Most banks offer higher interest rates on certificates of deposit with longer terms -- so the longer you agree to lock up your funds, the better your return. But that’s not what we’re seeing with long-term CDs, like three-year CDs, right now.
Although CD rates have increased overall throughout the past few months, banks have been boosting rates for short-term CDs (those with maturity dates of one year or less) higher than long-term CDs. For example, the average three-year CD rate for banks we track at CNET is 4.22% APY, while a six-month CD averages 4.35% APY.
It’s a small difference, but what’s more significant is that it marks a turning point for CDs. With inflation cooling and experts predicting that the Fed just raised rates for the last time for the next few months, there’s a chance that CD rates are at their peak. So now’s the time to lock in a high rate on a long-term CD, like a three-year option.
Here’s what you should know about three-year CDs and the best CD rates on the market right now.
What is a 3-year CD?
A three-year CD is a deposit account that lets you earn a return on your savings for three years. During this time, your financial institution will pay you a guaranteed interest rate in return for locking your money away for a few years.
When your CD term ends, you’ll receive the total balance of your deposit plus interest. You can then renew the CD for another term or withdraw the funds to use toward a savings goal. Most banks offer a grace period of up to 10 days after your CD matures to decide how you want to use the balance before automatically rolling them into a new CD.
However, if you need to take money out of the CD before the three-year term ends, you’ll pay an early withdrawal penalty worth a few months of interest, depending on your lender’s terms. If there’s a chance you’ll need your money before three years is up, it may be better to invest in a one-year CD or store your money in a high-yield savings account.
CNET’s picks for the best 3-year CD rates
| Bank | APY | Minimum deposit |
| MYSB Direct | 4.76% | $500 |
| CFG Bank | 4.60% | $500 |
| Bread Savings | 4.50% | $1,500 |
| Alliant Credit Union | 4.45% | $1,000 |
| Barclays | 4.30% | $0 |
| Capital One | 4.30% | $0 |
| Marcus by Goldman Sachs | 4.30% | $500 |
| Quontic | 4.30% | $500 |
| Synchrony | 4.30% | $0 |
| Ally Bank | 4.25% | $0 |
| TIAA Bank | 4.10% | $1,000 |
More details on the top 3-year CD rates
MYSB Direct
- Only high-yield CDs available
- Terms range from one month to five years
- Early withdrawal penalties apply, but the amount isn’t clear
About the bank: M.Y. Safra Bank Direct is a full-service bank that offers a range of checking, savings, money market and CD accounts depending on your needs. When it comes to CDs, MYSB Direct is a solid option since you’ll earn a competitive rate and there’s a wide range of terms to choose from. And you can use the bank’s online CD calculator to help estimate your return before opening an account.
However, the CDs require a $500 deposit. Another downside is that this bank charges a $5 monthly fee for select accounts. You can visit the local branch if you live in New York City or call 212-652-7200 during business hours. However, you can manage your account online.
CFG Bank
Read CFG Bank Review- Only high-yield CDs are available
- Terms range from one to five years
- Requires a $500 minimum deposit
- CDs cannot exceed $500,000
- Early withdrawal penalty of seven days of interest within six days of account opening.
About the bank: CFG Bank only offers traditional high-yield CDs with terms ranging from one to five years. There aren’t any frills, such as specialty CDs or online savings tools to track your goals. But you’ll earn a competitive APY. Keep in mind that CFG charges a few fees that are more than other banks, such as a $37 overdraft fee and a monthly maintenance fee between $2 and $10 depending on the account. Its minimum deposit is on the lower end though -- you can get started with $500.
Branches are available in Maryland -- which can be a downside if you need in-person help and you’re not close by. However, you can manage your account online, via the mobile app or by phone at 410-823-0500.
Bread Savings
- Only high-yield CDs available.
- Terms range from one to five years
- Early withdrawal penalties range from three months to one year of interest
About the bank: Bread Savings offers traditional CDs ranging from one to five years. However, it has a $1,500 minimum deposit requirement to get started -- higher than most banks we track. Interest accrues daily and is credited monthly.
We like that Bread doesn’t charge monthly maintenance fees and there’s a 10-day grace period where you can renew the CD for the current rate or withdraw the funds penalty-free. It also offers a competitive high-yield savings account, but both this account and its CDs require a minimum deposit -- $100 and $1,500 respectively. CDs come with a few free services that are common amongst banks, but worth noting -- including incoming wire transfers, monthly maintenance and ACH transfers. Bread Savings is an online bank but can be reached at 833-755-4354 during its weekday and weekend business hours and most holidays if you need live assistance.
Alliant Credit Union
Read Alliant Credit Union Review- High-yield and jumbo CDs
- IRA CDs are also available for retirement
- Terms range from three months to five years.
- Early withdrawal penalties range from seven days to three months of interest
About the bank: Alliant offers traditional and jumbo CDs with terms ranging from one to five years. What we like most is that Alliant offers dividend withdrawals to get your interest paid to you each month instead of waiting. Plus, there’s no penalty this way, but you won’t receive as big of a return. To fund your CD, you can transfer money from an external account, direct deposit or deposit a check with the mobile app.
