9 Best CD Rates for February 2023

• Definition: A CD, or certificate of deposit, is a bank account with a fixed interest rate that’s generally higher than that of a regular savings account, and a fixed date of withdrawal, known as the maturity date. Common terms range from three months to five years.

• Main advantages: The ability to lock in rates when they’re high is one of the most attractive features of a CD, especially since regular savings accounts have variable rates subject to change at any time. Even outside of high-rate environments, though, CDs provide a safe, federally insured place for short-term savings.

• Main downsides: You’ll generally have to pay a penalty if you withdraw your money before a CD matures; the penalty can be equal to several months’ or a year’s worth of interest.

• What else to consider: If you’re thinking about CDs, compare the highest CD rates today.

Online banks such as Capital One and Synchrony Bank and credit unions such as Alliant Credit Union tend to offer some of the most competitive rates, especially compared to national averages.

Yes. Most banks and credit unions insure your money in a CD up to $250,000 per person per account type, such as single-owned and joint accounts. See more details about how CDs are FDIC insured. Plus, your returns are guaranteed as long as you don’t withdraw early, in which case you may have to pay a penalty.

Yes. The Federal Reserve has raised its rate multiple times in 2022, which has encouraged banks and credit unions to raise their rates as well. See more insight about current CD rates.

Certificates of deposit require more of a commitment than a regular savings account since you're locking away some savings for a future date. This feature can be helpful for some goals but not for others, such as emergency savings. Take a closer look at when CDs are worth it.

It depends on what’s more important to you: rates or access to your money. Some of the current CD rates tend to be higher than the best savings account rates, but you sacrifice access to money in CDs. If that doesn’t work for you, check out our list of best online savings accounts.

CDs can make sense as a way to lock up some savings dedicated to a short-term goal such as buying a car or house in the next few years. Outside of goals, CDs can be a safe place for money you want to get guaranteed returns on without the risk of fluctuation such as in the stock market.

It depends on your savings goals and how sure you are that you won't need your funds before the CD term expires. Having to pay an early withdrawal penalty, generally up to one year's worth of interest, can be a blow to your savings. Common CD terms range from six months to five years; if you want to play it safe, go for a shorter CD term or a no-penalty CD.

CD rates are quoted as an annual percentage yield, or APY, which is how much the account earns in one year including compound interest. Banks generally compound interest monthly or daily. A CD’s term plays a role too: the longer the term, the higher the rate generally.

This largely depends on the CD’s rate. Let’s say you placed $10,000 into a one-year CD with 2.50% APY. You’d earn about $250 in interest. To see what one or more CDs can earn for you, check out our CD calculator.

Both show the rate of interest you can earn on a CD or savings account, but APY factors in compounding interest and the interest rate doesn’t. If you’re comparing CD rates at a glance, APY is more useful. For example, APY brings a CD with interest compounded daily and another with interest compounded monthly onto the same playing field. For CDs of the same term length, a higher APY means a higher return.

The biggest point of comparison for any CD is the rate: the higher it is, the more you save. Compare CD rates by term, for example, one-year CDs with other one-year CDs. Other details to consider would be an unusually high minimum deposit or a harsh early withdrawal penalty (such as cutting into the initial deposit you put into the CD — most early-withdrawal penalties only affect the interest earned, not the initial deposit).

Credit unions and online banks are solid places to find competitive CD rates. Credit unions are the nonprofit equivalent of banks, and can generally offer higher savings rates than traditional brick-and-mortar banks. Credit unions’ certificates of deposit are called “shared certificates” and interest “dividends,” and these function as they do at banks. See an analysis of banks vs. credit unions.

See our list of the best credit union CD rates.

A jumbo CD is a type of CD with a traditionally high minimum deposit such as $10,000, though it can be lower. Although jumbo CD rates can be higher than regular CDs, online banks and credit unions offer some of the best rates on CDs with low or no minimums.

A brokered CD is a CD originated by a bank or credit union and offered by a brokerage firm. They function like regular CDs except that they can be traded before their terms end. Check out the pros and cons on our explainer about brokered CDs.

An IRA CD is a type of CD used to save a portion of retirement savings. You get the tax-advantaged status of an IRA and the fixed term and rate of a CD.

No. CDs are meant for savings you can set aside and leave untouched. Consider a high-yield savings account for money you need in a pinch. Learn more about emergency funds, including a calculator to determine the exact amount to aim for.

See our list of the best IRA CD rates.

CDs don’t have monthly fees like checking or savings accounts might have, but they generally have a penalty if you withdraw before the CD term expires. This early withdrawal penalty tends to be several months’ worth of interest, so it’s usually best to wait to access funds from a CD once it expires. The exception is no-penalty CDs.

A no-penalty CD is a type of CD that doesn’t have a penalty for withdrawing money before the term ends. It can be appealing if you want the traditionally higher yield of a CD, compared to regular savings accounts, but you might need the money sooner than you expect. Here’s a closer look at no-penalty CDs: pros, cons, and some of their rates.

Yes. Interest earned in CDs is taxable as interest income. Your bank or credit union will usually give you a Form 1099-INT that states the interest each year, unless the amount is under $10. The IRS notes that you generally include interest from CDs when you receive it, so a CD with a term longer than a year wouldn’t have its interest taxed until the term ends.

A CD ladder can be a helpful strategy if you don’t want to go all in on one CD, especially if you think rates will keep rising. It works like this: you open multiple CDs at different terms, such as one year, two years and three years, which frees up part of your funds more regularly than having, say, just a three-year CD. Each time a CD matures, you can either reinvest in a new CD or withdraw your money. Learn more about how CD ladders work.

It depends on what rates and type of access to funds you need. Like high-yield savings accounts, money market accounts have ongoing access to funds, while CDs don’t. Among savings accounts, CD rates are traditionally the highest, then money market accounts, then regular savings accounts. However, online high-yield savings account rates now compete with money market rates, which you can see on our list of top rates.

» For more info, see the best short-term investments for 5 years or less

It depends on the level of risk you want to take. Investment, or brokerage, accounts can have higher returns than CDs, but CDs guarantee returns. They’re typically federally insured for up to $250,000 and offer fixed interest rates. Brokerage accounts can be riskier, since you aren’t protected against losses.

» For in-depth guidance, check out NerdWallet’s best online stock brokers for beginners

Both CDs and savings bonds offer stable returns over time and can be given to children as long as an adult manages the account on their behalf. Savings bonds have longer time horizons, up to 30 years, and can earn more than many CDs in a low-rate environment. Learn more about savings bonds and how to give them as gifts.