Five-year certificates of deposit (CDs) are among the most popular CDs because they’re often a bank or credit union’s highest-yielding deposit account. In a falling interest-rate environment, locking in a decent return for five years can be very appealing. Then again, five years is a long time to stash your money away, so you should consider your options carefully.
Every week we comb through the 5-year CD rates from over 150 banks and credit unions nationwide to find the highest ones. We track APYs daily but re-evaluate and re-order our list weekly. All accounts that make our cut are insured by either the FDIC or the NCUA and are available to customers nationwide, even if there are a few hoops to jump through to get them.
We also include a few 4-year CDs because if you’re building a CD ladder, you’ll need these building blocks as well. (For both lists, we consider CDs with terms close to four and five years, if not exact: 42-53 months for 4-year CDs and 54-69 months for 5-year CDs.) In the case of a tie on the APY, we look at the CD with the shortest term and then with the lowest minimum deposit required to earn the APY.
Here are the top 4-year and 5-year CD rates as of April 3, 2020.
APYs are changing rapidly amid widespread uncertainty about the economy and financial markets. The Balance is monitoring rates and will update them accordingly.
Best 5-Year CD Rates
|Bank or Credit Union||APY||Minimum Deposit||Early Withdrawal Penalty|
|Premier America Credit Union||2.20%||$1,000||6 months of interest|
|Georgia's Own Credit Union||2.27%||$500||15 months of interest|
|Pen Air Federal Credit Union||2.20%||$500||6 months of interest|
|Hiway Federal Credit Union||2.00%||$25,000||12 months of interest|
|The Federal Savings Bank||2.05%||$10,000||12 months of interest|
|Alabama Credit Union||2.02%||$500||12 months of interest|
|Lafayette Federal Credit Union||2.02%||$500||20 months of interest|
|Wings Financial Credit Union||2.02%||$10,000||2 years of interest|
Best 4-Year CD Rates
|Bank or Credit Union||APY||Minimum Deposit||Early Withdrawal Penalty|
|Premier America Credit Union||2.15%||$25,000||6 months of interest|
|Pen Air Federal Credit Union||2.10%||$500||6 months of interest|
|Georgia's Own Credit Union||2.00%||$500||12 months of interest|
Premier America Credit Union, based in Chatsworth, California, boasts over 100,000 members and $2.5 billion in assets. Meeting the membership requirements is relatively easy. If you don’t live, work, or study in the qualifying areas of California, you can open an account by joining the Thousand Oaks Alliance for the Arts, which offers free membership. You must also keep at least $5 in a savings account.
As you might have guessed, Georgia’s Own Credit Union is indeed based out of Georgia—Atlanta, to be specific. It’s been around since 1934 and has over 210,000 members and $2 billion in assets. While living in certain parts of Georgia is one way to qualify for membership, you can also join by first becoming a member of the GettingAhead Association for $5 or Georgia’s Own Foundation for $10. As with most other credit unions, you’ll also need to keep at least $5 in a savings account in order to keep your membership active.
Pen Air Federal Credit Union—based in Pensacola, Florida—has $1.6 billion in assets and 15 branches in Northwest Florida and Southeast Alabama. While it was chartered in 1936 to serve civil service and military employees, anyone can join at no charge by getting a membership to the Friends of the Navy Marine Corps Relief Society. (Pen Air will make a $1 donation to the society on your behalf when you apply to the credit union.) You’ll also need to deposit at least $25 in a share savings account to join.
Like the name invokes, Hiway Federal Credit Union was originally founded to help Minnesota Department of Transportation workers back in 1931. It’s grown in size and today anyone can join the St. Paul, Minnesota-based credit union by simply making a $10 donation to the Minnesota Recreation & Park Foundation during their application. You’ll also need to keep at least $5 in a savings account to maintain your membership.
The Federal Savings Bank may have a grand-sounding name, but this Chicago-based bank only has about $600 million in assets. The privately held bank, owned by veterans, is focused mainly on mortgage lending (all but two of its 35 offices around the country are exclusively for making loans) but not to worry. CDs are just about the easiest deposit account to manage online, and you can open one from anywhere.
Alabama Credit Union was founded in 1956 to serve the University of Alabama. Anyone nationwide can join after becoming a member of several organizations. For example, you can join the Secret Meals Foundation, which helps to feed hungry children, with at least $10. You must also keep $5 in a savings account.