Keep in mind that Alliant is a digital credit union and no physical branches are available. And you’ll need to meet certain account eligibility requirements to open any account, but it’s still available nationwide.
You may qualify if you or a family member are an employee of a particular business or organization. You may also qualify if you live or work in one of Alliant’s eligible Chicago communities. Lastly, you can become a member of the Foster Care to Success to become a member of Alliant.
You can open an account online or by calling 800-328-1935.
Barclays
Read Barclays Review- Only high-yield CDs available
- Terms range from one to five years
- No monthly maintenance fees
- Early withdrawal penalties range from three to six months of interest -- depending on the CD term
About the bank: Barclays Bank is an online bank that’s a good choice for CDs and savings, but you won’t find any other options -- such as checking or money market accounts. Barclays offers one to five year terms for traditional CDs, but other CD types aren’t available. If you open a CD account, your interest can be paid to you monthly, and even transferred to another account. However, cash deposits are not accepted for CDs.
Instead of the 10-day grace period, Barclays will give you a heads up that your CD term is ending 30 days prior -- giving you more time to think about what you want to do next with your money. We also like that Barclays also offers a few helpful tools to help you manage your money and track savings goals, including the Savings Assistant and CD calculator.
The downside is while customer service is available seven days a week, the hours are 8 a.m. to 8 p.m. ET -- not 24/7. However, you can manage your accounts online or via the mobile app.
Capital One Bank
Read Capital One Bank Review- Only high-yield CDs available
- Terms range from six months to five years
- CDs cannot exceed $1,000,000
- Early withdrawal penalties range from three to six months of interest
About the bank: Capital One offers traditional, high-yield CD terms ranging from six months to five years. There’s no minimum deposit or balance required, but like most banks, Capital One charges an early withdrawal penalty if you take money out of the CD before it ends.
You can choose to receive your interest disbursements monthly or annually, and the money can be paid to an external account. What we like about Capital One is that you can open and manage your CD online or at one of its many branches if you prefer in-person assistance.
Marcus by Goldman Sachs
Read Marcus by Goldman Sachs Review- High-yield, no-penalty and bump-up CDs available
- Terms range from six months to six years -- depending on the type of CD
- Early withdrawal penalties range from three to nine months of interest
- CD Maturity Center available 12 months before your CD matures to make changes to your CD beforehand -- including withdrawing money or closing the account
About the bank: Marcus by Goldman Sachs offers high-yield savings accounts, high-yield CDs, as well as no-penalty and bump-up CDs. Its high-yield CDs require a minimum $500 deposit.
What sets this bank apart is its CD Maturity Center that gives you information you need to decide how you want to allocate your CD balance a year before it matures.
We also like that even though Marcus by Goldman Sachs doesn’t have physical branches, you can reach the contact center 24/7 by calling 855-730-7283. Plus, an extensive list of frequently asked questions is also available online. However, there are some shortcomings. Marcus by Goldman Sachs doesn’t offer an ATM network, checking or money market accounts. Lastly, you won’t be able to deposit cash or mobile check deposits.
Quontic Bank
Read Quontic Bank Review- Only high-yield CDs available
- Terms range from one to five years
- Early withdrawal penalties vary by term
About the bank: Quontic offers traditional CDs ranging from six months to five years. CDs have a minimum $500 deposit requirement, which is the middle ground compared to banks that offer no minimum deposit or require at least $1,000. You can’t deposit cash, a common shortcoming among online banks. However, you can fund the CD by transferring money from an external account or via the Automated Clearing House network.
To reach Quontic, you can choose live chat or share your phone number with the bank for a phone call. Quontic’s mobile app is also available for help and managing your accounts. Quontic is an online bank, so physical branches aren’t available.
Synchrony Bank
Read Synchrony Bank Review- Bump-up, high-yield and no-penalty CDs available
- Terms range from three months to five years -- depending on the type of CD
- No minimum balance or monthly maintenance fees
- Early withdrawal penalties range from three months to one year of interest
About the bank: Synchrony offers competitive rates for all of its savings options -- including money market accounts, CDs and high-yield savings accounts. You’ll also have extended customer service hours by phone and live chat online.
However, like Ally, Synchrony is an online only bank and doesn’t allow cash deposits. It also doesn’t offer a checking account, so you’ll need separate accounts at another bank to fund your CDs.
Ally Bank
Read Ally Bank Review- No-penalty, bump-up and high-yield CDs
- Terms range from three months to five years -- depending on the type of CD
- Early withdrawal penalties range from two to five months of interest
- Loyalty reward of 0.05% for CDs you renew
About the bank: Ally is one of our favorite banks for opening a CD. It’s a full-service bank that offers several deposit accounts, including high-yield checking, savings and a money market account. None of Ally’s accounts require a minimum deposit or balance required. If you’re eyeing a CD with Ally, we like that it offers a loyalty reward that boosts your APY by 0.05% when you renew after your initial term expires.
