If you’re investing in certificates of deposit (CDs), it’s smart to try to maximize your returns. Fortunately, this doesn’t have to be hard. Here are three really simple steps you can take to make sure you’re getting the best yields possible from your investment.
1. Shop around
The best thing you can do to make sure you are earning the highest yields possible is to compare CD offers from different sources before you buy. The FDIC reports the national average on CDs as:
- 1.53% for 3-month CDs
- 1.79% for 6-month CDs
- 1.80% for 12-month CDs
- 1.52% for 24-month CDs
- 1.42% for 36-month CDs
- 1.33% for 48-month CDs
- 1.50% for 60-month CDs
However, if you buy a CD from a bank offering anything close to those rates, you’re going to earn far less than you should. That’s because there are tons of high-yield CDs of every term length that provide much better yields. In fact, The Ascent’s list of the best 6-month CD rates shows many CDs paying upward of 5.00%.
If you don’t shop around, you could miss out on the most competitive offers. Don’t make that mistake. See what rates credit unions and online banks advertise to customers so you can get the best yields.
Our Picks for the Best High-Yield Savings Accounts of 2024
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SoFi Checking and Savings  APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet. Min. to earn $0 Member FDIC. |
APY up to 4.60% Rate info You can earn the maximum APY by having Direct Deposit (no minimum amount required) or by making $5,000 or more in Qualifying Deposits every 30 days. See SoFi Checking and Savings rate sheet at: https://www.sofi.com/legal/banking-rate-sheet. |
Min. to earn $0 |
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Synchrony Bank High Yield Savings  APY 4.75% Rate info Our Disclosure: Annual Percentage Yields (APY) is subject to change at any time without notice. Offer applies to personal accounts only. Fees may reduce earnings. For High Yield Savings accounts, the rate may change after the account is opened. Visit synchronybank.com for current rates, terms and account requirements. Member FDIC Min. to earn $0 Member FDIC. |
APY 4.75% Rate info Our Disclosure: Annual Percentage Yields (APY) is subject to change at any time without notice. Offer applies to personal accounts only. Fees may reduce earnings. For High Yield Savings accounts, the rate may change after the account is opened. Visit synchronybank.com for current rates, terms and account requirements. Member FDIC |
Min. to earn $0 |
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American Express® High Yield Savings  APY 4.25% Rate info 4.25% annual percentage yield as of June 11, 2024 Min. to earn $1 Member FDIC. |
APY 4.25% Rate info 4.25% annual percentage yield as of June 11, 2024 |
Min. to earn $1 |
RELATED: Best High-Yield Savings Accounts
2. Look for a CD offering daily compounding
If you want to earn the most interest, you should look for another key feature when you’re buying a CD: daily compounding.
When a CD compounds daily, the interest that accumulated on that CD over the course of a day is added to that CD at the end of the day. This means the next day, you’re paid interest on a higher balance. A CD that compounds interest daily will make more money than one that compounds monthly or annually because the interest is not added on until the end of the month or year.
3. Be careful about CDs that auto-renew
Finally, you should look at what your bank’s policy is regarding auto-renewing your CD. When your CD matures, sometimes banks just put it into another CD by default unless you take action to stop that from happening. In some cases, the new CD that your bank rolls your money into pays a much lower rate than the CD you purchased initially.
This doesn’t necessarily mean you shouldn’t buy that CD at all — but if you do, you need to make a note on your calendar and set yourself a phone reminder. That way, you can take action before the money you have invested gets automatically moved into a CD with a lower yield at the end of the term.
If you pay attention to these three factors when you are buying certificates of deposit, you can make sure you’re maximizing your earnings. You work hard for your money, and CDs are a great place to put it right now — so you may as well make the most of them and get the very best possible returns available.
These savings accounts are FDIC insured and could earn you 11x your bank
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts could earn you 11x the national average savings account rate. Click here to uncover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.
