The economic and financial impact of the coronavirus (Covid-19) crisis is being felt by all businesses, sectors, industries, consumers and, of course, banks. Anticipating the negative impact of the crisis on the economy, the Federal Reserve dropped the federal funds rate to record lows, which is a boon to borrowers, but also disadvantageous in other ways.
Low interest rates can hurt your ability to save because they lead to lower APYs that banks pay to you in interest. Only a few months ago, there were online CD accounts with APYs easily over 2%. However, due to the impact of Covid-19 and the consequent slashing of the federal funds rate, CD rates have fallen to historic lows, which is unfortunate. As of the week of July 20, 2020, according to the FDIC’s weekly national rates and rate caps report, the national average CD rate for one-year CDs is 0.23% and the average for five-year CDs is 0.47%.
With interest rates down, we analyzed and identified some of the top CD accounts available in terms of their yield. The CD accounts analyzed were standard CDs, not promotional or jumbo, and the terms we scored were the APYs for a one-year CD and a five-year CD. Here’s a look at the 10 best banks with the highest CD APYs of 2020.
First Internet Bank
1-Year CD APY: 1.01%
5-Year CD APY: 1.31%
First Internet Bank has been in the online banking game for quite some time. Across the board, First Internet Bank’s CD accounts have some of the highest APYs available. To open a high-yield CD account at First Internet Bank, the minimum deposit is $1,000, which is fairly typical. Both the one-year CD and five-year CD interest rates at First Internet Bank are multiple times higher than the national average non-jumbo CD rate, providing you with a great boost to your savings.
Marcus by Goldman Sachs
GS
1-Year CD APY: 1.10%
5-Year CD APY: 1.15%
Marcus by Goldman Sachs offers a wide array of great banking products, including savings accounts, checking accounts, loans and CD accounts. CD accounts from Marcus carry excellent interest rates, with both the one-year CD account and five-year CD accounts having APYs well above their respective national rates. Marcus by Goldman Sachs requires a minimum deposit of only $500 to open a CD account. What’s more, Marcus provides customers with the 10-Day CD Rate Guarantee: If you open a CD account and deposit $500 within the first 10 days and within that period the CD rate increases, Marcus will give you the newer, higher CD APY.
Presidential Bank
1-Year CD APY: 1.00%
5-Year CD APY: 1.15%
In a list of best banks dominated by online ones, Presidential Bank stands out as a brick-and-mortar bank offering some of the highest interest rates on CD accounts. All CD accounts at Presidential Bank require a minimum deposit of $1,000 to open the account. However, there are no minimum balance requirements or maintenance fees once you’ve opened the account. For CD accounts with maturities of one, two, three and five years are also available as IRA CD accounts.
Sallie Mae Bank
1-Year CD APY: 1.05%
5-Year CD APY: 1.05%
Sallie Mae began as a government entity that provided federal education loans before it become a private company offering private student loans. From its origins in student loans, Sallie Mae has diversified and now offers a variety of banking products. With CD rates of 1.05% on CD accounts with terms of 12-months or more, Sallie Mae offers some of the best CD accounts around. The minimum deposit to open a CD account is $2,500 and the minimum balance you’ll need to maintain is also $2,500, though Sallie Mae does not charge any monthly maintenance fees.
Ally Bank
1-Year CD APY: 1.00%
5-Year CD APY: 1.10%
Ally Bank offers three types of CD accounts: High Yield CD, Raise Your Rate CD and No Penalty CD. The Raise Your Rate CD is limited to either two-year or four-year terms. The No Penalty CD account tops out at 0.95% APY. The High Yield CD account comes with a variety of terms, from three months up to five years. Ally Bank charges no monthly maintenance fees. Plus, if you renew your CD after the maturity is up, Ally will give you a 0.05% Loyalty Reward on the interest you earn with your CD account.
Synchrony
1-Year CD APY: 0.90%
5-Year CD APY: 1.20%
Synchrony is another top-notch online bank, and its CD accounts carry excellent interest rates. With a minimum deposit of $2,000 to open, you can earn 0.90% APY with a 12-month CD and earn 1.20% with a 60-month CD. Synchrony also offers a 15-Day Best Rate Guarantee: If you open your CD and fund within 15 days, and the CD rate is higher on the day you fund the account, Synchrony gives you the better rate.
Discover
DISCA
1-Year CD APY: 0.90%
5-Year CD APY: 1.15%
Discover offers a variety of options when it comes to CD account terms, ranging from three months all the way up to 10 years. Discover’s one-year CD rate is 0.90% APY, which is almost four times the national average rate of 0.23% APY for a 12-month CD. Its five-year CD rate is nearly two-and-a-half times the corresponding national average rate of 0.47% for 60-month CDs. Either way, with a CD account from Discover, you’re beating the average.
TIAA Bank
1-Year CD APY: 0.76%
5-Year CD APY: 1.10%
TIAA Bank offers great interest rates on most of its bank accounts, including its standard CD accounts. The minimum opening deposit for a basic TIAA CD account is $1,000, with terms of three months to five years. With a five-year CD rate of 1.10% APY, TIAA Bank definitely offers one of the best CD accounts around, while at the same time charging no monthly maintenance fees. If you want even better CD rates, then you could aim for TIAA’s Yield Pledge CD, which comes with a minimum deposit requirement of $5,000, but also higher yields, such as 1.35% APY for a 60-month Yield Pledge CD.
Barclays
1-Year CD APY: 0.85%
5-Year CD APY: 0.85%
Online CDs from Barclays are available in a variety of terms, ranging from three months to five years. With Barclays CD accounts, there are no minimum opening deposit or minimum balance requirements, as well as no monthly maintenance fees. The one-year online CD rate at Barclays is almost four times the national average rate and the five-year CD rate nearly double.
VirtualBank
1-Year CD APY: 0.80%
5-Year CD APY: 0.90%
VirtualBank is the online banking wing of First Horizon Bank, which was originally First Tennessee Bank. VirtualBank offers a wide variety of CD account terms, ranging from one month to five years. APYs for all VirtualBank CD accounts are very solid compared to competitors and national average rates. One downside is that the minimum deposit to open an eCD at VirtualBank is $10,000. There are certainly banks that require higher minimums than this, but it is much higher when compared to what the other best CD accounts on this list require.