Since Ally is an online-only bank, you’ll need to be comfortable managing your account online. While ATM service is available, cash deposits aren’t accepted, so if you’ll need to transfer money from another bank account to fund your CD.
TIAA Bank
Read TIAA Bank Review- High-yield, bump-up and IntraFi® CDs available
- Terms range from three months to five years -- depending on the type of CD
- No monthly account fee
- Minimum deposit for CD varies based on the type of CD
- Early withdrawal penalty is one-fourth of the CD term’s total interest
About the bank: We like that TIAA Bank offers an array of CD types that can yield a solid return with a competitive interest rate. Plus, you can choose from CD terms ranging from three months to five years. However, there’s a minimum deposit requirement for most accounts -- and you’ll need $1,000 to open a CD. You’ll get an alert 20 days before your CD term ends to decide how you want to allocate the funds.
We like that 24/7 customer support is available online and by phone at 888-882-3837. You can manage your accounts online or in person if there’s a branch nearby. However, there aren’t many brick-and-mortar branches compared to major national banks.
Should I choose a 3-year CD?
Three- and five-year CDs are appealing right now because you can lock in a high interest rate now, to protect your savings if rates fall later this year, said Hannah Szarszewski, founder of Blue Mountain Financial Planning, a virtual firm based in Melissa, Texas.
For instance, if you put $1,000 in a three-year CD with a 4.22% APY today, you’ll earn $132.02 in interest in three years without worrying about volatility or rates lowering. And while you could wait to see if the Fed decides to raise rates again at the next Open Market Committee meeting in June, if you’ve been waiting to lock in a high CD rate, most experts recommend acting fast.
But a long-term CD, like a three-year option, isn’t always the best choice. A shorter-term CD might be a better option if you want to lock in a fixed interest rate but need more flexibility. Some banks currently offer a higher rate on six-month and one-year CDs than three- and five-year CD terms. You can also consider a no-penalty CD, which lets you withdraw your funds early, free of penalty charges, so you can take advantage of better interest rates if rates rise.
Three-year CDs can fit nicely into a CD ladder strategy, too. For example, you could open several CDs with different terms, so your money comes due at different times. Depending on where rates are at the end of each term, you can either withdraw your funds to use or reinvest them in another CD.
If you want to take advantage of a competitive three-year CD APY, you should have a clear goal in mind for locking the money away for a few years. If there’s a chance you’ll need the money, consider more flexible options.
“CDs should only really be leveraged right now if you are certain you have at least a year (or whatever CD duration you choose) until you need the funds,” said Gary Grewal, a certified financial planner and founder of Financial Fives. Otherwise, a high-yield savings account offers easier access and more flexibility.
How to open a 3-year CD
Depending on the bank, you can open a CD online or in person. Online banks or divisions of larger financial institutions offer many of the highest interest rates right now.
When you’re ready to open your account, fill out the application. You’ll need basic personal information, including your email, physical address and Social Security number. Your bank may also have other requirements for opening an account.
You’ll also need to fund your CD. Some require minimum deposits of $500, $1,000 or more. You’ll need your bank account and routing information from another bank to transfer money to your CD account.
Before you open any new account, compare rates and requirements to see which CD is best for you, and weigh other savings account options that best align with your financial goals.
FAQs
Based on the banks we track at CNET, the average three-year CD is 4.22%, but it’s best to compare rates across banks since higher CD rates are available for this term.
If rates increase while you have a CD open, you’ll be locked into that rate you already have until your CD matures.
If you want to withdraw your money before your three-year CD matures, you’ll pay an early withdrawal penalty on your balance. Remember to never store your emergency fund in a CD; instead, put the money in a place that’s easily accessible, like a high-yield savings account.
Methodology
CNET reviews CD rates based on the latest APY information from issuer websites. We evaluated CD rates from more than 50 banks, credit unions and financial companies. We selected the CDs with the highest APY for three-year terms from among the organizations we surveyed, and considered rates for shorter terms if three-year terms were identical or unavailable.
Banks surveyed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Bank5 Connect, Barclays, BMO Harris, Bread Savings, BrioDirect, Capital One, CFG Community Bank, Citizens Access, Colorado Federal Savings Bank, Connexus Credit Union, Consumers Credit Union, Credit One Bank, Discover Bank, First Internet Bank of Indiana, First Tech Federal Credit Union, FNBO Direct, GO2bank, Golden 1 Credit Union, HSBC Bank, Huntington Bank, Lake Michigan Credit Union, LendingClub Bank, Live Oak Bank, M&T Bank, Marcus by Goldman Sachs, Merrick Bank, Nationwide (by Axos), Navy Federal Credit Union, NBKC, OneUnited Bank, Pentagon Federal Credit Union, PNC, Popular Direct, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, SchoolsFirst Federal Credit Union, Synchrony Bank, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Vio Bank, and Wells Fargo.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
