-month CD, including:
Limited flexibility: Once you deposit funds into a 6-month CD, you are committed to keeping the money in the account for the full term. If you need to access the funds before the end of the term, you may incur a penalty, unless it's defined as a no-penalty CD.
Low returns: The interest rate on a 6-month CD is generally lower than that of longer-term CDs. This means that you may not earn as much on your investment as you would with a longer-term CD or other investment options.
Inflation risk: The interest rate on a 6-month CD may not keep up with inflation, which could erode the purchasing power of your investment over time.
Opportunity cost: By locking your funds into a 6-month CD, you may miss out on other investment opportunities that could potentially provide a higher return.
Limited diversification: Investing all of your money in a 6-month CD may not provide enough diversification in your investment portfolio, which could lower your ROI and increase your risk.
It's important to consider these drawbacks and weigh them against the potential benefits of a 6-month CD before making a decision on whether it's the right investment for you.
Financial Institution | 6 Months CD Early Withdrawal Penalty |
|---|---|
Synchrony Bank
| 90 days of interest
|
CIT Bank | 3 months of interest
|
Capital One Bank
| 3 months of interest
|
Discover Bank
| 3 months of interest |
PenFed Credit Union | 90 days of dividends
|
Sallie Mae | 90 days of interest |
TIAA Bank
| 45 days of interest |
Live Oak Bank | 90 days of interes |
LendingClub | All Interest |
Ally Bank
| 60 days of interest
|
Marcus | 90 days of interest
|
Merrick Bank | 90 days of interest |
TD Bank | 3 months of interest
|
6-Month CD vs. Savings Account: Which Is Better?
The better option between a 6-month CD and a savings account depends on your financial goals and risk tolerance. Here are some factors to consider:
Interest rate: Savings accounts typically offer lower interest rates than 6-month CDs. However, the interest rate on a savings account is generally more flexible and may change over time. According to the table below, we can see some financial institutions offer higher interest on savings – in such a case, savings account is better option.
Access to funds: Savings accounts generally offer more flexibility in terms of accessing your funds, as you can usually withdraw your money at any time without incurring a penalty. With a 6-month CD, you are committed to keeping the funds in the account for the full term and may incur a penalty if you withdraw the funds early.
Safety: Both savings accounts and CDs are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per insured bank, making them relatively safe investments.
If you're looking for a low-risk investment with a guaranteed return, a 6-month CD may be a good option. If you're looking for more flexibility and easier access to your funds, a savings account may be a better choice.
Financial Institution | 6 Months CD APY | Savings Account APY |
|---|---|---|
Synchrony Bank
| 5.15% | 4.75% |
CIT Bank | 3.00% | 4.45% |
Capital One Bank
| 4.35% | 4.35% |
Discover Bank
| 4.25% | 4.25% |
PenFed Credit Union | 3.00% | 3.00% |
Sallie Mae | 4.80% | 4.50% |
TIAA Bank
| 4.00%
| 5.15% |
Live Oak Bank | 4.80% | 4.40% |
LendingClub | 5.00% | 5.00% |
Ally Bank
| 4.40% | 4.25% |
Marcus | 4.80% | 4.40% |
Merrick Bank | 5.25% | 3.51% – 5.01% |
TD Bank | 1.00% – 5.00% | 0.01% – 4.00% |
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How We Picked The Best 6-Month CD Rates: Methodology
The Smart Investor team conducted an extensive review of banks and credit unions to identify the best 6-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 6-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 6-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 6-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 6-month CD