Lafayette Federal Credit Union, based out of Rockville, Maryland, operates just eight branches scattered around the greater Washington D.C. area. But it’s a full-service credit union, and you can even choose from variable-rate and fixed-rate certificates depending on what tickles your fancy.
If you don’t qualify for membership through other means (such as living in the area or working for certain employers), you can become a member by first joining the American Consumer Council for $8 or the Homeownership Financial Literacy Council for $10. You must also keep a $50 balance in a savings account.
Wings Financial Credit Union, based in Apple Valley, Minnesota, was started in 1938 by a handful of Northwest Airlines employees. Since then, it’s grown to have over $5.3 billion in assets and 280,000 members, and anyone in the aviation industry or from Atlanta, Detroit, Orlando, Seattle-Tacoma, or parts of Wisconsin and Minnesota is eligible to join. If you don’t meet the eligibility requirements any other way, don’t worry. You can join by becoming a member of the Wings Financial Foundation, which carries a $5 membership fee. You’ll also need to keep $5 in a savings account.
What Is a 5-year CD?
A certificate of deposit is a special type of savings account that locks in your money and your interest rate. Also known as a time deposit, a CD requires you to leave your money alone for a specified length of time without adding to or withdrawing from the account.
With a 5-year CD, you agree to keep your money with the bank or credit union for a length of five years and in turn, the financial institution will pay you the same APY for that entire five years. Each month or quarter, you’ll earn interest payments that are deposited into the CD and earn even more interest. That continues until the CD matures (reaches the end of its term), or until you withdraw early, which comes with a penalty.
Most 5-year CDs automatically renew for another term length when they mature. If they do, you can still withdraw or add money to the account during a short grace period at the start of the term. Most grace periods are around seven to 10 days in length. After that, the account is locked down again for another five years, and you would have to pay an early withdrawal fee to access your funds any sooner.
Who Is a 5-year CD Best For?
If you have extra money that you won’t need on short notice (i.e., not the money you keep in your emergency fund), a 5-year CD can definitely earn more interest for you than a typical savings account.
Five-year CDs are often the highest-earning and longest-term accounts offered by a bank and credit union. As long as the institution is insured by the FDIC (for banks) or the NCUA (for credit unions), you’re guaranteed not to lose your money (up to $250,000) even if the bank goes under.
Five-year CDs are also a popular choice for CD ladder strategies. A common CD ladder is to divide your money among five separate CDs with staggered terms (1-year, 2-year, 3-year, 4-year, and 5-year) so that one CD matures every year.
Once the 1-year CD matures, you reinvest that money into a 5-year CD, and you do that every year. That way, all of your money will be stored in high-yield CDs, but you’ll still get access to part of your money once a year if you should need it. You can also include CDs with terms shorter than a year if you want to access your money sooner.
What Are the Alternatives to a 5-year CD?
Some banks offer CDs with even longer terms, all the way up to 10 years. That’s a big commitment, but you may be able to earn an even higher rate yet with these CDs.
Alternatively, if you won’t need the money you’ve set aside for a really long time (such as before you retire), many people advise investing in the stock market instead. Over the long term, the stock market has vastly outperformed CDs. There are no guarantees though, and unlike with a CD, you could lose money in the stock market.
Many banks offer 5-year IRA CDs for you to earn a guaranteed rate on your retirement savings. They have a hidden opportunity cost, though: Your money might not grow as fast as if you’d placed it in a higher-earning (but more volatile) investment like stocks or bonds.
One other option is a high-interest savings account. You’ll have easier access to your money than you would with a CD, and many savings accounts these days pay rates that are competitive with CDs. The downside? The APYs are variable, so you won’t be guaranteed a rate of return.
If this option appeals to you, check out the rates for money market accounts below, which we partnered with QuinStreet to bring you.
Pen Air Federal Credit Union. "Friends of the NMCRS Inc. Charity Golf Tournament." Accessed March 31, 2020.
Consumer Financial Protection Bureau. "What Is a Certificate of Deposit (CD)?" Accessed March 31, 2020.
Office of the Comptroller of the Currency. "My Time Certificate of Deposit (CD) Matured, But I Didn't Redeem It. What Happened to My Funds?" Accessed March 31, 2020.
CreditUnion.gov. "Is My Credit Union Federally Insured and How Do I Know?" Accessed March 31, 2020.
U.S. Securities and Exchange Commission. "Risk and Return." Accessed March 31, 2020.