How to Compare CD Rates?

To compare CD rates, visit Bankrate.com and call your local banks to learn what rates are available in your area.

Certificates of deposit, commonly known as CDs, are a form of savings account where you give a bank a certain amount of principal to earn a fixed rate of interest over a fixed term. For example, a 2% five-year CD would pay 2% interest for five years, at which point your principal is returned, along with the interest. There are several kinds of CD, so here are some tips on how to compare CD rates.

I. Where to find online CD rates

The first place to visit is Bankrate.com, a website which tracks interest rates across different financial institutions all over the country. The website has several tools that track CD rates and show you the average interest for CDs of varying terms. Generally speaking, a longer-term CD will have a higher interest rate.

II. Comparing rates by comparing terms

Now that you have seen the first step of comparing CD rates, you can dig a little deeper. On the CDs and Investments page, you can select different CD terms, such as 6-month, 1-year, no-penalty, and various other variables to see what each term is currently yielding. You can also compare your local rates against national rates. Sometimes, the best CD rate can be across the state line, or even online!

III. Call your local branches

Bankrate does not track every institution; for a comprehensive comparison, call your local banks and credit unions about their CDs. Credit unions often offering higher rates than banks, but may have special requirements to open an account. Write down what interest rates and terms your local institutions are offering, and compare them against similar terms at Bankrate to find out the best CD rate. These two tools are often enough to comprehensively compare CD rates. Your decision about which one to invest in will be based on your financial goals and your investing time line.

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